UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35138

PIMI AGRO CLEANTECH, INC.

(Exact name of registrant as specified in its charter)

Delaware		26-4684680
(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification No.)

~~269~~ POBox ~~South~~360 ~~Beverly Drive Suite 1091~~

~~Beverly~~ 3601201 ~~Hills~~Kiryat ~~California~~Tivon, ~~90212 USA~~Israel

(Address of principal executive offices)

~~(310)~~ +972 ~~203-8278~~72 2116144

( Registrant’s telephone number, including area code )

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 Par Value Per Share

Indicate by check mark whether the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.

Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

As of ~~January~~February 311, ~~2013~~2014, the aggregate market value of the issued and outstanding common stock held by non-affiliates of the registrant, computed by reference to the price at which the common equity was last sold of $0.80 was approximately $23,~~640~~538,~~917~~565. For purposes of the above statement only, all directors, executive officers and 10% shareholders are assumed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purpose.

Number of shares of common stock outstanding as of ~~March~~February 1215, ~~2013~~2014 was 9,336,487.

DOCUMENTS INCORPORATED BY REFERENCE – ~~None~~Not applicable

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, ~~2012~~ 2013

INDEX

		Page
	PART I
Item 1	Business	3
Item 1A	Risk Factors	1617
Item 1B	Unresolved Staff Comments	22
Item 2	Properties	22
Item 3	Legal Proceedings	22
Item 4	Reserved	2223
	PART II
Item 5	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	2223
Item 6	Selected Financial Data	2324
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2325
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	2729
Item 8	Financial Statements and Supplementary Data	2829
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	2967
Item 9A	Controls and Procedures	2967
Item 9B	Other Information	3068
	PART III
Item 10	Directors, Executive Officers, and Corporate Governance	3068
Item 11	Executive Compensation	3170
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	3371
Item 13	Certain Relationships and Related Transactions	3573
Item 14	Principal Accountant Fees and Services	3675
	PART IV
Item 15	Exhibits and Financial Statement Schedules	3675
	Signatures	4176
SIGNATURES

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In this annual report, references to "Pimi Agro Cleantech, Inc.," "Pimi," "the Company," "we," "us," and "our" refer to Pimi Agro Cleantech, Inc. and its subsidiary, Pimi Agro CleanTech, Ltd.

Except for the historical information contained herein, some of the statements in this Report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operation," and "Risk Factors." They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or "continue" or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to: our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technologies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

PART I

ITEM 1. BUSINESS

Organization

Pimi Agro CleanTech, Inc. is a Delaware Corporation with one operating subsidiary, Pimi Agro CleanTech, Ltd, which is an Israeli Limited Company (“Pimi Israel”). The Company was formed on April 1, 2009, under the laws of the State of Delaware, and its subsidiary Pimi Israel was formed on January 2004 in the State of Israel under the name "Pimi Marion Holdings Ltd.", and has since changed its name to "Pimi Agro Cleantech Ltd.", onin October 2008. The Company, through Pimi Israel, owns a patented technology for the ~~treatment of~~ pre and post-harvest treatment of fruits and vegetables utilizing environmentally friendly products.

Established in 2004, Pimi Israel's technology platform is based on a unique formulation of environmentally friendly Stabilized Hydrogen Peroxide (STHP) which decomposes into oxygen and water. As part of a sustainable agriculture platform, STHP products have worldwide patent protection and provide a cost-effective solution for consumers who want to reduce residue chemicals in their fruits and vegetables.

On April 27, 2009 we purchased all the issued shares of Pimi Israel from the Pimi Israel shareholders in consideration for 6,313,589 shares of Common Stock of the Company to the Pimi Israel shareholders. As a result, Pimi Israel became a wholly owned subsidiary of the Company.

We are a development stage company and have had limited revenues since our formation. There is currently limited public market for our common stock. The purchase of our shares is highly speculative and involves a high degree of risk, including, but not necessarily limited to, the “Risk Factors” described elsewhere in this report. Any person who cannot afford the loss of their entire investment should not purchase our shares.

The Company’s principal executive offices are located atin ~~269~~Kibbutz ~~South~~Alonim, ~~Beverly~~Israel, ~~Drive~~Our ~~suite~~telephone ~~1091,~~number ~~Beverly~~at ~~Hills~~our ~~California~~principal ~~90212,~~offices is 972-72-211-6144 and ~~its~~our ~~telephone~~local U.S. number is (310) 203-8278.

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Overview

The Company focuses on developing environmentally friendly solutions for extending storability and shelf life of vegetables and fruits. As of the date of this report, the Company ~~develops~~is engaged in developing, ~~tests~~testing and ~~markets~~marketing of four lines of products: (i) ~~Citrus~~products ~~treatment~~that ~~line~~treat ofcitrus ~~products~~fruits, ~~which~~ ~~includes:~~such as CitruWash™, and Super Clean™, CitrusGuard™ and FreshProtect™; (ii) ~~Sweet~~a ~~Potatoes treatment~~product ~~line~~that oftreats ~~products~~sweet potatoes, ~~which include~~ SweetGuard™; (iii) ~~Stored~~a ~~Table~~product ~~Potatoes~~that ~~treatment~~treats ~~line~~stored oftable ~~products~~potatoes ~~which include~~ SpuDefender™; and (iv) ~~other~~products ~~fruits~~that ~~and~~provide ~~vegetables~~ storage control ~~line~~ of ~~products~~fruits ~~which~~and ~~includes:~~vegetables, including StorGuard™ for treatment of vegetables such as broccoli and cabbage and OnionGuard™ for treatment ~~in storage~~ of ~~Onions~~onions. We have started the commercialization of ~~six~~five ~~(6)~~ of these products (namely: the sanitizer CitrusGuard™, the disinfectant FreshProtect™, the sprout controller SpuDefender™, and the cleansers SweetGuard™, and Super Clean™ ~~and~~(or CitruWash™).

~~Currently, the Company is focused on solutions~~ ~~related to fresh citrus fruits, table potatoes and sweet potatoes.~~ Based on recent statistics, ~~citruses~~citrus fruits are the most consumed fruits worldwide. The world fresh citrus market is estimated at over 50 million tons per annum. Potatoes are the fourth largest crop worldwide. According to the Food and Agriculture Organization of the United Nations, the total crop of ~~the 20 major producers of~~ Potatoes in ~~2011~~2012 was approximately ~~294~~368 million metric tons (see: http://~~faostat~~faostat3.fao.org/~~site~~faostat-gateway/~~339~~go/~~default.aspx~~to/download/T/TI/E). We estimate that table potatoes, which our solution is currently aimed towards, are 30%-40% of the total world produced potatoes. Sweet potatoes are the seventh largest crop in the world. According to the Food and Agriculture Organization of the United Nations, the total crop of the sweet potatoes during 2012 was approximately 104 million metric tons. According to the National Agricultural Statistics Service, USDA, the United States produced approximately 1.2 million metric tons of sweet potatoes during 2012, with a production value of $500 million.

We intend to provide our customers a comprehensive environmentally friendly solution for post-harvest treatment of fruits and vegetables, commencing with harvest thereof and utilizing our products in different phases of the treatment process until their delivery to distributors. InAccordingly, ~~accordance with this strategy~~ as of the date of this report we ~~develop~~are developing cleansers and sanitizers for treatment of fruits and vegetables on packing line, ~~and~~as well as sprout and disease control products for ~~stored~~use when storing fruits and vegetables. We are also currently developing a device for preventing decay during shipment of fruits and vegetables.

Industry Overview

The fresh fruits and vegetables industry is constantly seeking technologies and methods to prolong shelf life, reduce product deterioration losses and keep freshness of crops. In most cases the only way to prolong shelf life and reduce quality losses is by using chemicals which leave residues. The processed food industry is also using chemicals which leave residues and contaminate water and livestock. Heavy chemicals which leave residue are used also by the seed industry.

Leading retailers and agricultural regulatory bodies such as European Commission of Health and Consumer Protection the “European Commission" or the " EC") and the US Environment Protection Agency (the "EPA"), are increasingly focusing to reducing the use of residue chemicals in treating fruits, vegetables, seeds and soil in favor of environment-friendly alternatives.

In addition, organic food and organic agriculture is rapidly gaining momentum and is advocating chemical and residue-free use from growth, harvest to storage and maintenance. This is strengthened by the relatively new trend to consume low or non-residue produce, which have risen to 20%-25% of consumed produce in developed countries like Netherlands (see "Reducing Residue Rising up Priority List" 78 FGJ 1 February 2008. at: http://www.bcpcertis.com/Certis.bcp/English/Home/News/page.aspx/565?xf_itemId=522&xf_selectionDatapartId=512).

The Company’s management believes that the trend in the market [as may be exhibited by market leaders such as Wal-Mart (see at: http://www.nytimes.com/2011/01/20/business/20walmart.html), Marks & Spencer, Tesco and Sainsbury in the UK and EDEKA chain in Germany] is to replace, as much as possible, fruits and vegetables treated with chemicals which leave residues with fruits and vegetables with no residue or low residue.

Losses of agricultural produce, as high as 30% in countries such as India (see: http://agricoop.nic.in/sia111213312.pdf) and China (see http://www.ccsenet.org/journal/index.php/ijbm/article/view/19732), due to diseases and lack of correct supply chain, from the field to the stores, are exacerbated by the increasing demand for food produce, especially in developing countries.

~~Accordingly, there is a significant need to find alternative solutions to current chemical treatments for pre~~- ~~and~~4 ~~post~~- ~~harvest treatments of fruits and vegetables that will provide the following benefits:~~

4 Accordingly, there is a significant need to find alternative solutions to current chemical treatments for pre- and post- harvest treatments of fruits and vegetables that will provide the following benefits:

Reduce spoilage and losses of produce;

Extend shelf-life and improve quality of fruits, vegetables and grains;

Are non-residue and leave no harmful chemical by-products;

Are cost effective; and

Are approved for organically produced crops.

With millions of tons of stored fruits and vegetables annually world-wide, management believes there is an immediate, addressable market for Pimi’s products. Through our extensive communications with retailers, we understand a shortage of fresh goods is a primary concern for these groups – thus the ability to improve storability is critical and valuable.

Our Products and Technology

Treated Produce Citrus ~~Treatment~~Fruits ~~Products~~Sweet Potatoes Potatoes Onions Sanitizers CitrusGuard™ (Israel) — — OnionGuard™ Disinfectant FreshProtect™ (US) — — — Sprout Controller SpuDefender™ Cleansers SuperClean™ (Israel) CitruWash™ (US) SweetGuard™ — —

~~The~~ Citrus ~~Industry-~~Treatment ~~The Need to Replace Imazalil and TBZ~~Products

To The ~~date, green mold on~~ Citrus ~~is controlled in the United States and other countries, including Israel, by application of the fungicides Ortho~~Industry-~~phenyl~~ ~~Phenate~~The ~~(OPP~~Need orto ~~SOPP),~~ Replace Imazalil, and ~~Thiabendazole (~~TBZ). Retailers’ demand to reduce the Maximum Residue Levels (MRL) of pesticides in their fresh fruits, has led producers to seek environmentally friendly solutions, such as ours, aimed to reduce levels of pesticide residues while extending shelf life. Moreover, it has been proven that the green mold has already developed resistance to the abovementioned fungicides. This prevented the packers from effectively manage decay control pathogens.

~~The~~ To ~~combination~~date, ofmany ~~these~~countries, ~~two~~including ~~factors~~the ~~has posed~~United anStates ~~urgent~~and ~~need~~Israel, tocontrol ~~identify~~green anmold ~~alternative~~on toCitruses, ~~current~~by ~~packing~~applying ~~methods~~the fungicides Ortho-phenyl Phenate (OPP or SOPP), Imazalil, and Thiabendazole (TBZ). ~~Pimi~~Retailers’s ~~solution~~demand ~~may~~to reduce the ~~Imazalil~~Maximum ~~level from~~Residue ~~today’s~~Levels (MRL) of 5pesticides ~~ppm~~in their fresh fruits, has led producers to 1seek ~~ppm~~environmentally ~~(part~~friendly ~~per~~solutions, ~~million)~~such as ours, aimed to reduce levels of pesticide residues while ~~not~~extending ~~adding~~shelf ~~any~~life. ~~fungicide~~It ~~material~~was ~~and~~proven ~~improving~~that ~~yield~~the ~~losses~~green mold has already developed resistance to the abovementioned fungicides, especially for Imazalil. Therefore, packers can no longer count only on them to effectively control decay pathogens.

~~Super~~ The ~~Clean™,~~combination ~~CitruWash™~~of these two factors created an urgent need to identify an alternative method for controlling green mold. Pimi’s solution may reduce the Imazalil level from today’s MRL of 5 ppm (part per million) to 1 ppm, ~~CitrusGuard™~~ without adding any fungicide material and ~~FreshProtect™~~while reducing yield losses.

~~CitrusGuard™ and FreshProtect™,~~ ~~which are sanitizers, are formulated to sanitize~~ Citrus ~~Fruits~~Sanitizers ~~on packing lines~~ and ~~were~~-Disinfectants ~~developed in order to reduce residue treatments of fungicides, such as Imazalil~~ - CitrusGuard™ and ~~TBZ, which are the current treatment.~~FreshProtect™

~~SuperClean™ and CitruWash™,~~ ~~which~~We ~~are~~have ~~cleansers,~~developed ~~are~~CitrusGuard™ ~~formulated~~(in toIsrael) ~~clean~~and ~~Citrus~~FreshProtect™ ~~Fruits~~(in onthe ~~packing~~US), ~~lines and~~ which are ~~intended~~both formulated to ~~replace~~sanitize ~~soap~~citrus ~~and Chlorine~~fruits ~~that~~during ~~are~~packaging. ~~currently~~These ~~used~~products aswere ~~cleansers~~developed in ~~Citrus~~order ~~packing lines, prior~~ to ~~the~~replace ~~fungicide treatment. Good cleaning practice reduces~~ the ~~surface~~current ~~dirt~~residue ~~and~~treatments ~~soil~~of ~~and~~fungicides, bysuch ~~that~~as ~~reduces~~Imazalil. ~~micro~~FreshProtect™ ~~flora~~is ~~load~~mainly ~~prior~~targeted to ~~waxing~~ the ~~fruits~~U.S. ~~with~~market, ~~fungicides~~while ~~that~~CitrusGuard™ ~~prevents mold~~is ~~contamination,~~mainly ~~during~~targeted ~~its~~to ~~storage,~~the ~~transportation~~Israeli and ~~shelf~~other ~~life~~international markets.

On December 14, 2012, we received an unconditional Notice of Registration from the United States Environmental Protection Agency (the “EPA”) for FreshProtect™, ~~and~~which ~~CitruWash™ are~~was ~~mainly~~issued ~~targeted~~on toNovember 30, 2012 (the US“EPA ~~market~~Approval”). On May 29, ~~while~~2013 ~~CitrusGuard™~~we ~~and~~received ~~Super~~a ~~Clean™~~certificate ~~are~~of ~~mainly~~registration ~~targeted~~for toFreshProtect™ from the ~~Israeli~~California Department of Pesticide Regulation (“CDPR”), which enables us to market and ~~other international~~sell ~~markets~~this product in California. CDPR has recently renewed this registration until December 31, 2014.

On FreshProtect™ ~~December~~has ~~14,~~been ~~2012~~in development since 2009. In January 2011, we ~~received~~successfully anconcluded ~~unconditional Notice~~a commercial trial on easy peel citrus fruits in cooperation with Sun Pacific Inc. (“Sun Pacific”), one of ~~Registration~~the ~~from~~biggest suppliers of fruits and vegetables in the United States, ~~Environmental~~leading ~~Protection~~in ~~Agency~~citrus ~~(the~~and ~~“EPA”)~~other ~~for~~products. In January-February 2013 we performed large-scale commercial trial with Sun Pacific, utilizing both CitruWash™ and FreshProtect™~~, issued~~ in the treatment process on ~~November~~one 30packing line. The trial also involved Decco ltd., ~~2012~~a ~~(the~~leading ~~“EPA~~US ~~Approval”)~~post-harvest services company, which is considered by our management as a potential distributor of our products. The results of this trial were successful, indicating that our products have prevented decay more efficiently in comparison to other current treatments and materials.

~~FreshProtect™~~- has been in development since 2009. In January 2011, we successfully concluded a commercial trial on easy peel citrus fruits in cooperation with Sun Pacific Inc. (“Sun Pacific”), a leading citrus packaging house in California. In October 2011, we concluded another commercial trial on navel oranges with Paramount Inc. (“Paramount”), another leading packaging house based in California. Both trials were successful and indicated significant advantages of utilizing FreshProtect™ on citrus fruits in comparison to other current treatments and materials, while reducing the residue level of pesticides on the fruits to the level of less than 1.5 ppm (part per million). Such significantly low residue level complies with the stringent standards of leading European food chains. Further, the shelf life, quality, and quantity of fruits treated by FreshProtect™ were not adversely affected by reduction of the pesticide residue level.-

~~Commercialization~~ During the fourth quarter of 2013 our FreshProtect™ in and CitruWash™ were commercially implemented by Decco, for the ~~State~~post-harvest treatment of ~~California~~clementines iswith ~~subject~~Sun Pacific in Maricopa CA. Total sales to ~~approval~~Decco byduring the ~~State~~fourth quarter of ~~California~~2013 ~~Environmental~~amounted ~~Protection~~to ~~Agency~~approximately ~~(“CAL EPA”)~~$100,000. ~~The~~ ~~Company’s~~Total ~~pending~~amount ~~application~~of produce treated with our products amounted to approximately 20,000 tons. Based on the ~~CAL~~tests ~~EPA~~conducted isby inSun Pacific at the end of clementine season, Sun Pacific has recently expressed its ~~final~~satisfaction ~~stages~~of the appearance of the produce which had been treated with FreshProtect™ and ~~our~~CitruWash™, ~~management~~updated ~~believes~~us that anit ~~approval~~desires ~~by the~~to ~~CAL~~implement ~~EPA~~our ~~will~~products beon ~~obtained~~its asclementine ~~early~~packing aslines ~~the~~in ~~second~~upcoming clementine season (fourth quarter of 2014) and to further implement our products on lemon. However, Sun Pacific has stated that due to its extremely dry climate conditions, clementine’s 2013 season does not allow Sun Pacific to fully assess the efficacy of FreshProtect™ and CitruWash™, and therefore Sun Pacific intends to keep assessing FreshProtect™ and CitruWash™ performances under tougher climate conditions.

5 The Company has recently commenced an additional trial with Pace International LLC, another leading US post-harvest services company, which is considered by our management as a potential distributor of our products.

~~In January-February 2013 we performed large-scale~~ ~~commercial~~Simultaneously ~~trial with Sun Pacific, utilizing both CitruWash™ (as a cleanser) and FreshProtect™ (as a sanitizer) in~~ the ~~treatment~~Company ~~process on one packing line. Based upon an opinion received from our regulatory counsel, CitruWash™~~ is ~~not~~in anegotiations ~~pesticide~~with ~~and~~other ~~is not subject to the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”). The trial also involved a large~~ post-harvest services ~~company,~~companies ~~which~~for isconducting ~~considered~~efficacy byproof ~~our~~tests, ~~management~~successful ~~as a potential distributor of our products. The preliminary~~ results of ~~this~~which ~~trial~~will ~~were successful~~lead, ~~indicating~~as ~~that~~the ~~our~~Company ~~products~~believes, ~~have~~to ~~prevented~~an ~~decay~~increase ~~more efficiently~~ in ~~comparison to~~sales ~~other current treatments and materials. As~~ of ~~the~~FreshProtect™ ~~date of this report, we are negotiating with Sun Pacific~~ and ~~post-harvest services company as to further commercial implementation of our products~~CitruWash™.

In ~~March~~October ~~and April 2010~~2011, we ~~successfully completed~~concluded ~~small~~a ~~scale~~commercial ~~trials,~~trial ason ~~well~~navel asoranges ~~commercial~~with ~~trials,~~Paramount ~~applying~~Inc. ~~CitrusGuard™~~(“Paramount”), ~~for~~a ~~the~~leading ~~treatment~~packaging ofhouse ~~Mandarins,~~based ~~which is~~in ~~one~~California. ofBoth ~~the~~trials ~~most~~were ~~sensitive~~successful ~~and~~as ~~problematic~~they ~~Citrus,~~proved assignificant ~~well~~advantages asof ~~the~~utilizing ~~treatment~~FreshProtect™ ofon ~~Grapefruits.~~citrus ~~The~~fruits ~~trials~~in ~~were~~comparison ~~carried~~to ~~out~~other ~~with Mehadrin~~current ~~Ltd.~~treatments ~~(“Mehadrin”)~~and materials, ~~the~~while ~~largest~~reducing ~~packing~~the ~~house~~residue inlevel ~~Israel,~~of ~~which~~pesticides ~~exports~~on ~~citrus~~the fruits to the ~~United~~level ~~States~~of ~~and Europe~~less than 1.5 Inppm ~~these~~(part ~~trials~~per million), ~~CitrusGuard™~~without ~~demonstrated~~adversely ~~superiority~~affecting inthe ~~extending~~ shelf life, ~~compared~~quality, ~~with~~and quantity of the ~~current~~fruits. ~~treatment that~~Such isa ~~being~~significantly ~~used,~~low ~~which~~residue ~~requires~~level ~~almost~~complies ~~double~~with the ~~amount~~stringent standards of ~~pesticides~~leading toEuropean ~~reach~~food ~~the required shelf life~~chains.

As In aMarch ~~result~~and ofApril ~~these~~2010, ~~commercial~~we successfully completed small scale trials, ~~Mehadrin~~ ~~has~~as ~~decided~~well toas ~~commercially~~commercial ~~implement~~trials, applying CitrusGuard™, infor the treatment ~~process~~of ~~utilized~~Mandarins, inwhich ~~its~~is ~~packing~~one ~~lines.~~of ~~Those lines~~the ~~pack~~most ~~mainly~~sensitive ~~mandarins~~ and ~~grapefruits~~problematic ~~and~~citrus ~~small~~fruits, ~~volumes~~as ofwell ~~oranges~~as ~~and~~the ~~lemons~~treatment of grapefruits. ~~Mehadrin~~The istrials ~~also~~were ~~implementing~~carried ~~Super~~out ~~Clean™ cleanser~~with onMehadrin ~~its~~Ltd. ~~lines~~(“Mehadrin”), asthe alargest ~~part~~packing ofhouse ~~our~~in ~~model of comprehensive treatment~~Israel, which ~~utilizes~~exports ~~our~~citrus ~~products~~fruits into ~~different~~the ~~phases~~United ofStates ~~the cleaning~~and ~~process~~Europe. ~~The~~In ~~total~~these ~~quantity~~trials, ofCitrusGuard™ ~~citrus~~demonstrated ~~fruits~~superiority ~~which~~in ~~were~~extending ~~treated~~shelf bylife, ~~Mehadrin~~compared with ~~CitrusGuard™~~the ~~and~~current ~~SuperClean™ during~~treatment ~~the~~that ~~citrus~~is ~~season~~being used, which requires almost double the amount of ~~2011-2012~~pesticides isto ~~over~~reach ~~60,000~~the ~~tons~~required shelf life.

~~Sweet~~ As ~~Potatoes~~a ~~Treatment~~result ~~Products~~of these commercial trials, Mehadrin has decided to commercially implement CitrusGuard™, in the treatment process utilized in its packing lines. Those lines pack mainly mandarins and grapefruits and small volumes of oranges and lemons. Mehadrin is also implementing Super Clean™ cleanser on its lines, as a part of our model of comprehensive treatment, which utilizes our products in different phases of the cleaning process. During the years 2012 and 2013 Mehadrin purchased our products in total aggregate amounts of approximately 70,000 and 90,000 liters respectively.

~~Sweet~~ The ~~potatoes~~recent ~~are~~results ~~the~~of ~~seventh~~additional ~~largest crop~~trials that had been performed independently by Mehadrin indicated that our products had prevented decay more effectively in ~~the~~comparison ~~world~~to other current treatment materials utilized by Mehadrin. ~~According~~Accordingly, Mehadrin has recently resolved to ~~the~~replace ~~Food~~their ~~and~~current ~~Agriculture~~treatment ~~Organization~~materials ofwith ~~the~~Pimi’s ~~United~~products ~~Nations,~~and ~~the~~have ~~total~~already ~~crop~~placed ofadditional ~~the~~orders 20with ~~major~~us. ~~producers~~ They have also sent letters of ~~Potatoes~~recommendation into ~~the~~their ~~year~~outsourcing ~~2011~~packers, ~~was~~who ~~approximately~~process 99not ~~million~~only ~~metric~~Mehadrin’s ~~tons.~~produce, ~~According~~but toalso the ~~National~~produce ~~Agricultural~~of ~~Statistics~~their ~~Service~~own. Following this recommendation, ~~USDA,~~ inseveral ~~2010~~additional ~~the~~packing ~~United~~houses ~~States~~in ~~produced~~Israel ~~approximately~~have ~~1.08~~already ~~million~~commenced ~~metric~~utilizing ~~tons~~our ofproducts ~~sweet~~and ~~potatoes,~~several ~~with~~others aentered ~~production~~into ~~value~~negotiations ofwith ~~$478 million~~us.

~~SweetGuard™~~ In isaddition, ~~designed~~Mehadrin, ~~for~~one ~~cleaning the~~of ~~surface~~our major clients, has recently alleged incurring certain damages, amounting to approximately $100,000, as a result of ~~sweet~~the ~~potatoes~~unsuitability between the wax material implemented by Mehadrin and ~~improving~~our ~~the~~products. ~~appearance~~However, ofbased on the ~~treated~~information ~~sweet~~and ~~potatoes~~documentation in our possession, we believe that our products were implemented by Mehadrin not in compliance with our application protocol provided to Mehadrin. ~~The~~We ~~cleaning~~have referred an appropriate request to our insurer regarding a possible insurance claim under our product liability policy, and are currently reviewing this matter further. However, our management believes considering the effect of the ~~surface~~insurance ~~reduces~~in ~~decay of~~place, ~~sweet~~that ~~potatoes~~the ~~which~~effect ~~may~~of ~~occur~~these ~~during~~claims, ~~storage~~if any, ~~shipment~~will ~~and~~not ~~shelf~~be ~~life~~significant.

~~SweetGuard~~ Citrus Cleansers - SuperClean™ and CitruWash™

In The ~~January~~cleanser ~~2010,~~SuperClean™ we(in ~~completed~~Israel) ~~our~~(also ~~first commercial~~known ~~trial~~as ~~utilizing SweetGuard~~CitruWash™ ~~for~~in the ~~treatment~~US) ofis ~~sweet~~formulated ~~potatoes~~to clean citrus fruits during packaging. ~~Similar~~The cleanser was developed to ~~Pimi’s~~replace ~~CitrusGuard™~~soap and ~~CitruWash™,~~ ~~SweetGuard™~~Chlorine iswhich ~~designed~~are ~~for~~currently ~~improving~~used ~~sweet~~as ~~potatoes~~cleansers. A good cleaning ~~properties.~~practice ~~SweetGuard™~~reduces ~~causes~~surface ~~the sweet~~dirt ~~potatoes’~~and ~~bright~~soil, ~~appearance~~which ~~due~~consequently reduces micro flora load prior to ~~its~~spreading ~~cleaning~~the ~~effects~~fruits with fungicides that prevents mold contamination.

~~The trials were carried out in two cooperative~~ ~~farms~~CitruWash™ inis ~~Israel,~~mainly ~~with~~targeted ~~two separate packing houses that export sweet potatoes from Israel~~ to ~~Europe.~~the InUS ~~these trials~~market, ~~SweetGuard™ demonstrated~~while ~~efficacy~~and inSuperClean™ ~~various~~is ~~areas~~mainly oftargeted ~~post-harvest~~to ~~treatment~~the ofIsraeli ~~crop, which came from different growing soils. We have been advised by these clients that consumers presented with treated~~ and ~~untreated~~other ~~sweet~~international ~~potatoes~~markets; however, on the ~~same~~products ~~shelf,~~are ~~preferred~~identical ~~those which~~and ~~were~~named ~~cleaned~~differently ~~with~~for ~~SweetGuard™~~commercial reasons.

As- a6 result of these trials, the two cooperative farms determined to include SweetGuard™ in their regular working program for the packing line. The total quantity of sweet potatoes which was treated by SweetGuard™ in 2012 was approximately 12,000 tons.-

As The ofregulatory ~~the~~agency ~~date~~that ofis ~~this~~responsible ~~report,~~for weregulating ~~have~~our ~~successfully finalized~~products ~~several~~that ~~on-line~~make ~~commercial~~cleaning ~~tests~~claims ~~with~~on ~~several~~raw ~~leading~~agricultural ~~sweet~~commodities, ~~potato~~such ~~packers~~as ~~located~~CitruWash™, inis the ~~U.S.,~~Food and ~~have~~Drug ~~received~~Administration ~~our first purchase order for SweetGuard™~~(“FDA”).

6 Unlike the EPA, the FDA does not approve cleanser products. Instead, all of the ingredients comprising cleansing products must have the appropriate clearance, under the Federal Food, Drug and Cosmetic Act (“FFDCA”), for use on the target food commodities. All of the ingredients in CitruWash™ are compliant with the FFDCA. We have been advised by our regulatory counsel that CitruWash™ is classified as a cleanser under applicable U.S. laws and regulations.

~~Potato~~ Sweet Potatoes Treatment Products

~~The~~ ~~Potato Industry - the Need to Replace CIPC and prolong shelf life~~ SweetGuard™

~~Potatoes are the fourth largest crop in~~ ~~the~~SweetGuard™ ~~world.~~is ~~According~~designed to ~~the~~clean ~~Food and Agriculture Organization of~~ the ~~United~~surface ~~Nations, the total crop~~ of ~~the~~sweet 20potatoes ~~major~~and ~~producers~~improve ~~of Potatoes in~~ the ~~year~~appearance ~~2011 was approximately 294 million metric tons (see: http://faostat.fao.org/site/339/default.aspx). We estimate that table potatoes are 30%-40%~~ of ~~the~~treated ~~total~~sweet ~~world produced~~ potatoes. InCleaning ~~developed~~the ~~countries~~surface ~~roughly one third~~ of ~~the crop~~sweet ~~is used for direct use by households (table~~ potatoes) ~~and~~reduces ~~the rest for processing~~decay, ~~such~~which asmay ~~chips/crisps~~occur ~~and~~during ~~French fries (processed potatoes). In non-developed countries~~storage, ~~80%~~shipment ~~of the crop is used as table potatoes~~ and ~~the~~shelf ~~rest as processed potatoes~~life. ~~Therefore we estimate that the annual crop of potatoes is divided between 35% table potatoes and 65% processed potatoes.~~

~~Stored potatoes begin sprouting, in most~~ ~~circumstances,~~In ~~after~~January ~~two to three months in storage. Effective sprout control is a major component of managing stored potato quality. If proper sprout control is not maintained~~2010, ~~significant~~we ~~reduction~~completed toour ~~tuber~~first ~~quality~~commercial ~~will~~trial ~~occur,~~utilizing ~~and~~SweetGuard™ ~~the ability to store~~ for ~~extended periods of time is diminished. Sprouting causes high yield loss and low quality produce for consumers and for processing. Sprouting is also associated with~~ the ~~conversion~~treatment of ~~starch~~sweet ~~to sugars, which is undesirable in the processing industry, due to the darkening effect of fried products. In the table~~ potatoes ~~industry, visible sprouts on potatoes are unacceptable to consumers~~.

The ~~primary method~~trials were carried out in two cooperative farms in Israel, having two separate packing houses that export sweet potatoes to ~~control~~Europe. ~~sprouting~~The trials demonstrated SweetGuard’s™ efficacy in ~~storage~~various isareas ~~with~~of post-harvest ~~application~~treatment of ~~isopropyl~~crop ~~N-(3-chlorphenyl)~~coming ~~carbamate~~from ~~("Chlorpropham" or~~different ~~"CICP")~~growing asoils. ~~synthetic~~We ~~hormone~~were advised that isconsumers ~~used~~that ~~worldwide.~~were ~~For~~presented ~~the~~with ~~toxic~~treated ~~effects~~and ofuntreated ~~CIPC~~sweet ~~see:~~potatoes ~~http://pmep~~had preferred those which were cleaned with SweetGuard™.~~cce.cornell.edu/profiles/extoxnet/carbaryl-dicrotophos/chlorpropham-ext.html.~~

~~Regulators such as the European Commission~~ ~~("The~~Based ~~EC")~~on ~~and~~these ~~United~~trials, ~~States~~the ~~EPA~~two ~~are~~participating ~~pushing~~cooperative ~~for~~farms ~~substantial~~have ~~reduction~~decided ofto ~~permitted~~include ~~maximum~~SweetGuard™ ~~residues level of CIPC~~ in ~~crops,~~ ~~livestock~~their ~~and~~regular ~~water~~packaging. ~~The~~Accordingly, EUapproximately ~~has issued in 2008~~12,000 aand ~~Directive (196/2008 of January 29~~14,000 ~~2008)~~tons ~~which sets the MRL~~ of ~~CIPC~~sweet ~~to 10mg per ton. The UK has recently regulated that~~ potatoes were treated with ~~more~~SweetGuard™ ~~than~~in ~~36g~~2012 ofand ~~CIPC per ton should only be used for commercial processing. The British Potato Council together with the industry~~ in ~~the~~2013 ~~UK, have set a maximum of 63~~respectively.~~75mg~~ ~~per ton for commercial processing.~~

In ~~the~~2012 ~~US, in~~we ~~August~~successfully ~~1996,~~finalized aseveral ~~federal~~on-line ~~Registration~~commercial ~~Eligibility~~tests ~~Decision~~with ~~(RED)~~leading ~~for~~sweet ~~CIPC~~potato ~~was~~packers ~~issued~~located byin the ~~EPA for the continued use of this chemical as sprout inhibitor of harvested potatoes in storage~~U.S., Aand ~~mandate~~during ~~regulated~~2013 inreceived ~~2002~~US bypurchase ~~the~~orders ~~Environmental~~for ~~Protection~~SweetGuard™ ~~Agency, resulted~~ in aan ~~reduction~~aggregate inamount ~~allowable CIPC tolerance~~ of ~~residue,~~approximately ~~on fresh potatoes from 50ppm to 30ppm per kg. Residues as high as 40 ppm are permitted by EPA on wet peel potatoes~~$12, ~~which goes to life feed stock~~000. ~~Similar consequences of CIPC reassessment are common in potato-growing region in the world such as Canada and Australia. In Sweden CIPC has been banned for use since 2005.~~

~~SpuDefender~~ Potato ™Treatment Products

~~Pimi~~ The ~~develops~~Potato ~~the~~Industry ~~SpuDefender™,~~- ~~which is~~the ~~aimed~~Need atto ~~substituting~~Replace CIPC asand aprolong ~~sprout inhibitor, increasing~~ shelf life, ~~and preventing quality reduction.~~

~~SpuDefender™~~ Potatoes isare athe ~~formulated~~fourth ~~STHP designed~~largest ~~for~~crop ~~use~~ in ~~potato~~the ~~storage~~world. ~~treatment~~According to ~~inhibit~~the ~~sprouting.~~Food ~~SpuDefender™~~and isAgriculture ~~patent~~Organization ~~protected~~of the United Nations, the total crop of Potatoes in ~~several~~2012 ~~countries~~was approximately 368 million metric tons. ~~SpuDefender™~~ isWe ~~applied~~estimate inthat ~~stored~~table potatoes ~~inside~~are ~~storehouses,~~30%-40% orof onthe ~~packing~~total ~~lines,~~world byproduced ~~using~~potatoes. ~~Pimi’s~~In ~~proprietary~~developed ~~storage application~~countries ~~protocol~~around ~~which~~one third of the crop is ~~based~~used ondirectly anby ~~especially~~households ~~designed~~(table ~~system~~potatoes) and ~~ultrasonic~~the ~~atomizers~~rest toare ~~provide~~processed ~~optimum~~(and ~~results~~turned into chips/crisps and French fries). In non-developed countries, 80% of the crop is used as table potatoes and the rest as processed potatoes. Therefore we estimate that the annual crop of potatoes is divided between 35% table potatoes and 65% processed potatoes.

~~SpuDefender™ is an environmental~~ ~~friendly~~Stored ~~external~~potatoes ~~treatment~~begin sprouting, ~~and~~in ~~therefore~~most circumstances, after ~~washing~~two itto ~~leaves~~three nomonths ~~residue~~in storage. AtEffective ~~the~~sprout ~~end~~control ofis ~~the~~a ~~application~~major ~~process~~component ~~the active ingredient~~ of ~~SpuDefender™~~managing ~~decomposes~~stored ~~into~~potatoes’ ~~water~~quality. ~~and oxygen~~Indeed, ~~unlike~~if ~~existing~~proper ~~chemical~~sprout ~~alternatives,~~control ~~such~~is asnot ~~Isopropyl N-(3-chlorophenyl)~~maintained, ~~Carbamate~~tuber ~~("Chlorpropham"~~quality orsignificantly ~~"CIPC")~~decreases ~~(see~~and ~~“The Potato Industry -~~ the ~~Need~~ability to ~~Replace CIPC~~store ~~and~~potatoes ~~prolong~~for ~~shelf~~extended ~~life”~~periods ~~elsewhere~~of intime ~~this~~is ~~report)~~diminished. AsSprouting ofcauses ~~the~~high ~~date~~yield ofloss ~~this~~and ~~report~~low ~~SpuDefender™~~quality ~~has~~produce ~~proven to~~for beconsumers ~~effective~~and infor ~~controlling~~processing. ~~potato~~Sprouting ~~storage~~is ~~decay,~~also ~~while~~associated ~~reducing~~with the ~~residue~~conversion ~~level~~ of ~~pesticides~~starch onto ~~treated~~sugars, ~~potatoes.~~which ~~Its~~is ~~sprout control~~undesirable ~~ability~~in ~~(required~~the processing industry, due to ~~effectively~~the ~~substitute~~darkening ~~CIPC)~~effect isof ~~under~~fried ~~further~~products. ~~development~~In ~~and~~the ~~testing,~~table ~~and~~potatoes ~~therefore~~industry, ~~SpuDefender™ is~~visible ~~not~~sprouts ~~marketed~~on ~~yet~~potatoes asare ~~sprout~~unacceptable ~~inhibitor~~to consumers.

~~Other~~ The ~~Fruits~~primary ~~and~~method ~~Vegetables Storage~~to ~~Control~~control ~~Line~~sprouting in storage is through post-harvest application of ~~Products~~isopropyl N-(3-chlorphenyl) carbamate ("Chlorpropham" or "CICP") – a synthetic hormone that is used worldwide. For the toxic effects of CIPC see: http://pmep.cce.cornell.edu/profiles/extoxnet/carbaryl-dicrotophos/chlorpropham-ext.html.

7 Regulators such as the European Commission ("The EC") and United States EPA are advocating for substantial reduction of permitted maximum residues level of CIPC in crops, livestock and water. In 2008, the EU has issued a Directive (196/2008 of January 29, 2008) which sets the MRL of CIPC to 10mg per ton. The UK has recently regulated that potatoes treated with more than 36g of CIPC per ton should only be used for commercial processing. The British Potato Council along with the industry in the UK, have set a maximum of 63.75mg per ton for commercial processing.

~~StorGuard™~~- 7 -

~~StorGuard™~~ In ~~was~~August ~~developed~~1996, ~~for extending~~a US EPA issued a federal Registration Eligibility Decision (RED) regarding the ~~shelf~~continued ~~life~~use of ~~fruits~~CIPC ~~and~~as ~~vegetables~~sprout ininhibitor ~~storage~~of harvested stored potatoes. In 2002, byEPA ~~reducing~~reduced ~~air~~the ~~pathogens~~allowable inlevel ~~storage~~of ~~rooms,~~CIPC aon ~~treatment~~fresh ~~which~~potatoes ~~improves storage~~from ~~conditions~~50ppm to 30ppm per kg. ~~StorGuard™~~ ~~enriches~~EPA ~~storage~~permitted ~~room~~residues ~~with~~as ~~Oxygen~~high ~~and~~as ~~humidity~~40 ppm on wet peel potatoes, which ~~are~~go ~~key~~to ~~factors~~life feed stock. Similar consequences of CIPC reassessment occurred in other potato-growing regions in the world, such as Canada and Australia. In Sweden CIPC has been banned for ~~good storability~~use ~~process~~since 2005. The ~~active~~aforementioned ~~ingredient~~limitations ofemphasize ~~StorGuard™~~the isindustry’s ~~STHP,~~urgent ~~which~~need ~~has~~of ~~abilities~~products tothat ~~oxidize~~will ~~air~~provide ~~spores~~proper ~~[see~~sprout ~~EPA Hydrogen~~control ~~Peroxide~~without ~~(000595)~~leaving ~~Federal~~the ~~Register~~toxic ~~Notices~~residues ~~at:~~of ~~http://www~~CIPC.~~epa.gov/pesticides/biopesticides/ingredients/fr~~ ~~notices/frnotices 000595~~Our products are designed to provide same and meet the limitations introduced by the regulators worldwide.~~htm].~~

~~OnionGuard~~ SpuDefender ™

As Pimi ~~of the date of this report there~~ is no ~~known~~developing ~~effective treatment to reduce Botrytis Neck Rot and Aspergillus Black Mold, which are~~ the ~~two~~SpuDefender™ ~~main onion diseases. The two diseases can damage up~~ to 40substitute ~~percent~~CIPC ofas ana ~~onion~~sprout ~~harvest. In October 2009~~inhibitor, wewhile ~~started~~increasing ashelf ~~trial~~life ~~with Idaho State University~~ and ~~McCain~~ ~~Foods~~protecting ~~Limited~~quality. ~~(“McCain”) to extend storability of onions by using OnionGuard~~SpuDefender™, ~~which~~ is a ~~formula~~formulated ~~comprised of~~STHP ~~our~~designed ~~StorGuard™. We ran a trial comparing OnionGuard™~~ to ~~current~~inhibit ~~storage~~sprouting ~~methods which do not utilize treatment. The test was performed~~ in ~~cooperation~~stored ~~with McCain, which stores onions for its onion rings production line and encountered storability problems~~potatoes. ~~The~~SpuDefender™ ~~results~~is ~~received~~patent inprotected ~~June 2010 demonstrated improvement of storability~~ in ~~room~~several ~~temperature, as well as in cold storage temperature, of up to 40%~~countries. ~~After~~It ~~six~~is ~~months~~applied ~~of storage, defects were reduced from 35 percent~~ to 15potatoes ~~percent.~~stored ~~The trial’s results were presented to one of the leading retailers~~ in ~~the US who subsequently ordered a commercial test of 20~~storehouses,~~000~~ ~~pounds~~or ~~of onions, which started~~ on ~~October~~packing ~~2010~~lines, ~~under~~by ~~the~~using ~~supervision~~Pimi’s ofproprietary ~~the~~storage ~~Washington~~application ~~State~~protocol ~~University.~~which ~~Initial~~is ~~results~~based ~~from~~on ~~January~~a ~~2011~~unique ~~presented high~~designed ~~performance~~system of ~~OnionGuard™.~~ultrasonic ~~The~~atomizers ~~trial was not completed due~~ to ~~release~~provide ofmaximum ~~the onions to the market prior to the receipt of final~~ results.

~~Pimi~~ SpuDefender™ ~~anticipates~~is ~~starting~~an ~~EPA~~environmental ~~registration~~ friendly external treatment, and therefore, after washing it leaves no residue. At the end of ~~OnionGuard~~the application process, the active ingredient of SpuDefender™ ~~once~~decomposes ~~sufficient~~into ~~working~~water ~~capital~~and isoxygen, ~~available~~unlike existing chemical alternatives, such as Isopropyl N-(3-chlorophenyl) Carbamate ("Chlorpropham" or "CIPC") (see “The Potato Industry - the Need to ~~initiate~~Replace CIPC and prolong shelf life” elsewhere in this report). As of the ~~process~~date of this report SpuDefender™ has proven to be effective in controlling decay in seed potatoes, while reducing the residue level of pesticides on treated potatoes. Our ability to evenly distribute the product in large storehouses (required to effectively substitute CIPC) is under further development and testing.

~~Products~~ Other ~~planned~~Fruits ~~for~~and ~~Research~~Vegetables ~~and~~Storage ~~Development~~Control Line of Products

~~Pimi plans to extend its line of products~~ inStorGuard™ ~~the coming years by devoting substantial R&D for other areas, where we have identified a market need for environmental friendly solutions.~~

~~SeedGuard~~ StorGuard™ was developed for extending the shelf life of stored fruits and vegetables, by reducing air pathogens in storage rooms. To improve storage conditions, StorGuard™ enriches storage rooms with Oxygen and humidity, which are key factors for good storability. The active ingredient of StorGuard™ is STHP, which has abilities to oxidize air spores [see EPA Hydrogen Peroxide (000595) Federal Register Notices at: http://www.epa.gov/pesticides/biopesticides/ingredients/fr notices/frnotices 000595.htm].

~~Potatoes are susceptible to a variety of~~ diseases that lower yields and tuber quality which might cause significant losses in the quantities and quality of crops. What's more, pathogens accumulate in successive cloning of tubers and in the soil used to grow them. That is why sustainable potato production depends on a constantly renewed supply of disease-free planting material. According to numerous international regulations, seeds, of all types, must be disinfected to prevent the transfer of diseases between countries, between seeds, from seeds to soil, and from seeds to crop.OnionGuard™

~~Seed~~ As ~~tuber~~of ~~disinfection~~the ~~treatments~~date ~~are used~~of this report management believes there is no known effective treatment to reduce ~~seed~~Botrytis ~~borne~~Neck Rot and Aspergillus Black Mold, which are the two main onion diseases. ~~However~~These ~~organic~~two ~~mercury~~diseases ~~which~~can ~~has~~damage ~~been~~up ~~used~~to ~~for~~40 ~~this~~percent ~~purpose~~of ~~has~~an ~~been~~onion ~~banned~~harvest. ~~and~~In ~~the~~October ~~alternative agents~~2009, ~~available~~we ~~are~~initiated ~~effective~~a ~~against~~trial ~~only~~with ~~some~~Idaho State University and McCain Foods Limited (“McCain”) to extend storability of ~~the~~onions ~~pathogens.~~by ~~Moreover~~using anOnionGuard™ ~~increasing~~– ~~number~~a formula comprised of ~~pathogens~~our ~~are~~StorGuard™. ~~found~~We ran a trial comparing OnionGuard™ to becurrent ~~unaffected by~~storage ~~any~~methods. ofThe ~~these~~trial ~~treatments~~was ~~(see~~performed ~~Lea~~in ~~Tsror~~cooperation with McCain, which stores onions for its onion rings production line and alencountered storability problems. ~~"Survey~~The ofresults ~~Bacterial~~received ~~and~~in ~~Fungal~~June ~~Seed~~2010 ~~borne~~demonstrated ~~diseases~~a 40% improvement in ~~Imported~~room ~~and~~temperature ~~Domestic Seed~~storability, ~~Tubers"~~as ~~(1999)~~well atas ~~http://www~~in cold temperature storability.~~pimiagro~~ Moreover, after six months of storage, defects were reduced from 35 percent to 15 percent.~~com/upload_pdf/1241461817_4~~ The trial’s results were presented to one of the leading retailers in the US who subsequently ordered a commercial test of 20,000 pounds of onions.~~pdf)~~ Such a test started on October 2010, under the supervision of the Washington State University. Nevertheless, while initial results from January 2011 presented high performance of OnionGuard™, the test was never completed due to the release of the onions to the market prior to the receipt of final results.

Pimi ~~has~~anticipates ~~embarked~~starting onEPA aregistration ~~R&D plan for potato-seed applications, aimed for the development~~ of anOnionGuard™ ~~innovative,~~once ~~holistic~~sufficient ~~and~~working ~~ecological~~capital solution to treat potato seeds throughout their lifecycle, which was approved for receiving grants from the Israeli Chief Scientist Office (see "Governmental Support" elsewhere in this report). SeedGuard ™ is ~~designed~~available to ~~provide~~initiate ~~added-value to~~ the ~~seed producer and potato growers owing to its long lasting disinfectant effect, versus existing aggressive chemical treatments which are not environmental friendly solutions~~process.

~~Management estimates that additional substantial~~ ~~R&D~~Products isplanned ~~required~~for toResearch ~~tailor~~and SeedGuard™ to specific seeds, which will take several years of work. Therefore management has decided to postpone the development of this product until full commercialization of its other products. As of the date of this report, the progress of product development is delayed until sufficient funds are raised.Development

~~Performic~~ Pimi ~~Acid~~plans to extend its line of products in the coming years by investing substantial amounts of R&D in other fields, where we have identified a market need for environmental friendly solutions.

~~Pimi has begun conducting research in the field of performic acid based eco~~-~~friendly~~ ~~solutions~~8 (see “Intellectual Property” elsewhere in this report). Additionally, Pimi has initiated discussions with a leading global chemical producer, for the purpose of exploring and evaluatingcommercial development in this field.-

8 SeedGuard ™

~~Our~~ Potatoes ~~Technology~~are susceptible to a variety of diseases that lower yields and tuber potentially causing significant losses in the quantities and quality of crops. Pathogens accumulate in successive cloning of tubers and in the soil used to grow them. Hence, sustainable potatoes production depends on a constantly renewed supply of disease-free planting material. According to numerous international regulations, seeds of all types must be disinfected to prevent the transfer of diseases between countries, between seeds, from seeds to soil, and between seeds and crop.

~~Pimi’s~~ Tuber ~~technology~~disinfection ~~for~~treatments ~~increasing~~ are used to reduce seed borne diseases. Nevertheless, the ~~storability~~use of organic mercury for this purpose was banned and ~~shelf~~the ~~life~~alternative treatments are ineffective against many of ~~fruits~~the ~~and~~pathogens. ~~vegetables~~Moreover isan ~~based~~increasing onnumber aof ~~unique~~pathogens ~~proprietary~~were ~~solution~~found ~~using~~to ~~only~~be ~~edible~~unaffected ~~products~~by any of these treatments (see Lea Tsror and a ~~proprietary~~al. ~~designed~~"Survey ~~delivery~~of ~~system~~Bacterial and Fungal Seed borne diseases in Imported and Domestic Seed Tubers" (1999) at http://www.pimiagro.com/upload_pdf/1241461817_4.pdf).

~~Active~~ Pimi ~~Ingredient~~has embarked on an R&D plan for potato-seed ~~Stabilized~~applications, ~~Hydrogen Peroxide~~hoping to develop an innovative, holistic and ecological solution to treat potato seeds throughout their lifecycle. This plan was approved for the receipt of grants from the Israeli Chief Scientist Office (~~STHP~~see "Governmental Support" elsewhere in this report). SeedGuard’s™ long lasting disinfectant effect is designed to benefit seed producers and potato growers and replace existing aggressive chemical treatments which are not environmental friendly solutions.

Pimi’s ~~has~~management ~~developed~~estimates athat ~~patented~~additional ~~Stabilized Hydrogen~~substantial ~~Peroxide~~R&D ~~(H2O2) formula which includes other edible ingredients. Hydrogen Peroxide~~ is ~~widely~~required ~~used~~to intailor ~~various~~SeedGuard™ ~~industrial applications,~~to ~~such~~specific ~~as: rocket fuel~~seeds, ~~wound~~which ~~disinfection,~~requires ~~hair~~several ~~coloring~~years ~~and~~of ~~teeth whitening~~work. ~~The formulations were developed by Nimrod Ben Yehuda~~Therefore, Pimi’s ~~co-founder,~~management ~~with~~has decided to postpone the ~~assistance~~development of ~~leading~~this ~~research~~product ~~institutes,~~until ~~which~~its ~~include~~other ~~the~~products ~~Hebrew~~are ~~University~~fully ~~of Jerusalem~~commercialized. Accordingly, ~~the~~as ~~Volcani~~of ~~Institute~~the date of ~~Agricultural~~this ~~Research~~report, ~~and~~SeedGuard’s™ ~~the~~development ~~Technion~~is –delayed ~~Israel~~until ~~Institute~~sufficient offunds ~~Technology~~are raised.

~~Fogging~~ Performic ~~delivery system~~Acid

~~By harnessing the advanced fogging technology~~ ~~of ultrasonic micro Droplets (which was developed by third parties and was upgraded by~~ Pimi's ~~management)~~has ~~and~~begun ~~the~~researching ~~special distribution method developed by~~ the ~~Company,~~field ~~Pimi's Technology is capable~~ of ~~distributing~~performic aacid-based, ~~lower~~eco-friendly ~~than~~solutions 10(see ~~micron~~“Intellectual ~~droplet~~Property” ~~cloud~~elsewhere in ~~the~~this ~~storage room~~report). ~~This ultrasonic droplet diameter and the application method generate “Dry Fog”~~Additionally, ~~forms a highly effective vehicle for distributing~~ Pimi’s ~~products.~~has Anconsulted ~~added benefit comes with the ability to raise relative humidity to~~ a ~~very~~leading ~~high~~global ~~level of~~chemical ~~99%~~producer ~~without~~for ~~causing~~ the ~~devastating~~purpose ~~effects~~ of aexploring ~~condensation~~and ~~event.~~evaluating ~~The~~the ~~system~~possibility ~~is fully automated, thus enabling a cost-effective implementation for customers, reducing many hours~~ of ~~labor~~commercial ~~and~~development ~~minimizing~~in ~~user~~this ~~intervention~~field.

~~Manufacturing~~ Device ~~Process~~for ~~Supply~~Treatment of ~~Raw~~Fruits ~~Material~~and Vegetables in Transit

~~Pimi’s~~ We ~~products~~ are currently ~~produced by~~developing ~~Seeler~~a ~~Industries,~~disposable ~~Inc.~~adjustable substance diffuser device, indesigned ~~their~~to ~~plant~~utilize ~~located~~with our products on fruits and vegetables transported in ~~Joliet~~containers. This unique solution shall prolong shelf life, ~~Illinois~~reduce ~~("Seeler")~~product deterioration losses and ~~also~~keep byfreshness ~~Zohar~~of ~~Dalia~~transported ~~Ltd~~agriculture goods. inOur ~~Israel~~management anticipates that, once developed, this product will be primarily demanded by those distributors that use long term and long distance maritime transportation methods.

~~Transportation~~ Our ~~and Storage of our Products~~Technology

~~Hydrogen~~ Pimi’s ~~Peroxide~~technology isfor aincreasing ~~common~~the ~~chemical sold~~storability and ~~transported~~shelf ~~worldwide~~life inof ~~50%~~fruits ~~concentrations.~~and ~~Transported~~vegetables ~~Hydrogen~~is ~~Peroxide~~based inon ~~such~~a ~~concentrations~~unique isproprietary ~~defined~~solution asusing ~~dangerous goods~~only byedible ~~the~~products ~~industry~~and a proprietary designed delivery system.

We Active ~~have~~Ingredient ~~decided~~- toStabilized ~~supply our products with stable~~ Hydrogen Peroxide ~~and~~solution at low concentration of only 4%-8%%, which is graded as low product risk. At this grade of risk the product should be transported by certified truck drivers, and the truck should be marked with special signs. The product should be transported together with Material Safety Data Sheets (~~MSDS~~STHP) ~~which show the dangers related to the product and the safety procedures, including how the product should be handled.~~

Pimi has developed a patented Stabilized Hydrogen Peroxide is(H2O2) anformula ~~aggressive~~which ~~oxidizer and~~includes ~~will~~other ~~corrode~~edible ~~many materials~~ingredients. Hydrogen Peroxide ~~should~~is bewidely ~~stored~~used in avarious ~~cool~~industrial applications, ~~dry~~such as: rocket fuel, ~~well-ventilated~~wound ~~area~~disinfection, hair coloring and ~~away~~teeth ~~from~~whitening. ~~any~~The ~~flammable or~~formulations ~~combustible~~were ~~substances.~~developed Itby ~~should~~Nimrod beBen ~~transported~~Yehuda, inPimi’s ~~special~~co-founder, ~~tanks~~with ~~and~~the ~~vehicles~~assistance ~~and~~of ~~should~~leading beresearch ~~stored~~institutes, inwhich ainclude ~~container~~the ~~composed~~ Hebrew University of ~~non-reactive~~Jerusalem, ~~materials~~the Volcani Institute of Agricultural Research and the Technion – Israel Institute of Technology.

~~Pimi is carefully and diligently following~~ ~~the~~Fogging ~~above~~delivery ~~rules and regulations in handling its products in transportation and storage.~~system

~~Governmental~~ By ~~Support~~harnessing the advanced fogging technology of ultrasonic micro Droplets (which was developed by third parties and was upgraded by Pimi's management) and the special distribution method developed by the Company, Pimi's Technology is capable of distributing a lower than 10 micron droplet cloud in the storage room. This ultrasonic droplet diameter and the application method generate “Dry Fog”, forms a highly effective vehicle for distributing Pimi’s products. An added benefit comes with the ability to raise relative humidity to a very high level of 99% without causing the devastating effects of a condensation event. The system is fully automated, thus enabling a cost-effective implementation for customers, reducing many hours of labor and minimizing user intervention.

~~Pimi Israel has received grants from the Israeli Chief Scientist under a program of investment in research and development for a solution for disinfection of potato seeds (SeedGuard™) under a 6~~-~~stage~~ ~~method.~~9 The approval of the Chief Scientist was extended and changed in order to enable certain expenses to be recognized for the grant. Pimi has received from the Chief Scientist the sum of $121,753 (484,429 NIS) as grant under this program. -

~~Pimi is obligated to pay the grant back~~ toManufacturing ~~the~~Process ~~Chief~~Supply ~~Scientist in the form~~ of ~~royalties.~~Raw In the first 3 years of sales we shall pay 3% out of the sales of the product which was developed under the R&D program. In the fourth, fifth and sixth years of sales we shall pay 4% of such sales, and from the seventh year and on we shall pay 5% up to the amount of the grant. If there will be no sales of the product which was developed under the program, Pimi will not be required to pay back the grant.Material

9 Pimi’s products are currently produced by Seeler Industries, Inc., in their plant located in Joliet, Illinois ("Seeler") and also by Zohar Dalia Ltd. in Israel.

~~Under~~ Transportation ~~the law~~ and ~~regulations~~Storage ~~relating to the grant, sale~~ of ~~the~~our ~~IP developed under the program to a foreign entity will require the approval of the Israeli Chief Scientist.~~Products

~~Pimi Israel has filed an application with~~ ~~the~~Hydrogen ~~International~~Peroxide ~~Projects~~is ~~and~~a ~~Tenders~~common ~~Fund~~chemical ~~under~~sold ~~the Israeli Ministry of Industry, Trade~~ and ~~Labor~~transported ~~for~~worldwide ~~participation~~ in ~~FreshProtect™ and~~50% ~~CitruWash™ US commercialization costs and expenses~~concentrations. AsTransported ofHydrogen ~~the~~Peroxide ~~date~~in ofsuch ~~this~~concentrations ~~report,~~is ~~such~~defined ~~participation~~as ~~has~~dangerous ~~not~~goods ~~yet~~by ~~been approved~~the industry.

~~Intellectual~~ We ~~Property~~have decided to supply our products with stable Hydrogen Peroxide and at low concentration levels of only 4%-8%%, which is graded as low product risk. At this grade of risk the product should be transported by certified truck drivers, and the truck should be marked with special signs. The product should be transported together with Material Safety Data Sheets (MSDS) which show the dangers related to the product and the safety procedures, including how the product should be handled.

We Hydrogen ~~have~~Peroxide ~~developed~~is aan ~~significant~~aggressive ~~intellectual property~~oxidizer ~~portfolio~~and ofwill ~~patents~~corrode many materials. WeHydrogen ~~believe~~Peroxide ~~that~~should ~~our~~be ~~intellectual~~stored ~~property~~in ~~portfolio~~a cool, ~~coupled~~dry, ~~with~~well-ventilated ~~our~~area ~~strategic~~and ~~relationships~~away ~~(see "Customers~~from ~~and~~any ~~Partners")~~flammable ~~and~~or ~~accumulated~~combustible ~~experience~~substances. It should be transported in ~~the~~special ~~field,~~tanks ~~gives~~and usvehicles anand ~~advantage~~should ~~over~~be ~~potential~~stored ~~competitors~~in a container composed of non-reactive materials.

~~In 2010 we filed two provisional patents~~ ~~covering~~Pimi ~~new~~is ~~developed~~carefully ~~products~~ and ~~technologies~~diligently ~~which~~following ~~we started to implement at~~ the ~~end~~above ofrules 2011. In 2011 we filed an application pursuant to the Patent Cooperation Treaty (“PCT”), covering an environmentally friendly solution, implementing performic acid, for controlling decay of a very wide range of addible matters and ~~for~~regulations ~~soil~~in ~~disinfection.~~handling Asits ofproducts the date of this report, we have started the registration of this patent. In 2012 we filed an additional PCT application, with respect to a product aimed at improving the appearance of foods. We currently maintain the following patents (for the agreement of the transfer of the rights in ~~the~~transportation ~~patents~~ and ~~patents applications to us, see "Certain Relations and Related Parties transaction"):~~storage.

Country	Patent Register No.	Application No.	Status	Validity Date
U.S.A	6,797,302		Granted	July 2019
U.S.A	6,946,155		Granted	July 2019
U.S.A	7,147,872		Granted	July 2019
U.S.A		12/691,3161	Pending
Europe		99933105.1	Pending
China	99810112.5		Granted	July 2019
Russia	2262230		Granted	July 2019
Australia	757,181		Granted	July 2019
South Africa	2001/1528		Granted	July 2019
Israel		125520	Pending
Chile		1675-99	Pending
Mexico	230589		Granted	July 2019
Argentina	AR 019937- B1		Granted	July 2019
Bulgaria		105167	Pending
Bolivia		P990103701	Pending
Brazil		PI9912697-4	Pending
Colombia		99047340	Pending
Cuba		22/2001	Pending
Czech Republic		PV 2001-254	Pending
Georgia		AP1999004257	Pending
Guatemala		PI99-01099	Pending
Honduras		PCT/IL99/120	Pending
Latvia	12750		Granted	July 2019
Nicaragua	1441		Granted	July 2019
New Zealand	509566		Granted	July 2019
Peru	3093		Granted	July 2019
Poland	P-348722		Granted	July 2019
Paraguay	4217		Granted	July 2019
Slovenia	9920057-20615		Granted	July 2019
Slovakia		PV97-2001	Pending
Turkey	TR2001-231		Granted	July 2019
Uruguay		025.625	Pending
Serbia		P-51/01	Pending
Norway		20010447	Pending
Romania		A 2001-00090	Pending

Governmental Support

~~__________________________________________________________________________~~ Pimi Israel has received grants from the Israeli Chief Scientist under a program of investment in research and development for a solution for disinfection of potato seeds (SeedGuard™) under a 6-stage method. The approval of the Chief Scientist was extended and changed in order to enable certain expenses to be recognized for the grant. Pimi has received from the Chief Scientist the sum of $121,753 (484,429 NIS) as grant under this program.

1 Pimi ~~The~~is ~~application~~obligated to pay the grant back to the Chief Scientist in the form of royalties. In the first 3 years of sales we shall pay 3% out of the sales of the product which was ~~filed~~developed onunder ~~January~~the 21R&D program. In the fourth, ~~2010~~ ~~for~~fifth aand ~~continuation~~sixth ~~patent~~years of ~~patent~~sales Nowe shall pay 4% of such sales, and from the seventh year and on we shall pay 5% up to the amount of the grant. 7If there will be no sales of the product which was developed under the program,~~147,872~~ Pimi will not be required to pay back the grant.

10 Under the law and regulations relating to the grant, sale of the IP developed under the program to a foreign entity will require the approval of the Israeli Chief Scientist.

~~Regulatory~~ Pimi ~~Approval~~Israel has been granted certain funding with the International Projects and Tenders Fund under the Israeli Ministry of ~~Pimi's~~Industry, ~~Products~~ Trade and Labor for participation in FreshProtect™ and CitruWash™ US commercialization costs and expenses. Under this grant, we are entitled to reimbursement of certain costs incurred by us amounting to approximately NIS 150,000.

~~The following description will relate to the~~ ~~countries~~Intellectual ~~in which the Company intends to sell its products:~~ Property

~~Regulatory~~ We ~~Process~~have developed a significant intellectual property portfolio of patents. We believe that our intellectual property portfolio, coupled with our strategic relationships (see "Customers and Partners") and accumulated experience in the ~~United~~field, ~~States~~gives us an advantage over potential competitors.

~~Our~~ In ~~products~~2010 ~~are~~we ~~regulated~~filed bytwo ~~both~~provisional ~~EPA (Environmental~~patents ~~Protection~~covering ~~Agency)~~new developed products and ~~FDA~~technologies which we started to implement at the end of 2011. ~~The~~ ~~regulatory~~In ~~agency~~2011 ~~that~~we ~~has~~filed ~~jurisdiction~~an application pursuant to the Patent Cooperation Treaty (“PCT”), covering an environmentally friendly solution, implementing performic acid, for controlling decay of a ~~particular~~very ~~product~~wide ~~depends~~range on of addible matters and for soil disinfection. As of the ~~claims~~date ~~that~~of ~~are~~this ~~made~~report, ~~for~~following completion of the ~~product~~international PCT stage, we have started the registration of this patent in Israel, US and EU. ~~Accordingly~~ In 2012 we filed an additional PCT application, ~~EPA~~with isrespect ~~responsible~~to ~~for~~a ~~any~~product aimed at improving the appearance of ~~our~~foods. ~~products~~As ~~that~~of ~~claim~~the ~~microbial~~date ~~control on~~of ~~raw~~this ~~agricultural~~report, ~~commodities~~following completion of the international PCT stage, ~~such~~we ashave ~~FreshProtect™~~started the process of registration of this patent, currently in Israel only. ~~FDA~~ isIn ~~responsible~~2013 we filed a PCT application for ~~regulating~~a ~~any~~disposable adjustable substance diffuser device, designed to utilize our products ~~that~~on ~~make cleaning~~fruits ~~claims~~and onvegetables ~~raw~~transported ~~agricultural~~in ~~commodities~~containers. We currently maintain the following patents (for the agreement of the transfer of the rights in the patents and patents applications to us, ~~such~~see as"Certain ~~CitruWash™.~~Relations and Related Parties transaction"):

~~The~~- ~~EPA~~10 registration process is governed by the pesticide statute, Federal Insecticide, Fungicide and Rodenticide Act or “FIFRA”. Under Section 3 of FIFRA, EPA registers or licenses pesticide products. The registration process involves registrants submitting a comprehensive data base of chemistry and safety data so that EPA can make a safety determination. On November 30, 2012, EPA registered FreshProtect™ in accordance with the provisions of Section 3 of FIFRA. In addition to federal registration of pesticides, all states in the U.S. require product registration pursuant to the applicable state laws. We have a pending registration application for FreshProtect™ with the California Department of Pesticide Regulation (CDPR) and we anticipate that approval will be granted shortly. Finally, EPA in accordance with Section 409 of the Federal Food, Drug and Cosmetic Act or “FFDCA” and through the tolerance or tolerance exemption process is responsible for setting residue levels for pesticides that are applied to raw agricultural commodities. All of the ingredients contained in FreshProtect™ have the appropriate tolerance or tolerance exemption for residues that may result from the use of FreshProtect™.-

Unlike EPA, FDA does not approve cleanser products. Instead, all of the ingredients comprising cleanser products must have the appropriate clearance, under the FFDCA, for use on the target food commodities. All of the ingredients in CitruWash™ are compliant with the FFDCA. In accordance with the legal opinion we received, our CitruWash™ is classified as a cleanser under applicable US laws and regulations.

Country	Patent Register No.	Application No.	Status	Validity Date
U.S.A	6,797,302		Granted	July 2019
U.S.A	6,946,155		Granted	July 2019
U.S.A	7,147,872		Granted	July 2019
U.S.A		12/691,316¹	Pending
Europe		99933105.1	Pending
China	99810112.5		Granted	July 2019
Russia	2262230		Granted	July 2019
Australia	757,181		Granted	July 2019
South Africa	2001/1528		Granted	July 2019
Israel		125520	Pending
Chile		1675-99	Pending
Mexico	230589		Granted	July 2019
Argentina	AR 019937- B1		Granted	July 2019
Bulgaria		105167	Pending
Bolivia		P990103701	Pending
Brazil		PI9912697-4	Pending
Colombia		99047340	Pending
Cuba		22/2001	Pending
Czech Republic		PV 2001-254	Pending
Georgia		AP1999004257	Pending
Guatemala		PI99-01099	Pending
Honduras		PCT/IL99/120	Pending
Latvia	12750		Granted	July 2019
Nicaragua	1441		Granted	July 2019
New Zealand	509566		Granted	July 2019
Peru	3093		Granted	July 2019
Poland	P-348722		Granted	July 2019
Paraguay	4217		Granted	July 2019
Slovenia	9920057-20615		Granted	July 2019
Slovakia		PV97-2001	Pending
Turkey	TR2001-231		Granted	July 2019
Uruguay		025.625	Pending
Serbia		P-51/01	Pending
Norway		20010447	Pending
Romania		A 2001-00090	Pending

1 The application was filed on January 21, 2010 for a continuation patent of patent No. 7,147,872.

~~In addition, under Sections 201(s) and~~ ~~409~~Regulatory ofApproval the FFDCA, any substance that is intentionally added to food is a food additive, that is subject to premarket review and approval by FDA, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of ~~its~~Pimi's ~~intended~~Products use, or unless the use of the substance is otherwise excluded from the definition of a food additive. FDA established a notification procedure whereby any person may notify FDA of a determination by that person that a particular use of a substance is “GRAS" (Generally Recognized As Safe). It should be noted that according to applicable law we may market a substance that we determine to be GRAS for a particular use without informing FDA or, if FDA is so informed, while FDA is reviewing that information.

~~We have received EPA approval for~~ ~~SpuDefender™~~The asfollowing ~~well~~description aswill ~~the~~relate ~~approval~~to of the ~~State~~countries ofin ~~Wisconsin,~~ which ~~enables~~the usCompany intends to sell ~~SpuDefender™~~its ~~in the State for commercial use.~~products:

~~Our SweetGuard™ is used as a cleaning agent on post~~-~~harvest~~ ~~sweet~~11 potatoes. As such, SweetGuard™ is regulated under both the Toxic Substances Control Act (“TSCA”) and FFDCA. Under both of these statutes, products are not approved or cleared but the individual components or substances comprising a product must be compliant with the provisions of each statute and their implementing regulations.-

~~Pimi Agro has evaluated each component~~ ofRegulatory ~~SweetGuard~~Process ~~and~~in ~~based on this evaluation has concluded that every component is compliant with~~ the ~~provisions~~United ~~of TSCA and FFDCA and the corresponding implementing regulations.~~States

11 Our products are regulated by both the EPA (Environmental Protection Agency) and FDA. The regulatory agency that has jurisdiction for a particular product depends on the claims that are made for the product. Accordingly, EPA is responsible for any of our products that claim microbial control on raw agricultural commodities, such as FreshProtect™. FDA is responsible for regulating any our products that make cleaning claims on raw agricultural commodities, such as CitruWash™.

~~Regulatory~~ The ~~Process~~EPA registration process is governed by the pesticide statute, Federal Insecticide, Fungicide and Rodenticide Act or “FIFRA”. Under Section 3 of FIFRA, EPA registers or licenses pesticide products. The registration process involves registrants submitting a comprehensive data base of chemistry and safety data so that EPA can make a safety determination. On November 30, 2012, EPA registered FreshProtect™ in ~~Israel~~accordance with the provisions of Section 3 of FIFRA. In addition to federal registration of pesticides, all states in the U.S. require product registration pursuant to the applicable state laws. On May 29, 2013 we received a certificate of registration for FreshProtect™ from the California Department of Pesticide Regulation (“CDPR”), which enables us to market and sell this product in California. CDPR has recently renewed this registration until December 31, 2014. Finally, EPA in accordance with Section 409 of the Federal Food, Drug and Cosmetic Act or “FFDCA” and through the tolerance or tolerance exemption process is responsible for setting residue levels for pesticides that are applied to raw agricultural commodities. All of the ingredients contained in FreshProtect™ have the appropriate tolerance or tolerance exemption for residues that may result from the use of FreshProtect™.

~~SpuDefender™~~ Unlike ~~has~~EPA, ~~been~~FDA ~~approved~~does by not approve cleanser products. Instead, all of the ~~Israeli~~ingredients ~~Plant~~comprising ~~Protection~~cleanser ~~Authority~~products ~~for~~must ~~use~~have onthe ~~potatoes~~appropriate ~~and~~clearance, ~~sweet~~under ~~potatoes~~the inFFDCA, ~~Israel.~~for Touse on the ~~best~~target food commodities. All of ~~our~~the ~~management’s knowledge,~~ingredients ~~CitrusGuard™,~~in ~~SuperClean~~CitruWash™ ~~and~~are ~~SweetGuard™~~compliant dowith ~~not~~the ~~require~~FFDCA. In ~~approval~~accordance bywith the ~~Israeli~~legal ~~Plant~~opinion ~~Protection Authority~~we received, our CitruWash™ is classified as a cleanser under applicable ~~Israeli~~US laws and regulations.

~~Regulatory~~ In ~~Process~~addition, inunder ~~Europe~~Sections 201(s) and 409 of the FFDCA, any substance that is intentionally added to food is a food additive, that is subject to premarket review and approval by FDA, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its intended use, or unless the use of the substance is otherwise excluded from the definition of a food additive. FDA established a notification procedure whereby any person may notify FDA of a determination by that person that a particular use of a substance is “GRAS" (Generally Recognized As Safe). It should be noted that according to applicable law we may market a substance that we determine to be GRAS for a particular use without informing FDA or, if FDA is so informed, while FDA is reviewing that information.

In We ~~Europe~~have ~~the~~received ~~authority~~EPA ~~in charge of the~~ approval offor ~~our~~SpuDefender™ ~~product~~as iswell ~~the~~as ~~European~~approval ~~Commission.~~of ~~Under~~ the ~~Plant~~State ~~Protection~~of ~~Products Directive 91/414 (the "EU Directive 91/414")~~Wisconsin, ~~the~~which ~~European~~enables ~~Commission~~us ~~requires that we will show that the product is not toxic, has physical and chemical safety properties and is effective (i.e. it achieves the statement under its label). In order~~ to ~~submit~~sell ~~the~~SpuDefender™ ~~application~~for ~~("Dossier") we~~commercial ~~have~~use ~~engaged Redebel S.A from Brussels, Belgium ("Redebel"), who is a specialist~~ in ~~such~~this ~~process~~state.

~~We have been advised by Redebel that in~~ ~~order~~Our ~~to register our products (mainly FreshProtect~~SweetGuard™ ~~and~~is ~~SpuDefender™)~~used inas ~~the~~a ~~European~~cleaning ~~Community~~agent ~~the complete Dossier for inclusion of Hydrogen Peroxide~~ on ~~"Annex~~post-harvest I"sweet ofpotatoes. EUAs ~~Directive~~such, ~~91/414~~SweetGuard™ ~~must~~is beregulated ~~approved~~under byboth the ~~European~~Toxic ~~Commission~~Substances ~~("Annex I~~Control ~~Listing"~~Act (“TSCA”). ~~Such file has to include documentation~~ and ~~information concerning the active ingredient (in our case Hydrogen Peroxide)~~FFDCA. ~~Important~~Under ~~elements~~both of ~~such~~these ~~documentation~~statutes, products are ~~toxicological~~not ~~and~~approved ~~eco-toxicological~~or ~~profile~~cleared ofbut the ~~molecule~~individual ~~and~~components ~~eventual dangers~~or ~~and~~substances ~~hazards~~comprising ~~coming~~a ~~from human exposition. An example of use of this substance in “formulated”~~ product ~~has~~must to be ~~also~~compliant ~~presented,~~with ~~and~~ the ~~most~~provisions ~~important element~~ of ~~this~~each ~~part~~statute isand ~~demonstration~~their ofimplementing ~~the efficacy – prove of the activity of the product declared on the label~~regulations.

~~Normal~~ Pimi ~~procedure~~Agro ~~for~~has ~~efficacy~~evaluated ~~testing~~each ~~is two~~component ~~years~~ of ~~trials.~~SweetGuard ~~After~~and ~~having~~based ~~the~~on ~~efficacy~~this ~~results~~evaluation wehas ~~will~~concluded ~~have~~that toevery ~~file~~component is compliant with the ~~product~~abovementioned ~~for~~provisions ~~examination~~of ~~which~~TSCA ~~can~~and ~~last~~FFDCA ~~for~~and ~~another 2~~the ~~years~~corresponding implementing regulations.

~~Due to this long regulatory process, we~~ ~~have~~Regulatory ~~decided~~Process ~~that we will concentrate on sales~~ in the US, and other territories outside the EU, prior to finalizing the European file for pesticide. Therefore as of the date of this report we have halted the regulatory process of our products in the EU.Israel

As SpuDefender™ ofhas been approved by the ~~date~~Israeli ofPlant ~~this~~Protection ~~report~~Authority wefor ~~are~~use ~~examining whether~~on potatoes and sweet potatoes in ~~accordance~~Israel. ~~with~~To ~~applicable~~the ~~law~~best ~~and~~of ~~regulations~~our management’s knowledge, CitrusGuard™, SuperClean™ and~~/or~~ ~~CitruWash~~SweetGuard™ ~~(which~~do ~~are~~not ~~cleansers)~~ require ~~registration~~ inapproval EUby the Israeli Plant Protection Authority under applicable Israeli laws and regulations.

~~Customers~~ Regulatory ~~and~~Process ~~Partners~~in Europe

As In aEurope ~~small~~the ~~company~~authority ~~with~~in ~~roots~~charge ~~in Israel,~~of ~~one~~the ~~method~~approval byof ~~which~~our ~~Pimi~~product is ~~able~~the toEuropean ~~attain,~~Commission. ~~and~~Under ~~engage~~the ~~with,~~Plant ~~potential~~Protection ~~partners,~~Products inDirective ~~particular~~91/414 ~~those~~(the ~~having~~"EU ~~a favorable~~Directive ~~foot-print~~91/414"), ~~in their~~the ~~respective~~European ~~markets~~Commission ~~and~~requires ~~having~~that ~~the~~we ~~ability~~will toshow ~~educate~~that ~~end-users~~the ~~(i.e.~~product ~~their~~is ~~customers)~~not toxic, ~~is by~~has ~~gaining~~physical ~~recognition~~ and ~~acceptance~~chemical ofsafety ~~market~~properties ~~leaders~~and ~~having~~is ~~the~~effective ~~best~~(i.e. ~~leverage~~it ~~point~~achieves tothe ~~our~~statement ~~prospective~~under ~~customers~~its label). ~~These~~ ~~companies,~~In ~~being~~order ~~opinion leaders with high sensitivity~~ to ~~environmental-friendly~~submit ~~growing demands, are in~~ the ~~best position~~application to("Dossier") ~~influence~~we ~~their~~have ~~suppliers,~~engaged ~~who~~Redebel ~~are~~S.A ~~Pimi's~~from ~~potential customers~~Brussels, inBelgium ~~testing and ultimately adopting Pimi's technology~~("Redebel"), aswho ~~their~~is ~~next~~a ~~generation~~specialist ~~solution~~in ~~for~~such ~~post-harvest treatment~~process.

We- ~~have~~12 ~~entered into agreements with several companies specialized in the supply of agriculture products, primarily in the US, as further detailed below.~~-

~~VegiSafe~~ We ~~LLC~~have been advised by Redebel that in order to register our products (~~Earthbound~~mainly ~~LLC~~FreshProtect™ ~~Group~~and SpuDefender™) in the European Community the complete Dossier for inclusion of Hydrogen Peroxide on "Annex I" of EU Directive 91/414 must be approved by the European Commission ("Annex I Listing"). Such file has to include documentation and information concerning the active ingredient (in our case Hydrogen Peroxide). Important elements of such documentation are toxicological and eco-toxicological profile of the molecule and eventual dangers and hazards coming from human exposition. An example of use of this substance in “formulated” product has to be also presented, and the most important element of this part is demonstration of the efficacy – prove of the activity of the product declared on the label.

~~In January 2009 Pimi Israel entered into~~ aNormal ~~Joint~~procedure ~~Venture~~for ~~Agreement~~efficacy ~~("The~~testing ~~Joint~~is ~~Venture")~~two ~~with~~years ~~VegiSafe LLC ("VegiSafe"), an affiliate~~ of ~~Earthbound LLC~~trials. ~~("EB"),~~After ahaving ~~group~~the ofefficacy ~~companies~~results ~~engaged~~we inwill ~~consulting~~have to ~~mass-market~~file ~~retailers~~the ~~and~~product ~~major~~for ~~supermarket~~examination ~~chains~~which incan ~~North America~~last ~~(see: http://www.earthboundllc.com/). EB has a proven track record in developing private label campaigns (apparel)~~ for ~~Wal-Mart~~another ~~and~~2 ~~Target brands~~years.

~~The Joint Venture will market, sell and~~ ~~distribute~~Due ~~Pimi's~~to ~~technology~~this ~~throughout~~long ~~the~~regulatory ~~United States~~process, onwe anhave ~~exclusive~~decided ~~basis,~~that ~~and~~we ~~throughout~~will ~~Canada~~concentrate ~~and Mexico,~~ on ~~a non-exclusive basis. VegiSafe will market and handle the~~ sales ~~activities of the Joint Venture. VegiSafe intends to seek retailers and major distributors~~ in the ~~U.S.~~US, ~~which will recommend its producers~~ and ~~suppliers~~other toterritories ~~manufacture~~outside ~~and~~the ~~supply CIPC-free potatoes~~EU, orprior ~~CIPC-free potato~~to ~~products.~~finalizing ~~The exclusivity of~~ the ~~Joint~~European ~~Venture~~file isfor ~~subject~~pesticide. toTherefore ~~fulfillment of certain milestones of annual sales~~ as ~~herein described. We will have 70%~~ of the ~~rights~~date ~~in the Joint Venture and will nominate two~~ of ~~its~~this ~~directors;~~report ~~VegiSafe~~we ~~will~~ have ~~30%~~halted of the ~~rights,~~regulatory ~~and~~process ~~will nominate one director. We will grant a sub-license to the Joint Venture for the use~~ of our ~~patents and technology, relating to the~~ products ~~and~~in ~~to any new product developed by us, for~~ the ~~term of the Joint Venture~~EU.

12 As of the date of this report we are examining whether in accordance with applicable law and regulations SuperClean™ and/or CitruWash™ (which are cleansers) require registration in EU.

~~We are obligated to continue to operate~~ ~~the~~Customers ~~Joint Venture so long as certain trigger events occur prior to December 31, 2009. The Trigger event is defined as: an event, where any retailer~~ and any fast food chain, or any major packaged, frozen or snack food marketer, or any major or national vegetable (or fruit) growers and major or national distributors in the U.S expresses an interest in launching CIPC free potatoes or CIPC free potato products at any Retailer or by any distributor, by requesting its supplier/s to use our technology for potatoes or potato products, in order to produce or to supply CIPC free potatoes or CIPC free potato products for its consumption.Partners

In As ~~May~~a ~~2009~~small company with roots in Israel, ~~Pimi~~one ~~and~~method ~~VegiSafe~~by ~~mutually agreed~~which ~~that~~Pimi ~~the~~is ~~trigger~~able ~~event~~to ~~occurred~~attain, ~~thereby~~and ~~obligating~~engage with, ~~the~~potential ~~continuation~~partners, ofin ~~the~~particular ~~Joint~~those ~~Venture.~~having ~~Accordingly,~~a ~~VegiSafe’s exclusivity~~favorable isfoot-print ~~subject~~in their torespective markets and having the ~~following~~ability ~~milestones:~~to ~~Entering~~educate aend-users ~~CIPC~~(i.e. ~~free~~their ~~branding~~customers), ~~program~~is ~~with~~by ~~two~~gaining ~~retailers~~recognition orand ~~distributors~~acceptance ~~prior to~~of ~~September~~market ~~2010;~~leaders having the ~~treatment~~best ofleverage ~~150~~point to our prospective customers. These companies,~~000~~ ~~tons~~being ofopinion ~~potatoes~~leaders inwith ~~the~~high ~~season~~sensitivity ofto ~~2011~~environmental-friendly ~~(September~~growing ~~2011);~~demands, are in the ~~treatment~~best ofposition ~~350~~to influence their suppliers,~~000~~ ~~tons of~~who ~~potatoes~~are Pimi's potential customers, in ~~the~~testing ~~season~~and ofultimately ~~2012~~adopting ~~(September~~Pimi's ~~2012)~~technology, as their next generation solution for post-harvest treatment.

As We ofhave ~~the~~entered ~~date~~into ofagreements ~~this~~with ~~report~~several ~~VegiSafe has~~companies ~~not~~specialized ~~complied~~in ~~with~~ the ~~above~~supply ~~milestones~~of ~~and~~agriculture weproducts, ~~have~~primarily ~~not~~in ~~taken~~the ~~any~~US, ~~actions~~as ~~against~~further ~~VegiSafe~~detailed ~~with this regard~~below.

~~VegiSafe has invested in the Joint Venture~~ ~~an aggregate amount of $250,000 which has been used to cover expenses reflected in a budget prepared for the Joint Venture, and approved by~~ VegiSafe ~~and~~LLC ~~Pimi.~~(Earthbound ~~The~~LLC Joint Venture will use the VegiSafe Trade Mark as the trademark for fruits and vegetables, which will be treated by our products and are CIPC free. Any additional investment in the Joint Venture in excess of the $250,000 shall be contributed by the parties according to their share in the Joint Venture upon mutual consent, taking into account the Joint Venture's business and its needs.Group)

~~The Joint Venture focused on SpuDefenderTM~~ ~~and~~In ~~therefore~~January on2009 ~~August~~Pimi 9,Israel ~~2010~~entered weinto ~~have~~a ~~signed~~Joint anVenture ~~Addendum to the~~ Agreement ~~dated~~("The ~~January~~Joint ~~20,~~Venture") ~~2009~~ with VegiSafe, ~~under~~LLC ~~which~~("VegiSafe"), ~~we agreed~~an toaffiliate ~~expand the activities~~ of ~~the~~Earthbound ~~Joint~~LLC ~~Venture in the US to sweet potatoes~~("EB"), ~~yams,~~a ~~onions,~~group ~~cabbages~~of ~~and~~companies ~~mushrooms.~~engaged Inin ~~addition we~~consulting ~~have agreed~~ to ~~expand~~mass-market ~~the~~retailers ~~activity~~and ofmajor ~~Joint~~supermarket ~~Venture~~chains in ~~the~~North USAmerica. toEB ~~citrus~~has ~~fruits,~~a ~~provided~~proven ~~VegiSafe~~track ~~will~~record ~~bear all the costs and expenses, which~~ in ~~our~~developing ~~opinion~~private ~~are~~label ~~reasonable~~campaigns (apparel) for ~~the~~Wal-Mart ~~progress of the distribution~~ and ~~the~~Target ~~implementation of our CitrusGuard™ in the US~~brands.

As The ofJoint Venture intends to market, sell and distribute Pimi's technology throughout the ~~date~~United ofStates, ~~this~~on ~~report~~an exclusive basis, and throughout Canada and Mexico, on a non-exclusive basis. VegiSafe ~~introduced our~~ ~~products~~will market and ~~technology~~handle tothe ~~one~~sales activities of the ~~major~~Joint ~~retail~~Venture. ~~chain~~VegiSafe inintends ~~the~~to USseek ~~who~~retailers ~~has,~~and major distributors in ~~turn~~the U.S., ~~introduced~~which uswill torecommend ~~their~~its producers and suppliers ofto ~~table~~ manufacture and supply CIPC-free potatoes, ~~citruses,~~or ~~onions~~CIPC-free potato products. The exclusivity of the Joint Venture is subject to certain milestones of annual sales. We will have 70% of the rights in the Joint Venture and ~~sweet~~will ~~potatoes~~nominate two of its directors; VegiSafe will have 30% of the rights, inand ~~order~~will ~~that~~nominate weone ~~shall~~director. ~~present~~We will grant a sub-license to ~~these~~the ~~suppliers~~Joint Venture for the ~~efficacy~~use of our patents and technology, relating to the products and to any new product developed by us, for the term of the Joint Venture.

~~Mehadrin~~ In May 2009, Pimi and VegiSafe mutually agreed on continuation of the Joint Venture. Accordingly, VegiSafe’s exclusivity is subject to certain additional milestones.

~~Mehadrin Ltd.(“Mehadrin”) is~~ ~~the~~As ~~biggest distributor and exporter~~ of ~~Citrus~~the ~~fruits~~date ~~in Israel. Mehadrin is exporting approximately two thirds~~ of ~~the~~this ~~Israeli Citrus~~report ~~crop~~VegiSafe ~~to Europe, US, Canada and the Far East. Mehadrin~~ has ~~its~~not ~~own~~complied ~~orchards and packing houses and they also purchase packed fruits from other farmers and packing houses. We have started to work commercially~~ with Mehadrin on October 2010, implementing our CitrusGuard™ on one packing line of Grapefruits. On January 2011 we have started treating with CitrusGuard™ additional 2 packing lines of Clementine. During the ~~citrus~~above ~~season~~milestones ofand ~~2011-2012~~ we have ~~entered~~not ~~into~~taken ~~additional~~any ~~packing~~actions ~~lines,~~against ~~implementing also~~VegiSafe ~~our SuperClean™ and treating over 60,000 tons. We anticipate treating~~ with ~~our~~this ~~CitrusGuard ™ up to 70,000 tons of Citrus fruits until the end of 2012- 2013 citrus season (April 2013)~~regard.

~~Sun~~ VegiSafe ~~Pacific~~has ~~Inc~~invested in the Joint Venture an aggregate amount of $250,000 which has been used to cover expenses reflected in a budget prepared for the Joint Venture, and approved by VegiSafe and Pimi. The Joint Venture will use the VegiSafe Trade Mark as the trademark for fruits and vegetables, which will be treated by our products and are CIPC free.

~~Sun~~- ~~Pacific~~13 ~~is one of the biggest suppliers of fruits and vegetables in the United States, leading in Citrus, Tomatoes, and Grapes.~~-

~~Sun~~ The ~~Pacific~~Joint isVenture ~~one~~focused ofon ~~the~~SpuDefenderTM ~~leading~~and ~~packing houses~~therefore inon ~~the~~August ~~U.S.~~9, ~~for~~2010 ~~clementines~~we ~~and~~have ~~oranges.~~signed ~~Pimi~~an ~~was~~Addendum ~~introduced~~ to ~~Sun~~the ~~Pacific~~Agreement bydated aJanuary ~~significant~~20, ~~U.S.~~2009 ~~retailer~~with VegiSafe, to ~~whom~~expanding ~~Sun~~JV’s ~~Pacific~~activities ~~supplies~~to ~~its~~certain ~~produce~~vegetables. ~~From~~In ~~December~~addition ~~2010~~we ~~through~~have ~~February~~agreed ~~2011,~~to weexpand ~~conducted~~the aactivity ~~trial~~of Joint Venture in ~~Sun Pacific’s~~the ~~Mandarins~~US ~~packing~~to ~~house~~citrus fruits, atprovided ~~Maricopa~~that CAVegiSafe will bear all the costs and expenses, which ~~is,~~in toour ~~management’s~~opinion ~~best~~are ~~knowledge,~~reasonable for the ~~biggest~~progress ~~clementine~~of ~~packing house~~the distribution and the implementation of our CitrusGuard™ in the UUS.S.

~~The~~ In ~~trial~~February ~~was~~2014 ~~conducted~~we onamended ~~one~~the terms and conditions of ~~the~~our ~~commercial lines~~cooperation ~~using~~with ~~FreshProtect™~~VegiSafe ~~treatment~~by expanding their activities for promotion of our STHP based technology worldwide, ~~which~~on ~~was~~an ~~compared~~unexclusive basis. VegiSafe shall be entitled to ~~current~~certain ~~cleaning~~percentage ~~and~~of ~~waxing~~our ~~treatment.~~net ~~The~~revenues ~~trial~~generated ~~results~~by ~~have shown~~a ~~that~~customer ~~applying~~introduced ~~FreshProtect™~~by onVegiSafe ~~Clementines~~and ~~improves~~shall ~~the~~bear ~~shelf~~certain ~~life~~costs ofand ~~the~~expenses ~~fruits~~related ~~versus~~to ~~the~~our ~~current~~engagement ~~treatment~~with such customer.

13 As of the date of this report, VegiSafe introduced our products and technology to a major retail chain in the U.S. who has, in turn, introduced us to their suppliers of table potatoes, citruses, onions and sweet potatoes, in order for us to present to these suppliers the efficacy of our products. To date, VegiSafe is successfully continuing its promotion activities with this retail chain.

~~On January-February 2013 we performed large-scale~~ ~~commercial~~Mehadrin trial with Sun Pacific, utilizing both CitruWash™ (as a cleanser) and FreshProtect™ (as a sanitizer) in the treatment process on one packing line. The trial also involved a large post-harvest services company, which is considered by our management as a potential distributor of our products. The preliminary results of this trial were successful, indicating that our products have prevented decay more efficiently in comparison to other current treatments and materials. As of the date of this report, we are negotiating with Sun Pacific and post-harvest services company further commercial implementation of our products.

~~Suppliers~~ Mehadrin Ltd.(“Mehadrin”) is the biggest distributor and exporter of Citrus fruits in Israel. Mehadrin is exporting approximately two thirds of the Israeli Citrus crop to Europe, US, Canada and the Far East. Mehadrin has its own orchards and packing houses and they also purchase packed fruits from other farmers and packing houses. We have started to work commercially with Mehadrin on October 2010, implementing our CitrusGuard™ on one packing line of Grapefruits. On January 2011 we have started treating with CitrusGuard™ additional 2 packing lines of Clementine. During the citrus seasons of 2011-2013 we have entered into additional packing lines, implementing also our SuperClean™. During the years 2012 and 2013 Mehadrin purchased our products in total aggregate amounts of approximately 70,000 and 90,000 liters respectively. For additional information please see Citrus Sanitizers section elsewhere in this report.

~~Seeler~~ Sun ~~Industries,~~Pacific Inc.

~~Seeler Industries, Inc. (“Seeler”),~~ aSun ~~leading~~Pacific ~~toll~~is ~~manufacturer~~one of ~~food~~the ~~grade~~biggest ~~formulations~~suppliers ~~supplies~~of ~~our~~fruits ~~products~~and vegetables in the USUnited ~~under our name~~States, leading in ~~accordance~~citrus ~~with a toll manufacturing agreement. Seeler is responsible for keeping standards of the products~~ and ~~for~~other ~~supply of the~~ products ~~within specifications and within required shelf life~~.

~~Zohar~~ Pimi ~~Dalia~~was introduced to Sun Pacific by a significant U.S. retailer, to whom Sun Pacific supplies its produce. From December 2010 through February 2013 we conducted several trials in Sun Pacific’s Mandarins packing house, at Maricopa CA, which is, to management’s best knowledge, the biggest clementine packing house in the U.S. In fourth quarter of 2013 our CitruWash™ and FreshProtect™ were utilized by Sun Pacific in commercial scales on certain of its packing lines. For additional information please see Citrus Sanitizers section elsewhere in this report.

~~Zohar Dalia is the manufacturer of our~~ ~~Products~~Suppliers in Israel. It manufactures our products under our name in accordance with an oral agreement. Zohar Dalia follows ISO and GMP quality programs at its site, and is responsible for keeping the standards of the products and to supply our products within specifications and within required shelf life.

~~Competition~~ Seeler Industries, Inc.

~~Competition~~ Seeler ~~with~~Industries, Inc. (“Seeler”), a leading toll manufacturer of food grade formulations supplies our ~~SuperClean™~~ products in the US under our name, in accordance with a toll manufacturing agreement. Seeler is responsible for keeping standards of the products and ~~CitruWash™~~for supply of the products within specifications and within required shelf life.

~~As of the date of this report we are not~~ ~~aware~~Zohar of any product which is non-residue and leaves no harmful chemical by-products while providing similar levels of cleaning efficacy as our SuperClean™ and CitruWash™. Chlorine-based cleansers and their manufacturers and distributors are our major competitors in this field. We believe that retailers’ demand to reduce the Maximum Residue Levels (MRL) of pesticides in their fresh fruits, shall lead producers to prefer our environmentally friendly solutions, aimed to reduce levels of pesticide residues.Dalia

~~Competition~~ Zohar Dalia is the manufacturer of our Products in Israel. It manufactures our products under our name in accordance with an oral agreement. Zohar Dalia follows ISO and GMP quality programs at its site, and is responsible for keeping the standards of the products and to supply our ~~CitrusGuard™~~ products within specifications and ~~FreshProtect™~~within required shelf life.

~~As of the date of this report we are not~~ ~~aware~~Competition of any product which is non-residue and leaves no harmful chemical by-products while providing similar level of sanitizing efficacy as our CitrusGuard™ and FreshProtect™. The manufacturers and distributors of Imazalil, such as Makhteshim Agan Industries and Janssen Pharmaceutica N.V are our major competitors in this field.

Competition with our SuperClean™ ~~SweetGuard~~and CitruWash™

~~SweetGuard™~~ As of the date of this report we are not aware of any product which is ~~intended to increase~~non-residue ~~cleaning~~and ~~ability~~leaves no harmful chemical by-products while providing similar levels of ~~sweet~~cleaning ~~potatoes~~efficacy as our SuperClean™ and toCitruWash™. ~~improve~~Chlorine-based ~~its~~cleansers ~~appearance~~and their manufacturers and distributors are our major competitors in this field. AsWe ofbelieve that retailers’ demand to reduce the ~~date~~Maximum Residue Levels (MRL) of ~~this~~pesticides ~~report~~in their fresh fruits, weshall ~~are~~lead ~~not~~producers ~~aware~~to ofprefer ~~any competing~~our ~~products~~environmentally ~~with~~friendly ~~SweetGuard™~~solutions, aimed to reduce levels of pesticide residues.

~~Competition~~- ~~with~~14 ~~our SpuDefender™~~-

~~The manufacturers and distributors of CIPC~~ ~~are~~Competition ~~large~~with ~~chemical~~our CitrusGuard™ companies such as Cerits Europe B.V, Loxan B.V, Aceto Agriculture Chemical Corporation, United Phosphorous limited, Mirfield Sales Services Limited, Standon Chemicals limited, Atlas Crop Protection Limited and Whyte Agrochemical LTD. These manufacturers have promoted the "CIPC Stewardship Action Plan 2008" for the UK, which was introduced in order to monitor and control the application of the CIPC, in order not to exceed the current EU MRL of 10mg/kg, and at the same time to enable the continued use of CIPC in the UK. We expect significant competition from these manufacturers and distributors of CIPC.FreshProtect™

At As of the ~~same~~date ~~time,~~of ~~there~~this report we are ~~several~~not ~~products~~ aware of any product which ~~aim~~is tonon-residue ~~substitute~~and ~~the~~leaves ~~CIPC~~no ~~which~~harmful ~~are~~chemical inby-products ~~potential~~while ~~competition~~providing ~~with~~similar level of sanitizing and/or disinfecting efficacy as our ~~SpuDefenderTM:~~CitrusGuard™ and FreshProtect™. The manufacturers and distributors of Imazalil, such as Makhteshim Agan Industries and Janssen Pharmaceutica N.V are our major competitors in this field.

· Competition ~~Greenvale,~~with ~~UK,~~our launched the Ethylene gas solution that may control sprouts at low dosage. It has been used in some storage rooms in Europe. In management’s opinion the Ethylene has some disadvantages: it requires relatively expensive equipment for its distribution and after potatoes are released from storage accelerated sprouting occurs.SweetGuard™

14 SweetGuard™ is intended to increase cleaning ability of sweet potatoes and to improve its appearance. As of the date of this report, we are not aware of any competing products with SweetGuard™.

· Competition ~~Certis,~~with ~~Belgium,~~our launched the Caraway oil extract, however, in Management’s opinion, this substitute is not demonstrating an ability to replace CIPC due to fact that it is not palatable and it affects the fry colors.SpuDefender™

· The ~~Certis~~manufacturers ~~also~~and ~~manufactures~~distributors ~~Clove~~of ~~oil~~CIPC ~~which~~are large chemical companies such as Cerits Europe B.V, inLoxan ~~Management’s~~B.V, ~~opinion~~Aceto Agriculture Chemical Corporation, ~~has~~United ~~several~~Phosphorous ~~disadvantages:~~limited, ~~the~~Mirfield ~~oils~~Sales ~~affect~~Services ~~taste~~Limited, ~~and~~Standon ~~aroma~~Chemicals limited, asAtlas ~~well~~Crop asProtection ~~cooking~~Limited and ~~fried~~Whyte ~~taste~~Agrochemical LTD. ToThese manufacturers have promoted the ~~best~~"CIPC Stewardship Action Plan 2008" for the UK, which was introduced in order to monitor and control the application of ~~management’s~~the ~~knowledge~~CIPC, in order not to exceed the ~~Industry~~current ~~banned~~EU itMRL ~~due~~of 10mg/kg, and at the same time to ~~bad~~enable ~~fry~~the ~~colors~~continued use of CIPC in the UK. We expect significant competition from these manufacturers and distributors of CIPC.

· At ~~Other~~the ~~products~~same ~~are: 1.4-Dimethylnaphthalene (1.4-DMN) and 2~~time,~~6-Disopropylnaphthalene:~~ ~~this~~there ~~two synthetic hormones~~ are ~~the~~several ~~replication~~products ofwhich ~~natural~~aim ~~hormones~~to ~~within~~substitute the ~~potato that induce and prolong its dormancy. This chemicals application in combination with~~ CIPC ~~can~~which ~~control effectively sprouting but has no disinfection capability, to the best of management’s knowledge. The compounds~~ are ~~several years~~ in ~~the~~potential UScompetition ~~market~~ with noour ~~significant presence.~~SpuDefenderTM:

· Greenvale, UK, launched the Ethylene gas solution that may control sprouts at low dosage. It has been used in some storage rooms in Europe. In management’s opinion the Ethylene has some disadvantages: it requires relatively expensive equipment for its distribution and after potatoes are released from storage accelerated sprouting occurs. · Certis, Belgium, launched the Caraway oil extract, however, in Management’s opinion, this substitute is not demonstrating an ability to replace CIPC due to fact that it is not palatable and it affects the fry colors. · Certis also manufactures Clove oil which, in Management’s opinion, has several disadvantages: the oils affect taste and aroma, as well as cooking and fried taste. To the best of management’s knowledge the Industry banned it due to bad fry colors. · Other products are: 1.4-Dimethylnaphthalene (1.4-DMN) and 2,6-Disopropylnaphthalene: this two synthetic hormones are the replication of natural hormones within the potato that induce and prolong its dormancy. This chemicals application in combination with CIPC can control effectively sprouting but has no disinfection capability, to the best of management’s knowledge. The compounds are several years in the US market with no significant presence. · There are several other hydrogen peroxide products that claim, as Pimi claims, substantial bacteriologic control abilities. To the best of Management’s knowledge, all of these products are based on HP and Acetic & Peracetic acide. These compounds are used in the food industry for more the 60 years and are very effective as disinfectant but limited in scope; in the niche of fruits and vegetables the application suffers several disadvantages, and in particular they have no long-term effect as disinfectant.

Competition with our StorGuard™

StorGuard™ is used mainly to increase shelf life and storability of crops, such as Cabbage, Broccoli and Onions. As of the date of this report and to Pimi’s best knowledge there are other methods to increase storability as described herein:

~~· Ozone~~- –15 ~~Ozone started to be popular solution to prevent air pathogens in storage rooms. Management believes this solution has health risks, since people may be exposed to carcinogenic residues.~~-

· ~~Chlorine-Dioxide~~· Ozone – aOzone ~~strong~~started ~~chlorination detergent which aerosols the room with Chlorine. Chlorine is not welcomed by the industry due~~ to ~~the~~be ~~fact~~popular ~~that~~solution ~~it may create connections with the surface of the produce, and,~~ to ~~management's~~prevent ~~knowledge,~~air itpathogens ~~may create~~in astorage ~~carcinogenic compound~~rooms. ~~This~~Management ~~product~~believes isthis ~~aggressive~~solution ~~for the workers its and residues stay in the air. This product~~ has ~~significant smell~~health ~~and~~risks, ~~odor~~since ~~that~~people may ~~remain~~be onexposed ~~the~~to ~~product~~carcinogenic ~~during its shelf life~~residues. ~~Recently, a food treatment solutions vendor has promoted the use of Chlorine in the market and has turned the use thereof into a more common.~~

~~Competition~~ · Chlorine-Dioxide – a strong chlorination detergent which aerosols the room with ~~our~~Chlorine. ~~OnionGuard™~~Chlorine is not welcomed by the industry due to the fact that it may create connections with the surface of the produce, and, to management's knowledge, it may create a carcinogenic compound. This product is aggressive for the workers its and residues stay in the air. This product has significant smell and odor that may remain on the product during its shelf life. Recently, a food treatment solutions vendor has promoted the use of Chlorine in the market and has turned the use thereof into a more common.

~~OnionGuard™ is intended to~~ ~~increase~~Competition ~~storability~~with ofour ~~the produce. As of the date of this report, we are not aware of any competing products to~~ OnionGuard™.

~~Price~~ OnionGuard™ ~~Competition~~is intended to increase storability of the produce. As of the date of this report, we are not aware of any competing products to OnionGuard™.

~~Management believes that the trend in the~~ ~~markets~~Price to use environmentally friendly products, which are residue free, or low residue, and to replace the subsisting chemicals, which are high residue, together with the trend of the regulators, to reduce the usage of high residue chemicals (such as CIPC), will cause farmers and packing houses to prefer Pimi’s solutions. However, this trend will not create a huge price difference from current procedures. Therefore, Pimi products prices are aimed at the same level as current solutions prices.Competition

~~Strategy~~ Management believes that the trend in the markets to use environmentally friendly products, which are residue free, or low residue, and to replace the subsisting chemicals, which are high residue, together with the trend of the regulators, to reduce the usage of high residue chemicals (such as CIPC), will cause farmers and packing houses to prefer Pimi’s solutions. However, this trend will not create a huge price difference from current procedures. Therefore, Pimi products prices are aimed at the same level as current solutions prices.

~~Since the market trend, led primarily by~~ ~~major retailers, is to increase freshness while reducing residue pesticides in consumed goods, we have adopted a strategy to create awareness of our solutions.~~Strategy

~~After~~ Since ~~presenting~~the ~~our solutions to~~ market ~~leaders~~ trend, ~~they~~led ~~usually~~primarily ~~connect~~by usmajor ~~to their suppliers~~retailers, sois ~~that~~to weincrease ~~may~~freshness ~~present~~while ~~the~~reducing ~~suppliers~~residue ~~with~~pesticides ~~our~~in ~~solutions.~~consumed ~~Then usually we will run Beta site trials~~goods, ~~and thereafter commercial trials, with these suppliers. Concurrently,~~ we ~~apply~~have toadopted ~~the~~a ~~authorized~~strategy ~~regulator in order~~ to ~~approve~~create ~~the~~awareness ~~product,~~of ~~and after such approval is obtained we start selling~~ our ~~product to these suppliers~~solutions.

15 After presenting our solutions to market leaders, they usually connect us to their suppliers, so that we may present the suppliers with our solutions. Then usually we will run Beta site trials, and thereafter commercial trials, with these suppliers. Concurrently, we apply to the authorized regulator in order to approve the product, and after such approval is obtained we start selling our product to these suppliers.

Under this strategy we have established our Joint Venture with VegiSafe LLC, whose parent company - Earthbound LLC - is engaged in consulting to mass market retail companies and major supermarket chains in North America, in brand development. Our Joint Venture has contacted already with major citrus’ packers in U.S. See “Customers and Partners.”

We plan to sell Pimi’s products to farmers and growers with large storage houses, to storage providers, and to packing companies. Initially, we will sell our products through local distributors or post-harvest service providers who serve this target market. Once we establish a foothold in the market, we will attempt to establish strategic relations with several large distributors (e.g. large post harvest services providers) who already have a regional distribution network. This will enable us to rapidly increase our global market share and coverage without investing in building a global distribution network. At this stage, based on this model, we will furnish the know-how of our technology to these strategic partners, which will be responsible for ordering the product from our OEM manufacturers and marketing and sales activities, enabling us to focus on developing additional products. The distributors will also be in charge of marketing of our products, and we intend that each distributor will be obligated to minimum sales. We intend to support our distributors with technical support, research and tests results, and professional's publication relating to our products. We will also support our distributors in the education of the market, in regulating of our products and with professional advice.

Pimi’s distributors will purchase our products from us, and we will deliver it to the customers through our OEM producers. The distributors will be trained by our technical team and will be responsible for recommending, training, and optionally also designing and installing the required systems that distribute the products in the storehouses and packing lines. For customers who do not have the required systems, we and our distributors will either provide one at a cost to be determined or alternatively, bundled with a minimum order of goods.

~~Employees~~- 16 -

~~As of the date of this report, we employ 4~~ ~~full-time and 2 part time employees.~~Employees

~~Corporate~~ As ~~Development~~of the date of this report, we employ 4 full-time and 2 part time employees.

~~Subject to additional fundraising and regulatory~~ ~~approvals,~~Corporate ~~management~~Development plans to expand the Company’s activity to Chile, Turkey, Spain, South Africa and Morocco as the markets for our CitrusGuard™, FreshProtect™, CitruWash™ and SuperClean™, and mainly to the US as our major market.

~~Dividends~~ Subject to additional fundraising and regulatory approvals, management plans to expand the Company’s activity to Chile, Turkey, Spain, South Africa and Morocco as the markets for our CitrusGuard™, FreshProtect™, CitruWash™ and SuperClean™, and mainly to the U.S. as our major market.

~~We have not declared any cash dividends~~ on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as our Board of Directors deems relevant.Dividends

~~ITEM~~ We 1Ahave not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. ~~RISK~~We ~~FACTORS~~plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as our Board of Directors deems relevant.

~~You should carefully consider the following~~ ~~risk~~ITEM ~~factors and the other information included herein as well as the information included in other reports and filings made with the SEC before investing in our common stock~~1A. ~~The~~RISK following factors, as well as other factors affecting our operating results and financial condition, could cause our actual future results and financial condition to differ materially from those projected. The trading price of our common stock could decline due to any of these risks, and you may lose part or all of your investment.FACTORS

~~Risks~~ You ~~Related~~should carefully consider the following risk factors and the other information included herein as well as the information included in other reports and filings made with the SEC before investing in our common stock. The following factors, as well as other factors affecting our operating results and financial condition, could cause our actual future results and financial condition to ~~Our~~differ ~~Business~~materially from those projected. The trading price of our common stock could decline due to any of these risks, and ~~Industry~~you may lose part or all of your investment.

~~Our independent auditors have expressed~~ ~~doubt~~Risks ~~about~~Related ~~our ability~~ to ~~continue~~Our ~~our~~Business ~~activities~~and ~~as a going concern, which may hinder our ability to obtain future financing.~~Industry

~~Since we have been focused in developing~~ ~~our~~Our ~~propriety~~independent ~~technology~~auditors ~~for availability of commercialization, we~~ have ~~suffered~~expressed ~~recurring~~doubt ~~losses~~about ~~from~~our ~~operations.~~ability ~~The~~to ~~continuation of~~continue our ~~company~~activities as a going concern, iswhich ~~dependent~~may ~~upon~~hinder our ~~company~~ability ~~attaining and maintaining profitable operations and raising additional capital. The financial statements do not include any adjustment relating~~ to ~~the~~obtain ~~recovery~~future ~~and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations~~financing.

16 Since we have been focused in developing our propriety technology for availability of commercialization, we have suffered recurring losses from operations. The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations.

Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the years ended December 31, 2013, 2012, and 2011 our independent auditors included an explanatory paragraph regarding the doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the status of the company.

The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a substantial dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If the Company should fail to continue as a going concern, you may lose the value of your investment in the Company.

We will need significant additional capital, which we may be unable to obtain.

Our capital requirements in connection with our research and development activities and transition to commercial operations have been and will continue to be significant. We will require additional funds to continue research, development and testing of our technologies and products, to obtain intellectual property protection relating to our technologies when appropriate, and to market our products. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. There is no assurance additional funds will be available from any source; or, if available, such funds may not be on terms acceptable to the Company. In either of the aforementioned situations, the Company may not be able to fully implement its growth plans.

In order to continue our operations, without expanding our activities, we estimate that we will need minimum capital in the sum of $~~600~~500,000 ~~starting~~for the period March 1, ~~2013~~2014 through the end of ~~2013~~2014. As of February 281, ~~2013~~2014 we used credit lines in the ~~sum~~amount of $1626,~~000~~223 and ~~have~~had nounused ~~cash~~credit lines in the amount of $33,777. Currently our net burn rate is approximately $5025,000 per month (not including delayed payments to executive officers and employees totaling to $25,000 per month). Thus, we need immediate additional investments.

If- we17 ~~are unable to obtain such additional capital as discussed above, we will be required to stop our operations, and will resume our activities, only after capital is raised.~~-

We On ~~may~~January ~~face~~3, ~~significant~~2014 ~~competition from~~we ~~other~~filed ~~companies~~an ~~looking~~S-1 Registration Statement with the Securities and Exchange Commission in connection with an offering of up to ~~develop~~$5,000,000 of Common Stock and common stock Class A Warrants, led by Sandlapper Securities as placement agent. The Registration Statement has yet to be declared effective by the Securities and Exchange Commission and is currently under review. This disclosure shall not constitute an offer to sell or ~~acquire~~a ~~new~~solicitation ~~alternative~~of ~~environment-friendly~~an ~~solutions~~offer ~~for~~to buy the ~~treatment~~securities, nor shall there by any sale of ~~fruits~~these ~~and vegetables~~securities in any jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Any offer of the securities will be solely by means of the prospectus included in the registration statement and one or more prospectus supplements that will be issued at the time of the offering.

~~We expect to face significant competition~~ inAdditional ~~every~~financings ~~aspect of our business, and particularly from other companies~~ that ~~seek~~we tomay ~~enter~~require ~~our~~in ~~market.~~the Asfuture ~~regulators~~will ~~are~~dilute ~~pushing to~~the ~~move~~percentage ~~away~~ownership ~~from~~interests ~~current residue chemical solutions, such as Chlorpropham or CIPC (“CIPC”), existing suppliers~~ of ~~these~~ ~~solutions~~our ~~are~~stockholders ~~anxiously~~and ~~looking~~may toadversely ~~develop~~affect orour ~~acquire~~earnings ~~new alternative environment-friendly solutions that can sustain their market share~~ and ~~revenue~~net ~~streams,~~book orvalue toper ~~enable the continuance of CIPC at current levels in new ways of treatment~~share. ~~Additionally, as~~In ~~market opportunity becomes eminent~~addition, ~~competitors~~we ~~and~~may ~~new~~not ~~players~~be ~~will~~able ~~most likely attempt~~ to ~~develop~~secure ~~similar~~any orsuch ~~comparable~~additional ~~solutions. Although~~financing ~~Pimi~~on ~~believes~~terms ~~its~~acceptable ~~technology~~to ~~is unique~~us, ~~and~~if ~~will~~at provide it with a significant competitive barrier, it is nevertheless possible that superior or more cost-effective alternative technology will emerge that will achieve greater market acceptance and render Pimi’s products less competitiveall. ~~Furthermore~~ Moreover, ~~existing~~if ~~vendors~~we ~~can~~are ~~cooperate~~unable to ~~combat~~obtain ~~new~~such ~~players~~additional bycapital ~~reducing~~as ~~market prices~~discussed ~~and~~above, ~~margins~~we ~~or other competitive initiatives. The future success of Pimi~~ will ~~therefore~~be ~~depend,~~required to astop ~~large~~our ~~extent~~operations, ~~upon the company’s ability to achieve market acceptance of its innovative solutions as well as develop~~ and ~~introduce new products and enhancements to existing products. No assurance can be given that the Company~~ will beresume ~~able~~our toactivities, ~~compete~~only inafter ~~such~~capital ais ~~market place~~raised.

We ~~have~~may ~~incurred~~face significant ~~losses to~~competition ~~date~~from ~~and~~other ~~expect~~companies looking to ~~continue~~develop toor ~~incur~~acquire ~~losses~~new alternative environment-friendly solutions for the treatment of fruits and vegetables.

~~During~~ We ~~the~~expect ~~year~~to ~~ended~~face ~~December~~significant competition 31in every aspect of our business, ~~2012~~and particularly from other companies that seek to enter our market. As regulators are pushing to move away from current residue chemical solutions, we ~~incurred~~such ~~net~~as ~~losses~~Chlorpropham inor ~~the~~CIPC ~~sum~~(“CIPC”), existing suppliers of ~~$695,742.~~these ~~Since~~solutions ~~starting~~are ~~our~~anxiously ~~operation~~looking into ~~2004~~develop ~~and~~or ~~until~~acquire ~~December~~new 31alternative environment-friendly solutions that can sustain their market share and revenue streams, ~~2012~~or weto ~~incurred accumulated~~enable ~~losses~~the continuance of CIPC at current levels in ~~the~~new ~~sum~~ways of $5treatment. Additionally,~~007~~ as market opportunity becomes eminent,~~417.We~~ ~~expect~~competitors toand ~~continue~~new players will most likely attempt to ~~incur~~develop ~~losses~~similar ~~for~~or ~~the~~comparable ~~fiscal~~solutions. ~~year~~Although ~~ended~~Pimi ~~December~~believes 31its technology is unique, ~~2013. Continuing~~and ~~losses~~will provide it with a significant competitive barrier, it is nevertheless possible that superior or more cost-effective alternative technology will ~~have~~emerge anthat ~~adverse~~will ~~impact~~achieve ongreater ~~our~~market ~~cash~~acceptance ~~flow~~and render Pimi’s products less competitive. Furthermore, existing vendors can cooperate to combat new players by reducing market prices and ~~may~~margins ~~impair~~or ~~our~~other ~~ability~~competitive initiatives. The future success of Pimi will therefore depend, to ~~raise~~a ~~additional~~large ~~capital~~extent, ~~required~~ upon the company’s ability to ~~continue~~achieve market acceptance of its innovative solutions as well as develop and ~~expand~~introduce ~~our~~new ~~operations~~products and enhancements to existing products. No assurance can be given that the Company will be able to compete in such a market place.

17 We have incurred significant losses to date and expect to continue to incur losses.

We During ~~are~~the ~~dependent~~year ~~upon~~ended December 31, 2013, we incurred net losses in the sum of $468,812. Since starting our ~~Managers~~operation ~~for~~ in 2004 and until December 31, 2013 we incurred accumulated losses in the ~~operating~~sum of $5,562,047. We expect to continue to incur losses for the ~~Company~~fiscal year ended December 31, 2014. Continuing losses will have an adverse impact on our cash flow and may impair our ability to raise additional capital required to continue and expand our operations.

~~The Company is dependent upon the services~~ ofWe ~~its~~are ~~management to determine and implement the strategy of the Company. Furthermore, the Company is~~ dependent upon ~~the~~our Managers to ~~oversee~~for the ~~operations~~operating of ~~Pimi and Pimi Israel. Thus, there can be no assurance that~~ the ~~Managers’ experience will be sufficient to successfully achieve the business objectives of the~~ Company. All decisions regarding the management of the Company’s affairs will be made exclusively by the Officers and Directors of the Company. In the event these persons are ineffective, the Company’s business and results of operation would likely be adversely affected.

~~Our~~ The ~~success~~Company is dependent upon ~~our~~the ~~ability~~ services of its management to determine and implement the strategy of the Company. Furthermore, the Company is dependent upon the Managers to oversee the operations of Pimi and Pimi Israel. Thus, there can be no assurance that the Managers’ experience will be sufficient to successfully achieve ~~regulatory~~the ~~approvals~~business inobjectives of the UCompany.S All decisions regarding the management of the Company’s affairs will be made exclusively by the Officers and Directors of the Company. In the event these persons are ineffective, the Company’s business and ~~abroad~~results of operation would likely be adversely affected.

A Our ~~critical key to our~~ success ~~and~~is ~~ability to~~dependent ~~expand~~upon our ~~business is our~~ ability to ~~obtain~~achieve regulatory approvals in ~~United States and in other countries for~~ the ~~use of our products~~U. ~~The regulatory approvals of some of our products are dependent, on trials to show the efficacy or the non-toxicity of our products, and are time and cost consuming~~S. ~~Such registration filling might take longer period than expected,~~ and ~~it might delay obtaining such regulatory approvals, or might cause delay in starting operations on a large scale in these countries and other jurisdictions~~abroad. ~~We currently have EPA registration for our SpuDefender™ and FreshProtect™ products. We have postponed our efforts to obtain regulatory approvals for EU states.~~

~~Our~~ A critical key to our success and ability to expand our business is our ability to obtain regulatory approvals in United States and in other countries for the use of our products. The regulatory approvals of some of our products are dependent, ~~upon~~on trials to show the efficacy or the non-toxicity of our ~~ability~~ products, and are time and cost consuming. Such registration filling might take longer period than expected, and it might delay obtaining such regulatory approvals, or might cause delay in starting operations on a large scale in these countries and other jurisdictions. We currently have EPA registration for our SpuDefender™ and FreshProtect™ products. We have postponed our efforts to ~~achieve~~obtain ~~market~~regulatory ~~acceptance~~approvals for EU states.

~~In order to achieve high volume sales,~~ ~~and~~Our ~~attain~~success a leading market share and become the new standard of treatment, the Company’s products must not only be approved by the regulators, but also endorsed by the major packers and storage providers, retailer of fruits and vegetables as well as environment organizations. Pimi is ~~aware~~dependent ofupon this key factor and is focusing on conducting large scale trials with major fruits and vegetables packers and retail suppliers of fresh consumed goods in several countries, in order to show the efficacy of the products and our ~~technology~~ ~~and~~ability to ~~receive~~achieve ~~these recognition of the packers and retailers, but no assurances can be made that we will succeed in such endeavor and how long it will take until we shall receive~~ market ~~recognition~~acceptance.

~~Our~~ In order to achieve high volume sales, and attain a leading market share and become the new standard of treatment, the Company’s products must not only be approved by the regulators, but also endorsed by the major packers and ~~technology~~storage ~~are~~providers, ~~still in~~retailer ~~development~~of ~~stage~~fruits and ~~require~~vegetables ~~additional~~as well as environment organizations. Pimi is aware of this key factor and is focusing on conducting large scale trials with major fruits and ~~development~~vegetables packers and retail suppliers of fresh consumed goods in several countries, in order to show the efficacy of the products and our technology and to receive these recognition of the packers and retailers, but no assurances can be made that we will succeed in such endeavor and how long it will take until we shall receive market recognition.

~~Our~~- ~~products~~18 and technology have been tested in numerous trials, in the U.S and in Israel on vegetables and fruits varieties which are grown in hot climate, as well as storage rooms with refrigeration, and also on certain type of processes which are used in these countries. We still need to present efficacy in other climates and other countries with different types of processes than those we have presented performance with our products.-

We Our ~~rely~~products onand ~~our~~technology ~~Technologies~~are tostill ~~successfully develop~~in development stage and ~~market~~require ~~new~~additional trials and ~~existing products~~development.

Our ~~product~~products ~~has~~and technology have been tested in ~~multiple commercial~~numerous ~~and~~trials, ~~small~~in ~~scale~~the ~~tests~~U.S ~~Some~~and ~~of our products are still under evaluation~~ in ~~Beta~~Israel ~~sites~~on ~~trails in the US with leading~~ vegetables and fruits ~~packers~~varieties ~~and~~which ~~suppliers.~~are Itgrown isin ~~possible~~hot ~~that~~climate, ~~the~~as ~~results~~well ~~from~~as ~~these~~storage ~~large~~rooms ~~scale~~with ~~tests may show lower efficacy than tests conducted previously~~refrigeration, and ~~may~~also ~~require~~on ~~some~~certain ~~product~~type ~~improvements~~of asprocesses ~~well~~which asare ~~possible~~used ~~changes~~ in ~~the~~these ~~application and usage protocol~~countries. ~~These~~ ~~factors~~We ~~may~~still ~~significantly~~need ~~delay our products' introduction~~ to ~~market.~~present ~~Likewise,~~efficacy wein ~~cannot~~other beclimates ~~sure~~and ~~these~~other ~~products~~countries ~~will~~with ~~be commercially~~different ~~viable,~~types ~~and~~of ~~have~~processes nothan ~~assurances~~those ~~that~~ we ~~will~~have bepresented ~~able~~performance towith ~~expand upon~~ our ~~current product offerings or that any such expansion will result in revenues to the company~~products.

We rely on ~~rapidly~~our ~~establishing~~Technologies ~~global distributorship~~to ~~network~~successfully indevelop ~~order~~and tomarket ~~effectively~~new ~~market~~and ~~our~~existing products.

~~The~~ Our ~~company,~~product ~~through~~has ~~its~~been ~~wholly~~tested ~~owned~~in ~~subsidiary, Pimi~~multiple ~~Israel,~~commercial ~~has~~and ~~developed~~small ~~initial~~scale ~~partnerships~~tests. ~~with~~Some ~~local~~of ~~partners.~~our Inproducts ~~order~~are tostill ~~expand~~under ~~sales~~evaluation ~~and~~in ~~marketing~~Beta ~~globally,~~sites ~~and~~trails ~~capture leading~~in ~~market~~the ~~share~~US ~~before~~with ~~any~~leading ~~potential~~vegetables ~~reaction~~and ~~from~~fruits ~~the~~packers ~~competitors,~~and ~~the~~suppliers. ~~Company~~It ~~will~~is ~~need~~possible tothat ~~rapidly~~the ~~expand~~results ~~geographically and~~from ~~establish~~these alarge ~~global~~scale ~~distribution~~tests ~~network.~~may ~~This~~show islower ~~likely~~efficacy tothan ~~put~~tests ~~pressure~~conducted ~~on management~~previously, ~~financial~~ and ~~operational~~may ~~resources of~~require ~~the~~some ~~Company.~~product Inimprovements ~~order~~as towell ~~mitigate~~as ~~this~~possible ~~factor,~~changes ~~once~~in ~~Pimi~~the ~~establishes~~application aand ~~significant~~usage ~~presence~~protocol. inThese ~~the~~factors ~~market,~~may itsignificantly ~~will~~delay ~~proceed~~our products' introduction to ~~establish~~ ~~strategic~~market. ~~partnerships~~Likewise, ~~with~~we ~~some~~cannot ofbe ~~the~~sure ~~leading~~these ~~players~~products inwill ~~the~~be ~~market,~~commercially ~~however~~viable, ~~there~~and ~~are~~have no assurances that we will ~~succeed~~ inbe ~~establishing~~able ~~such~~to ~~partnerships,~~expand ~~which~~upon ~~may~~our ~~harm~~current ~~the~~product ~~marketing~~offerings ofor ~~our~~that ~~products~~any ~~and~~such ~~the~~expansion ~~development~~will ofresult ~~our~~in ~~business~~revenues to the company.

18 We rely on rapidly establishing global distributorship network in order to effectively market our products.

~~Our~~ The ~~inability~~company, through its wholly owned subsidiary, Pimi Israel, has developed initial partnerships with local partners. In order to ~~attain~~expand sales and ~~protect our~~marketing ~~intellectual~~globally, ~~property~~and ~~rights~~capture ~~could~~leading ~~reduce~~market share before any potential reaction from the ~~value~~competitors, the Company will need to rapidly expand geographically and establish a global distribution network. This is likely to put pressure on management, financial and operational resources of ~~our~~the ~~products~~Company. In order to mitigate this factor, ~~services~~once Pimi establishes a significant presence in the market, it will proceed to establish strategic partnerships with some of the leading players in the market, however, there are no assurances that we will succeed in establishing such partnerships, which may harm the marketing of our products and ~~brand~~the development of our business.

~~Patents and pending patents, trademarks,~~ ~~trade~~Our ~~secrets,~~inability ~~copyrights and other intellectual property rights may be important assets for us. Various events outside of our control pose a threat~~ to ~~our ability to~~ attain ~~or protect intellectual property rights as well as to our products~~ and ~~services. For example, effective intellectual property protection may not be available in every country in which our products are distributed. Also, the efforts we have taken to~~ protect our ~~proprietary rights may not be sufficient or effective. Any significant impairment of our ability to attain or protect our~~ intellectual property rights could ~~harm~~reduce ~~our business or our ability to compete. Also, protecting intellectual property rights is costly and time consuming. Any increase in~~ the ~~unauthorized~~value ~~use~~ of our ~~future~~products, ~~intellectual~~services ~~property could make it more expensive to do business~~ and ~~harm our operating results~~brand.

~~Our~~ Patents ~~success~~and pending patents, trademarks, trade secrets, copyrights and other intellectual property rights may be important assets for us. Various events outside of our control pose a threat to our ability to attain or protect intellectual property rights as well as to our products and services. For example, effective intellectual property protection may not be available in every country in which our products are distributed. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our ability to attain or protect our intellectual property rights could harm our business or our ability to compete. Also, protecting intellectual property rights is ~~dependent~~costly ~~upon~~and time consuming. Any increase in the ~~acceptance~~ unauthorized use of ~~environment-friendly~~our ~~solutions~~future ~~for~~intellectual ~~fruits~~property could make it more expensive to do business and ~~vegetables~~harm our operating results.

~~The~~ Our ~~future~~success ~~of the company~~ is dependent upon the acceptance of environment-friendly, ~~non-residue treatment~~ solutions for fruits and vegetables. Although this appears to be the direction the market is going in the coming years, these trends as well as the future size of this market, and other potential markets for the Company’s products, depend upon a number of factors, many of which are beyond the control of the Company. For example, failure to convince retailers, to bear additional cost for residue free fruit and vegetables, failure to convince the consumers to purchase residue free fruits and vegetables for higher prices, could have adverse effects on Pimi’s business, financial condition, operating results and cash flow going forward.

~~Our~~ The ~~business~~future of the company is dependent upon the acceptance of environment-friendly, non-residue treatment solutions for fruits and ~~operations~~vegetables. ~~may~~Although this appears to be ~~affected~~ bythe ~~climate~~direction ~~change~~the ~~conditions~~market is going in the coming years, these trends as well as the future size of this market, and other potential markets for the Company’s products, depend upon a number of factors, many of which are beyond the control of the Company. For example, failure to convince retailers, to bear additional cost for residue free fruit and vegetables, failure to convince the consumers to purchase residue free fruits and vegetables for higher prices, could ~~materially~~have ~~harm~~adverse ~~our~~effects on Pimi’s business, financial condition, operating results and cash flow going forward.

~~Our~~- ~~business~~19 may be affected from changes in climate conditions as such events would affect the crops and their storability (e.g. potatoes) in those cases where there is unusually warm, dry, humid or cold weather before cropping.-

~~In such instances, we may suffer a decrease~~ inOur ~~revenues~~business asand a result of a smaller storage volume of rooms or shorter storage period. While as of December 31, 2012 climate change events did not influence us materially, we anticipate that once we will increase our operations, ~~and~~may ~~certain~~be ~~territories~~affected ~~will~~by ~~experience significant~~ climate change, ~~such as above-common rains, heat waves, dry air~~ conditions, ~~and~~which ~~unusually~~could ~~cold or prolonged cold weather conditions, such events may~~ materially ~~impact~~harm our financial results.

Our ~~operating~~business ~~results~~ may ~~fluctuate, which~~be ~~makes~~affected ~~our~~from ~~results~~changes ~~difficult~~in toclimate ~~predict~~conditions as such events would affect the crops and ~~could~~their ~~cause~~storability ~~our~~(e.g. ~~results~~potatoes) toin ~~fall~~those ~~short~~cases ofwhere ~~expectations~~there is unusually warm, dry, humid or cold weather before cropping.

~~Our~~ In ~~operating~~such ~~results~~instances, we may ~~fluctuate~~suffer as a ~~result~~decrease ofin arevenues ~~number~~as ~~of factors, many outside of our control. As~~ a result, ~~comparing~~of ~~our operating results on~~ a ~~period-to-period basis~~smaller ~~may~~storage ~~not~~volume beof ~~meaningful,~~rooms ~~and~~or ~~you~~shorter ~~should~~storage ~~not~~period. ~~rely~~While ~~on our past results~~ as ~~an indication~~ of ~~our~~December ~~future~~31, ~~performance.~~2013 ~~Our~~climate ~~quarterly, year-to-date~~change ~~and~~events ~~annual~~did ~~expenses~~not asinfluence aus ~~percentage~~materially, ofwe ~~our~~anticipate ~~revenues~~that ~~may~~once ~~differ~~we ~~significantly~~will ~~from~~increase our ~~historical~~operations, orand ~~projected~~certain ~~rates. Our~~territories ~~operating~~will ~~results~~experience insignificant ~~future~~climate ~~quarters~~change, ~~may~~such ~~fall~~as ~~below~~above-common ~~expectations.~~rains, ~~Any~~heat ofwaves, ~~these~~dry ~~events~~air ~~could~~conditions, ~~cause~~and ~~our~~unusually ~~stock~~cold ~~price~~or toprolonged ~~fall. Each~~cold ofweather ~~the risk factors listed in the section Risk Factors~~conditions, ~~and~~such ~~the~~events ~~following factors~~ may ~~affect~~materially impact our ~~operating~~financial results:.

• Our ~~ability~~operating toresults ~~attract~~may ~~users~~fluctuate, ~~for~~which ~~our~~makes ~~products. • Our ability to generate revenue from~~ our ~~products.~~results •difficult ~~The amount and timing, of operating costs and capital expenditures related~~ to ~~the~~predict ~~maintenance~~ and ~~expansion~~could ofcause our ~~businesses,~~results ~~and~~to ~~operations.~~fall ~~• Our focus on long-term goals over~~ short~~-term~~ ~~results.~~of ~~• Global economic situation~~expectations. ~~• Fluctuations in weather conditions.~~

Our ~~earnings~~operating results may fluctuate as a result of a number of factors, many outside of our control. As a result, comparing our operating results on a period-to-period basis may not be ~~subject~~meaningful, and you should not rely on our past results as an indication of our future performance. Our quarterly, year-to-date ~~seasonal variability~~and annual expenses as a percentage of our revenues may differ significantly from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause our stock price to fall. Each of the risk factors listed in the section Risk Factors, and the following factors may affect our operating results:

• Our ~~earnings~~ability ~~may~~to beattract ~~affected~~users byfor ~~seasonal~~our ~~factors~~products. • Our ability to generate revenue from our products. • The amount and timing, ~~including:~~ of operating costs and capital expenditures related to the maintenance and expansion of our businesses, and operations. • Our focus on long-term goals over short-term results. • Global economic situation. • Fluctuations in weather conditions.

· Our ~~the~~earnings ~~seasonality~~may ofbe ~~our~~subject ~~customers;~~to seasonal variability.

· Our ~~the~~earnings ~~ability~~may tobe ~~supply~~affected ~~our~~by ~~products~~seasonal ~~during~~factors, ~~critical harvest periods; and~~including:

· the seasonality of our customers; · the ability to supply our products during critical harvest periods; and · the timing and effects of ripening and perishability.

19 Our business depends to some extent on international transactions.

~~Our~~ As a result of the international nature of Pimi’s business, ~~depends~~the company is exposed to ~~some~~risks ~~extent on~~associated ~~international~~with ~~transactions~~changes in foreign currency exchange rates. A majority of the company’s revenues and substantially all of its cost of sales are in USD, whilst our management, marketing, sales and R&D costs are in NIS. The Company is therefore exposed to foreign currency risk due to fluctuations in exchange rates. This may result in gains or losses with respect to movements in exchange rates, which may be significant and may also cause fluctuations in reported financial information that are not necessarily related to the Company’s operating results.

As- a20 result of the international nature of Pimi’s business, the company is exposed to risks associated with changes in foreign currency exchange rates. A majority of the company’s revenues and substantially all of its cost of sales are in USD, whilst our management, marketing, sales and R&D costs are in NIS. The Company is therefore exposed to foreign currency risk due to fluctuations in exchange rates. This may result in gains or losses with respect to movements in exchange rates, which may be significant and may also cause fluctuations in reported financial information that are not necessarily related to the Company’s operating results.-

The inherent dangers in production and transportation of Hydrogen Peroxide could cause disruptions and could expose us to potentially significant losses, costs or liabilities.

Pimi's operations are subject to significant hazards and risks inherent in transporting of the active ingredient of our Product- Hydrogen Peroxide. In high concentrations, Hydrogen Peroxide is an aggressive oxidizer and will corrode many materials. We are working with limited low concentration of the product, however in high concentrations of H2O2 it will react violently. Hydrogen Peroxide should be stored in a cool, dry, well-ventilated area and away from any flammable or combustible substances. It should be transported in special tanks and vehicles and should be stored in a container composed of non-reactive materials. These hazards and risks include, but are not limited to, fires, explosions, third-party interference (including terrorism) and mechanical failure of equipment at Pimi’s or third-party facilities. The occurrence of any of these events could result in production and distribution difficulties and disruptions, personal injury or wrongful death claims and other damage to properties.

Risks Related to our Location in Israel

Conditions in Israel may limit our ability to manage and market our products, which would lead to a decrease in revenues.

Because part of our operations is conducted in Israel and our management is located in Israel, our operations are directly affected by economic, political and military conditions affecting Israel. Specifically, we could be adversely affected by:

▪· any major hostilities involving Israel; ▪· risks associated with outages and disruptions of communications networks due to any hostilities involving Israel; and ▪· a significant downturn in the economic or financial conditions in Israel.

As of the date of this report, a major part of our sales is made in Israel.

Political, economic and military conditions in Israel have a direct influence on us because our operations are located there. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could materially and adversely affect our operations. Several Arab countries still restrict business with Israeli companies and these restrictions may have an adverse impact on our operating results, financial condition or the expansion of our business. We could be adversely affected by restrictive laws or policies directed towards Israel and Israeli businesses. The establishment in 2006 of a government in the Palestinian Authority by representatives of the Hamas militant group has created additional unrest and uncertainty in the area. In November 2012 and December 2008, Israel was engaged in an armed conflict with Hamas in the Gaza Strip, in the southern region of Israel. ~~During~~These ~~the~~and ~~summer~~similar ~~of 2006, Israel was engaged in an armed conflict with Hezbollah, a Lebanese Islamic Shiite militia group, which disrupted most daily civilian activity in northern Israel. These~~ events have at times caused considerable damage to the Israeli economy. As a result of the political and military situation, Israel’s economy has at times suffered considerably. Ongoing or revived hostilities related to Israel may have a material adverse effect on our business and on our share price.

Additionally, boycotts of products, prompted by political, religious or other factors, may affect our financial condition and results of operations. If such boycotts were to become widespread, it could have a significant impact on our revenues.

Furthermore, there are a number of countries that restrict business with Israel or with Israeli companies, which may limit our ability to promote our products and services in those countries.

20 We may not be able to enforce covenants not-to-compete under current Israeli law that might result in added competition for our products.

We ~~may~~have ~~not~~non-competition beagreements ~~able~~with all of our employees, all of which are governed by Israeli law. These agreements prohibit our employees from competing with or working for our competitors, generally during their employment in Pimi and for up to 6 months after termination of their employment. However, Israeli courts are reluctant to enforce ~~covenants not~~non-~~to-~~compete ~~under~~undertakings ~~current~~of ~~Israeli~~former ~~law~~employees ~~that~~and ~~might~~tend, ~~result~~if inat ~~added~~all, ~~competition~~to enforce those provisions for ~~our~~relatively ~~products~~brief periods of time in restricted geographical areas, and only when the employee has obtained unique value to the employer specific to that employer’s business and not just regarding the professional development of the employee. If we are not able to enforce non-compete covenants, we may be faced with added competition.

~~We have non~~-~~competition~~ ~~agreements~~21 with all of our employees, all of which are governed by Israeli law. These agreements prohibit our employees from competing with or working for our competitors, generally during their employment in Pimi and for up to 6 months after termination of their employment. However, Israeli courts are reluctant to enforce non-compete undertakings of former employees and tend, if at all, to enforce those provisions for relatively brief periods of time in restricted geographical areas, and only when the employee has obtained unique value to the employer specific to that employer’s business and not just regarding the professional development of the employee. If we are not able to enforce non-compete covenants, we may be faced with added competition.

It will be extremely difficult to acquire jurisdiction and enforce liabilities against our officers and directors who are based in Israel.

The majority of our officers and present directors reside outside of the United States and most of our operations at the time of the filing of this report are located outside the United States. As a result, it may not be possible for United States investors to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws. Moreover, we have been advised that Israel does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States. Further, it is unclear if extradition treaties now in effect between the United States and Israel would permit effective enforcement of criminal penalties of the Federal securities laws.

Risks Related to Share Prices

The Shares are an illiquid investment as there is presently limited market for our Shares, and transferability of the Shares is subject to significant restriction.

There is presently a limited market for our shares, and we cannot be certain that a public market will become available, or that there will be sufficient liquidity to allow for sale or transferability of the shares within the near future. Therefore, the purchase of our Shares must be considered a long-term investment acceptable only for prospective investors who are willing and can afford to accept and bear the substantial risk of the investment for an indefinite period of time. There is a limited public market for the resale of our Shares. A prospective investor, therefore, may not be able to liquidate its investment, even in the event of an emergency, and Shares may not be acceptable as collateral for a loan.

Because We May Be Subject To The “Penny Stock” Rules, You May Have Difficulty In Selling Our Common Stock.

If market activity develops for our common stock and our stock price is less than $5.00 per share, our stock may be subject to the SEC’s penny stock rules. These rules impose additional sales practice requirements and restrictions on broker-dealers that sell our stock to persons other than established customers and institutional accredited investors. The application of these rules may affect the ability of broker-dealers to sell our common stock and may affect your ability to sell any common stock you may own. According to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

•	Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
•	Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
•	“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced salespersons;
•	Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
•	The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

If we are subject to penny stock rules, you may have difficulty selling your shares of our common stock. For more information about penny stocks, please visit http://www.sec.gov/answers/penny.htm.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

21 ITEM 2. PROPERTIES

~~ITEM~~ The 2Company and its subsidiary currently lease office space at Kibbutz Alonim. ~~PROPERTIES~~The Company currently pays monthly rent of $1,126 (3,908 NIS) plus VAT per month pursuant to a 12 month lease started Jan 1, 2014 until December 31, 2014.

~~The Company and its subsidiary currently~~ ~~lease~~ITEM ~~office space at Kibbutz Alonim~~3. ~~The~~LEGAL ~~Company currently pays monthly rent of $1,000 (3,700 NIS) plus VAT per month pursuant to a 12 month lease started Jan 1, 2013 until December 31, 2013.~~PROCEEDINGS

~~ITEM~~ From 3time to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. ~~LEGAL~~We ~~PROCEEDINGS~~are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities that could affect our operations. Should any liabilities be incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, management does not believe that there are any proceedings to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent of the common stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

~~From~~- ~~time~~22 to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities that could affect our operations. Should any liabilities be incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, management does not believe that there are any proceedings to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent of the common stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.-

In 2012 Pimi Israel ~~has recently~~ opposed an application for a patent, filed by a third party with the Israeli Patent Authority ~~wich~~which might ~~jeopardize~~interfere with the use of our ~~recorded~~products ~~patents.~~when Asused ofin ~~the~~certain ~~date~~temperatures. ofIn this ~~report,~~ opposition Pimi Israel argued that the third party’s patent application lacks novelty and is devoid of inventive step, and also stated the inequitable conduct from the third party’s ~~are~~side ~~negotiating~~while ahindering ~~settlement~~prior ~~arrangement~~art ~~with~~from ~~this~~the ~~regard~~IPA examiners. Following certain IPA procedures the third party has recently filed an amendment for its application, narrowing the requested patent coverage. Pimi Israel is requested to file its amended pleading prior to April 10, 2014.

~~ITEM~~ In 4addition, Mehadrin, one of our major clients, has recently alleged incurring certain damages, amounting to approximately $100,000, as a result of the unsuitability between the wax material implemented by Mehadrin and our products. ~~RESERVED~~However, based on the information and documentation in our possession, we believe that our products were implemented by Mehadrin not in compliance with our application protocol provided to Mehadrin. We have referred an appropriate request to our insurer regarding a possible insurance claim under our product liability policy, and are currently reviewing this matter further. However our management believes, considering the effect of the insurance in place, that the effect of these claims, if any, will not be significant.

~~PART~~ ITEM II4. RESERVED

~~ITEM~~ PART ~~5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~II

In ITEM ~~February~~5. ~~2010,~~MARKET ~~our~~FOR ~~common~~REGISTRANT'S ~~stock~~COMMON ~~began quotation~~EQUITY, onRELATED ~~the~~SHAREHOLDER ~~OTC~~MATTERS ~~Bulletin~~AND ~~Board~~ISSUER ~~under~~PURCHASES ~~the~~OF ~~symbol~~EQUITY ~~"PIMZ.OB".~~ SECURITIES

~~Holders~~ In February 2010, our common stock began quotation on the OTC Bulletin Board under the symbol "PIMZ.OB".

~~As of December 31, 2012, the approximate~~ ~~number of stockholders of record of (i) the Common Stock of the Company was 67 and (ii) Series A Preferred Stock of the Company was 38.~~Holders

~~Dividends~~ As of December 31, 2013, the approximate number of stockholders of record of the Common Stock of the Company was 105.

~~We have never declared or paid cash dividends~~ on our common stock. We currently anticipate that we will retain all future earnings to fund the operation of our business and do not anticipate paying dividends on our common stock in the foreseeable future.Dividends

~~Recent~~ We ~~Issuances~~have never declared or paid cash dividends on our common stock. We currently anticipate that we will retain all future earnings to fund the operation of ~~Stock~~our business and do not anticipate paying dividends on our common stock in the foreseeable future.

~~On December 23, 2012, Pimi issued to Umidan~~ ~~Inc.,~~Recent anIssuances ~~entity owned by Mr. Uri Sheinbaum, a warrant to purchase 56,250 shares~~ of ~~Pimi’s common stock with an exercise price of $0.80, exercisable until April 11, 2014, in consideration for its services rendered to Pimi.~~Stock

On In ~~March~~May 92013, ~~2012~~the ~~Pimi~~Company ~~closed~~issued aconvertible ~~private placement~~notes intotaling ~~the~~approximately ~~aggregate amount of~~ $~~626~~94,000 ~~(the~~to ~~“Private~~finance ~~Offering”)~~its short-term operations. The ~~Company~~loans ~~issued~~bear ~~62,600~~interest ~~shares~~ of ~~Series A~~10% ~~Preferred~~and ~~Stock,~~were ~~par~~issued ~~value~~to ~~$0.01~~seven at(7) ~~a purchase price~~ of ~~$10.00~~Pimi's ~~per~~shareholders, ~~share~~including totwo 19controlling ~~accredited~~shareholders ~~investors~~(Alon Carmel; and 19Omdan ~~non-accredited~~Consulting ~~investors. Financial~~and ~~West~~Instructing ~~Group~~Ltd., a ~~FINRA~~company ~~registered~~owned ~~broker~~by ~~dealer,~~Mr. ~~served~~Eitan asShmueli ~~placement~~and ~~agent~~his inwife ~~connection~~Mrs. ~~with~~Vivy ~~the Private Offering~~Shmueli). ~~The holders~~Each ofnote ~~shares~~is ofsecured ~~Series~~by APimi ~~Preferred~~Israel’s ~~Stock~~guarantee ~~shall~~and bea ~~entitled~~pledge toon ~~receive~~Pimi ~~dividend~~Israel’s ~~cash~~patents ~~payments of 9% per annum, payable~~ in ~~quarterly installments,~~Israel and ~~subject~~the ~~to conversion~~U.S. ~~Upon~~The ~~the~~notes ~~closing~~are ofrepayable on the ~~Company's~~earlier ~~next~~to ~~round~~occur of: ~~financing,~~(i) ~~provided~~a ~~such~~raise ~~closing~~of ~~occurs within~~$1 ~~twelve~~million financing or (12ii) 6 months following the ~~execution~~effective ofdate. ~~the~~Each ~~Closing~~lender inis ~~which~~entitled ~~Subscribers~~to ~~receive~~convert the ~~Series~~unpaid Aprincipal ~~Preferred Stock,~~ and ~~further~~ ~~subject to minimum proceeds of $2,000,000 being raised in such investment (~~the ~~"Next~~interest ~~Round~~accrued ~~of Financing"), the Series A Preferred Stock shall automatically be converted~~ into ~~fully paid, non-assessable~~ shares of ~~Common Stock, $0.01 par value per share, of~~ the Company's ~~(“Common~~common ~~Stock”). In the event that the closing of the Next Round of Financing has not occurred by November 30~~stock, ~~2012,~~at ~~each~~a ~~share~~conversion ofprice ~~Series A Preferred Stock shall automatically be converted into fully paid, non-assessable shares~~ of ~~Common Stock, reflecting value of~~ $01.8000 per ~~Common Stock~~ share. ~~Notwithstanding~~In addition, ~~the~~for ~~holders~~each ofdollar, ~~Series~~each Alender ~~Preferred~~received ~~Stock~~a ~~shall be~~two ~~entitled~~years warrant to ~~convert~~purchase ~~each~~a share of the ~~Series~~Company's Acommon ~~Preferred Stock into fully paid~~stock, ~~non-assessable share of Common Stock,~~ at aan exercise price of $01.8000 per share. ~~Initially~~Further on, ~~all and any shares of Series A Preferred Stock should have been automatically converted into~~ the ~~Common~~ ~~Stock~~Company and ~~canceled~~the onlenders ~~November 30, 2012; further, we have~~ agreed ~~with~~on ~~the~~extension ~~holders~~ of the ~~Series~~said Aloans ~~Preferred~~and ~~Stock to postpone~~ the ~~automatic~~interest ~~conversion~~accrued ~~date~~thereon ~~until~~for ~~March~~additional 9,6 ~~2013~~months.

22 On March 9, 2013, all shares of our Series A Preferred Stock were automatically converted into the Common Stock and canceled; thereby, 782,500 shares of our Company’s Common Stock have been allocated and issued to former holders of Series A Preferred Stock.

On ~~March~~December 923, ~~2013~~2012, ~~all~~Pimi ~~shares~~issued ofto ~~our~~Umidan ~~Series A~~Inc., ~~Preferred~~an ~~Stock~~entity ~~were~~owned ~~automatically~~by ~~converted~~Mr. ~~into~~Uri ~~the~~Sheinbaum, ~~Common~~a ~~Stock~~warrant ~~and~~to ~~canceled;~~purchase ~~thereby~~56,250 ~~782,500~~ shares of ~~our Company~~Pimi’s ~~Common~~ ~~Stock~~common ~~have~~stock ~~been~~with ~~allocated~~an ~~and~~exercise ~~issued~~price of $0.80, exercisable until April 11, 2014, in consideration for its services rendered to ~~former~~Pimi. ~~holders~~The ofCompany ~~Series~~has Afurther ~~Preferred~~extended ~~Stock~~this warrant until December 31, 2014.

On ~~March~~April 812, ~~2012~~2011 the ~~company~~Company entered into a subscription ~~agreement~~agreements with ~~one~~an individual ~~residing~~and intwo ~~Israel~~companies ~~for~~all ~~the~~of ~~total~~which ~~sum~~are ofIsraeli ~~$ 10~~residents,~~000~~ atpursuant ato ~~purchase~~which ~~price~~the ofcompany ~~$0.80~~issued ~~per share~~56,250 ~~and~~common ~~issued~~stock ~~to this investor 12,500~~ shares offor ~~its~~the ~~Common Stock.~~total ~~For~~sum ~~each share~~ of ~~Common Stock purchased~~$45,000 ~~the~~at ~~investor or~~ a ~~third~~purchase ~~party on his behalf received a warrant with an exercise~~ price of $0.80, ~~exercisable~~per ~~until March 2, 2014~~share).

On- ~~March~~23 2, 2011 the Company entered into subscription agreements with 4 individuals residing in Israel for the total sum of $100,000 at a purchase price of $0.80 per share, and issued to the investors 125,000 shares of its Common Stock. For each share of Common Stock purchased, the investors received a warrant with an exercise price of $0.80, exercisable until March 2, 2013.-

On ~~January~~March 249, ~~2011~~2012 Pimi closed a private placement in the aggregate amount of $626,000 (the “Private Offering”). The Company ~~entered into~~issued an62,600 ~~agreement~~shares ~~with~~of anSeries ~~individual~~A ~~residing~~Preferred inStock, ~~Israel~~par value $0.01 at a purchase price of $10.00 per share to 19 accredited investors and ~~Israeli~~19 ~~private~~non-accredited ~~investment~~investors. ~~company~~Financial West Group, a FINRA registered broker dealer, served as placement agent in connection with the Private Offering. ~~Pursuant~~The holders of shares of Series A Preferred Stock shall be entitled to ~~this~~receive ~~agreement~~dividend cash payments of 9% per annum, payable in quarterly installments, and subject to conversion. Upon the ~~investor~~ ~~invested~~closing aof ~~total~~the ~~aggregate~~Company's ~~sum~~next round of USfinancing, provided such closing occurs within twelve (12) months following the execution of the Closing in which Subscribers receive the Series A Preferred Stock, and further subject to minimum proceeds of $~~500~~2,000,000 atbeing araised ~~purchase~~in ~~price~~such investment (the "Next Round of Financing"), the Series A Preferred Stock shall automatically be converted into fully paid, non-assessable shares of Common Stock, $0.8001 par value per share, ~~and~~ of the Company ~~issued~~(“Common toStock”). In the ~~investor~~event ~~625~~that the closing of the Next Round of Financing has not occurred by November 30,~~000~~ 2012, each share of Series A Preferred Stock shall automatically be converted into fully paid, non-assessable shares of ~~its~~ Common Stock, reflecting value of $0.80 ~~For~~per ~~each~~Common Stock share. Notwithstanding, the holders of ~~Common~~Series A Preferred Stock ~~purchased,~~shall be entitled to convert each share of the ~~investor~~Series ~~received~~A aPreferred ~~warrant~~Stock ~~with~~into anfully ~~exercise~~paid, non-assessable share of Common Stock, at a price of $0.80, ~~exercisable until~~per ~~December~~share. 31Initially, ~~2012.~~all ~~The~~and ~~Company~~any ~~extended~~shares ~~this~~of ~~warrant~~Series ~~until~~A ~~December~~Preferred ~~31,~~Stock ~~2013.~~should Inhave ~~the~~been ~~event~~automatically converted into the ~~investor~~Common ~~invests~~Stock and~~/or~~ ~~causes to~~canceled ~~investment~~on ofNovember ~~additional~~30, ~~$50~~2012; further,~~000,~~ we have agreed with the ~~Company~~holders ~~shall~~of ~~extend~~the ~~this~~Series ~~warrant~~A Preferred Stock to postpone the automatic conversion date until ~~December~~March 319, ~~2014~~2013.

~~No advertising or general solicitation~~ ~~was~~On ~~employed~~March in8, ~~offering~~2012 the ~~securities.~~company ~~The~~entered ~~offerings~~into ~~and~~a ~~sales~~subscription ~~were~~agreement ~~made~~with toone aindividual ~~limited~~residing ~~number~~in ofIsrael ~~persons,~~for the ~~majority~~total sum of ~~which were~~$ ~~accredited investors~~10,000 ~~business~~at ~~associates~~a ofpurchase ~~Pimi~~price orof ~~executive~~$0.80 ~~officers~~per ~~of Pimi~~share, and ~~transfer~~issued ~~was~~to ~~restricted~~this byinvestor ~~Pimi~~12,500 inshares ~~accordance with~~of ~~the~~its ~~requirements~~Common ofStock. ~~the~~For ~~Securities~~each ~~Act~~share of ~~1933.~~Common InStock ~~addition~~purchased, tothe ~~representations~~investor byor ~~the~~a ~~above-referenced~~third ~~persons, we have made independent determinations regarding~~party ~~the~~on ~~above-referenced persons~~his ~~were~~behalf ~~accredited~~received ora ~~sophisticated investors, and~~warrant ~~that~~with ~~they~~an ~~were~~exercise ~~capable~~price of ~~analyzing the merits~~ ~~and~~$0.80, ~~risks~~exercisable ofuntil ~~their investment~~March 2, ~~and~~ ~~that~~2014. ~~they~~The ~~understood~~Company ~~the~~has ~~speculative nature~~further ofextended ~~their investment~~these warrants until December 31, 2014.

~~ITEM~~ On 6March 2, 2011 the Company entered into subscription agreements with 4 individuals residing in Israel for the total sum of $100,000 at a purchase price of $0.80 ~~SELECTED~~per ~~FINANCIAL~~share, ~~DATA~~and issued to the investors 125,000 shares of its Common Stock. For each share of Common Stock purchased, the investors received a warrant with an exercise price of $0.80, exercisable until March 2, 2013. The Company has further extended these warrants until December 31, 2014.

~~Not~~ On ~~Applicable~~January 24, 2011, the Company entered into an agreement with an individual residing in Israel and Israeli private investment company. Pursuant to this agreement, the investor invested a total aggregate sum of US $500,000, at a purchase price of $0.80 per share, and the Company issued to the investor 625,000 shares of its Common Stock. For each share of Common Stock purchased, the investor received a warrant with an exercise price of $0.80, exercisable until December 31, 2012. The Company extended this warrant until December 31, 2013 and further until December 31, 2014.

~~ITEM~~ No 7advertising or general solicitation was employed in offering the securities. ~~MANAGEMENT'S~~The ~~DISCUSSION~~offerings ~~AND~~and ~~ANALYSIS~~sales OFwere ~~FINANCIAL~~made ~~CONDITION~~to ~~AND~~a ~~RESULTS~~limited OFnumber ~~OPERATIONS~~of persons, the majority of which were accredited investors, business associates of Pimi or executive officers of Pimi, and transfer was restricted by Pimi in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations regarding the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment.

~~Forward~~ On ~~Looking~~December ~~Statements~~28, 2010, the Company entered into an agreement with a California private company (the "Investor"). Pursuant to the agreement, the Investor invested a total aggregate sum of US$150,000, at a purchase price of US$0.80 per share, and the Company issued 187,500 shares of its common stock to the Investor (62,500 shares were issued in January 2011 for US$50,000, 62,500 shares were issued in February 2011 for US$50,000 and 62,500 were issued in March 2011 for US$50,000). For each share of Common Stock purchased, the Investor received a warrant, having an exercise price of US$0.80, exercisable for a period of three years from the date of issuance. On May 20, 2013 the warrants were extended for additional period ending December 31, 2014.

~~Please see page i of this Annual Report for~~ ~~“Information~~ITEM ~~Regarding~~6. ~~Forward~~SELECTED ~~Looking~~FINANCIAL ~~Statements” appearing throughout this Annual Report.~~DATA

~~Introduction~~ Not Applicable

~~The following discussion should be read in conjunction with the Financial Statements and Notes thereto. Our fiscal year ends December 31. This document contains certain forward~~-~~looking~~ ~~statements~~24 ~~including, among others, anticipated trends in our financial condition and results of operations and our business strategy. (See Part I, Item 1A, "Risk Factors"). These forward~~-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward-looking statements. Important factors to consider in evaluating such forward-looking statements include (i) changes in external factors or in our internal budgeting process which might impact trends in our results of operations; (ii) unanticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the industries in which we operate; and (iv) various competitive market factors that may prevent us from competing successfully in the marketplace.

23 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Company~~ Forward ~~History~~Looking Statements

~~Pimi Israel was established in 2004 with~~ aPlease ~~vision~~see ~~towards~~page ~~developing~~i ~~environmentally friendly alternative solutions to current chemical treatments~~ of ~~agricultural~~this ~~harvest, such~~Annual asReport ~~fruits, vegetables and grains, thereby improving the well-being of consumers, growers and the environment. Pimi Israel has devoted significant research in developing environmentally friendly solutions~~ for ~~pre~~“Information ~~and~~Regarding ~~post~~Forward ~~harvest~~Looking ~~treatments~~Statements” ofappearing ~~fruits and~~throughout ~~vegetables.~~this ~~The~~Annual ~~company's technology is based on unique, patented formulations of Stabilized Hydrogen Peroxide, combined with a controlled distribution system used to apply it~~Report.

~~On April 27, 2009 we purchased all the~~ issued and outstanding shares of Pimi Israel from Pimi Israel’s shareholders in consideration for 6,313,589 shares of our Common Stock. As a result, Pimi Israel became a wholly-owned subsidiary of the Company.Introduction

~~Overview~~ The following discussion should be read in conjunction with the Financial Statements and Notes thereto. Our fiscal year ends December 31. This document contains certain forward-looking statements including, among others, anticipated trends in our financial condition and results of operations and our business strategy. (See Part I, Item 1A, "Risk Factors"). These forward-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward-looking statements. Important factors to consider in evaluating such forward-looking statements include (i) changes in external factors or in our internal budgeting process which might impact trends in our results of operations; (ii) unanticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the industries in which we operate; and (iv) various competitive market factors that may prevent us from competing successfully in the marketplace.

~~The Company focuses on developing environmentally~~ ~~friendly solutions for extending storability and shelf life of vegetables and fruits. Currently, the~~ Company is focused on solutions related to fresh citrus fruits, table potatoes and sweet potatoes. As of the date of this report, the Company develops, tests and markets four lines of products: (i) Citrus treatment line of products, which includes: CitruWash™, Super Clean™, CitrusGuard™ and FreshProtect™; (ii) Sweet Potatoes treatment line of products, which include SweetGuard™; (iii) Stored Table Potatoes treatment line of products which include SpuDefender™; and (iv) other fruits and vegetables storage control line of products which includes: StorGuard™ for treatment of vegetables such as broccoli and cabbage and OnionGuard™ for treatment in storage of Onions.History

~~All~~ Pimi Israel was established in 2004 with a vision towards developing environmentally friendly alternative solutions to current chemical treatments of ~~our~~agricultural ~~products~~harvest, ~~are~~such ~~based~~as onfruits, ~~Stabilized Hydrogen~~vegetables ~~Peroxide~~and ~~("STHP")~~grains, ~~which~~thereby ~~has~~improving the ~~ability~~well-being toof ~~increase~~consumers, ~~shelf~~growers ~~life~~and ~~while~~the ~~reducing~~environment. ~~residue~~Pimi ~~pesticides~~Israel has devoted significant research in ~~consumed~~ developing environmentally friendly solutions for pre and post-harvest treatments of fruits and vegetables. The company's technology is based on unique, patented formulations of Stabilized Hydrogen Peroxide, combined with a controlled distribution system used to apply it.

~~Critical~~ On ~~Accounting~~April ~~Policies~~27, 2009 we purchased all the issued and outstanding shares of Pimi Israel from Pimi Israel’s shareholders in consideration for 6,313,589 shares of our Common Stock. As a result, Pimi Israel became a wholly-owned subsidiary of the Company.

~~The Securities and Exchange Commission~~ ("SEC") defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our accounting policies are described in Note 2 to the financial statements appearing elsewhere in this report. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. Our management believes that, as for the financial statements for the periods included in this report, the going concern assessment is viewed as critical accounting policy. However, due to the early stage of operations of the Company, there are no other accounting policies that are considered to be critical accounting policies by our management.Overview

~~Going~~ The ~~concern~~Company ~~uncertainty~~focuses on developing environmentally friendly solutions for extending storability and shelf life of vegetables and fruits. Currently, the Company is focused on solutions related to fresh citrus fruits, table potatoes and sweet potatoes. As of the date of this report, the Company is engaged in developing, testing and marketing of four lines of products: (i) products that treat citrus fruits, such as CitruWash™ or in its other commercial name, Super Clean™, CitrusGuard™ and FreshProtect™; (ii) a product that treats sweet potatoes, SweetGuard™; (iii) a product that treats stored table ‘ SpuDefender™; and (iv) products that provide storage control of fruits and vegetables, including StorGuard™ for treatment of vegetables such as broccoli and cabbage and OnionGuard™ for treatment of onions. We have started the commercialization of five of these products namely: the sanitizer CitrusGuard™, the disinfectant FreshProtect™, the sprout controller SpuDefender™ and the cleansers SweetGuard™ and Super Clean™ (or CitruWash™).

~~The development~~ ~~and~~All ~~commercialization~~ of our ~~product~~products ~~will~~are ~~require~~based ~~substantial~~on ~~expenditures.~~Stabilized WeHydrogen ~~have~~Peroxide ~~not yet generated sufficient revenues from operations to fund our activities~~("STHP"), ~~and~~which ~~therefore~~has ~~dependent upon external sources for financing our operations. There can be no assurance that we will succeed in obtaining~~ the necessary financing to continue our operations. Since inception, we have incurred accumulated losses and cumulative negative operating cash flow. The continuation of our current operations after utilizing the current reserves is dependent upon the generation of additional financial resources either through fund raising or by generating revenues from our products. These factors raise substantial doubt about our ability to ~~continue~~increase asshelf alife ~~going~~while ~~concern.~~reducing ~~The~~residue ~~consolidated financial~~pesticides ~~statements~~in ~~have~~consumed ~~been~~fruits ~~prepared on a going concern basis~~ and ~~do not include any adjustments that might result from the outcome of this uncertainty~~vegetables.

~~Recently~~ Critical ~~issued~~Accounting ~~accounting pronouncements~~ Policies

1. The ~~ASC~~Securities ~~Topic~~and ~~220,~~Exchange Commission ("~~Comprehensive~~SEC") ~~Income~~defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our accounting policies are described in Note 2 to the financial statements appearing elsewhere in this report. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. Our management believes that, as for the financial statements for the periods included in this report, the going concern assessment is viewed as critical accounting policy. However, due to the early stage of operations of the Company, there are no other accounting policies that are considered to be critical accounting policies by our management.

~~Effective January 1, 2012, the Company adopted retrospectively the provisions of Accounting Standard Update No. 2011~~-~~05,~~ ~~“Comprehensive~~25 ~~Income (Topic 220)~~ - Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of equity and requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.

24 Going concern uncertainty

The ~~adoption~~development and commercialization of ~~ASU~~our ~~2011-05~~product ~~did~~will require substantial expenditures. We have not yet generated sufficient revenues from operations to fund our activities, and therefore dependent upon external sources for financing our operations. There can be no assurance that we will succeed in obtaining the necessary financing to continue our operations. Since inception, we have a ~~material~~incurred ~~impact~~accumulated onlosses and cumulative negative operating cash flow. The continuation of our current operations after utilizing the current reserves is dependent upon the generation of additional financial resources either through fund raising or by generating revenues from our products. These factors raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty.

2. Recently ~~ASC~~issued ~~Topic~~accounting ~~210,~~pronouncements ~~“Balance Sheet”~~

1. ASC Topic 220, "Comprehensive Income"

In Effective ~~December~~January ~~2011~~1, 2012, the ~~FASB~~Company ~~issued~~adopted retrospectively the provisions of Accounting Standard Update ~~(ASU)~~No. 2011-1105, “~~Balance~~Comprehensive ~~Sheet~~Income (Topic ~~210~~220) - ~~Disclosures~~Presentation ~~about~~of ~~Offsetting~~Comprehensive ~~Assets and Liabilities~~Income” (“ASU 2011-1105”). ASU 2011-1105 ~~enhances~~eliminated ~~disclosures~~the ~~about~~option ~~financial~~to ~~instruments~~present ~~and~~the ~~derivative~~components ~~instruments~~of ~~that~~other ~~are~~comprehensive ~~either~~income ~~offset in~~as ~~accordance~~part ~~with~~of the ~~Accounting~~statement ~~Standards~~of ~~Codification~~equity orand ~~are~~requires ~~subject~~an entity to anpresent ~~enforceable~~the ~~master~~total ~~netting~~of ~~arrangement~~comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or ~~similar agreement~~in two separate but consecutive statements.

The ~~amended~~adoption ~~guidance~~of ~~will~~ASU be2011-05 ~~effective for~~did ~~annual~~not ~~reporting~~have ~~periods~~a ~~beginning~~material impact on ~~or after January 1, 2013, and interim periods within those annual periods (fiscal year 2013 for~~ the ~~Company)~~consolidated ~~and~~financial ~~should be applied retrospectively to all comparative periods presented~~statements.

2. ASC Topic 210, “Balance Sheet”

~~The~~ In ~~Company~~December is2011, ~~currently evaluating~~ the ~~impact~~ ~~that~~FASB ~~the~~issued ~~adoption~~Accounting ofStandard Update (ASU) 2011-11, ~~would~~“Balance ~~have~~Sheet on(Topic ~~its~~210) ~~consolidated~~- Disclosures about Offsetting Assets and Liabilities” (ASU 2011-11). ASU 2011-11 enhances disclosures about financial ~~statements,~~instruments ifand ~~any~~derivative instruments that are either offset in accordance with the Accounting Standards Codification or are subject to an enforceable master netting arrangement or similar agreement.

3. The ~~ASU~~amended guidance will be effective for annual reporting periods beginning on or after January 1, 2013-2, and interim periods within those annual periods (fiscal year 2013 for the Company) and should be applied retrospectively to all comparative periods presented.

~~In February 2013, the FASB issued Accounting~~ ~~Standard~~The ~~Update~~Company ~~No.~~is ~~2013-02~~currently ~~“Comprehensive~~evaluating ~~Income~~the ~~(Topic~~impact ~~220)~~that ~~“Reporting~~the ofadoption ~~Amounts Reclassified out~~ of ~~Accumulated Other Comprehensive Income” (~~ASU ~~2013~~2011-~~02).~~11 ~~ASU~~would ~~2013-02~~have ~~requires~~on anits ~~entity~~consolidated tofinancial ~~provide~~statements, ~~information~~if ~~about amounts reclassified out of accumulated other comprehensive income~~any.

3. ASU 2013-2

~~According~~ In toFebruary ~~ASU~~ 2013~~-02~~, ~~significant~~the ~~items that~~FASB ~~are~~issued ~~required~~Accounting ~~under~~Standard UUpdate No.S. ~~GAAP~~2013-02 to“Comprehensive beIncome ~~reclassified~~(Topic to220) ~~net~~“Reporting ~~income in their entirety shall be presented by the respective line items~~ of ~~net~~Amounts ~~income~~Reclassified ~~either~~out ~~on the face~~ of ~~the~~Accumulated ~~financial~~Other ~~statements~~Comprehensive orIncome” in(ASU ~~the footnotes~~2013-02). ~~Items~~ASU ~~that~~2013-02 ~~are~~requires ~~not~~an ~~required~~entity ~~under U.S. GAAP~~ to beprovide ~~reclassified~~information toabout ~~net~~amounts ~~income~~reclassified inout ~~their~~of ~~entirety,~~accumulated ~~will be required to be cross-referenced to~~ other ~~disclosures~~comprehensive ~~required under U~~income.S. ~~GAAP that provide additional detail about those amounts.~~

According to ASU 2013-02, issignificant ~~effective~~items ~~for~~that ~~public~~are ~~entities prospectively~~required ~~for~~under ~~annual~~U.S. ~~and~~GAAP ~~interim~~to ~~reporting~~be ~~periods~~reclassified ~~beginning~~to ~~after~~net ~~December~~income ~~15,~~in ~~2012~~their ~~(fiscal~~entirety ~~year~~shall ~~2013~~be ~~for~~presented by the ~~Company)~~respective line items of net income either on the face of the financial statements or in the footnotes. Items that are not required under U.S. GAAP to be reclassified to net income in their entirety, will be required to be cross-referenced to other disclosures required under U.S. GAAP that provide additional detail about those amounts.

~~The adoption of~~ ASU 2013-02 is ~~not~~effective ~~expected to~~for ~~have~~public aentities ~~material~~prospectively ~~impact~~for onannual ~~the~~and ~~financial~~interim ~~position~~reporting orperiods ~~results~~beginning ofafter ~~operations~~December ~~of the Company~~15, ~~but~~2012 ~~might~~(fiscal ~~result~~year in2013 ~~disclosure~~for ~~of additional~~the ~~information about amounts reclassified out of accumulated other comprehensive income~~Company).

~~Results~~ The adoption of ~~Operations~~ASU ~~for~~2013-02 is not expected to have a material impact on the ~~Year Ended~~ ~~December~~financial ~~31,~~position ~~2012~~or ~~compared~~results toof ~~Year~~operations ~~Ended~~of ~~December~~the 31Company, ~~2011~~but might result in disclosure of additional information about amounts reclassified out of accumulated other comprehensive income.

~~Total Net Sales: Total Net Sales~~ ~~decreased~~Results ~~$108,690~~of orOperations ~~24%~~for tothe Year ~~$351,399~~Ended inDecember ~~2012~~31, ~~from~~2013 ~~$460,089~~compared ~~for 2011. The decrease is due~~ to aYear ~~focus~~Ended inDecember ~~2012 on Pimi’s citrus pilot lines~~31, ~~while~~2012 ~~in 2011 the Company commenced small scale sales of products treating citrus fruits and potatoes.~~

~~R&D~~ Total ~~Expenses~~Net Sales: ~~R&D~~Total ~~Expenses for~~Net ~~2012~~Sales ofincreased $~~689~~170,~~070~~705 ~~decreased $9,230~~ or 149% ~~from~~to ~~the~~ $~~698~~522,~~300~~104 in ~~2011~~2013, ~~due~~from ~~to decrease in cost of materials in the amount of~~ $69351,~~465, partially~~399 ~~balanced by increase~~ in ~~cost~~2012. ofThe ~~labor~~increase ~~and~~is ~~professional~~due ~~services~~to in the ~~amount~~commencing of ~~$40,585,~~sales ~~and~~of ~~increase~~our inproducts ~~travel~~on ~~and other~~small ~~expenses~~commercial scale in the ~~amount of $19,650~~US.

~~General~~ R&D ~~and~~Expenses: ~~Administrative~~R&D Expenses~~: General~~ ~~and~~for ~~administrative~~2013 ~~expenses~~of ~~decreased~~$714,240 byincreased $325,~~925,~~170 or 14% from the $689,070 in 2012, due to ~~$295,055~~increase ~~from~~in ~~$298~~cost of materials in the amount of 55,~~980~~354 caused by increase in ~~2011~~sales, ~~mostly~~partially ~~due~~balanced toby decrease in cost of labor and professional ~~fee~~services ~~expenses~~in ~~paid~~the toamount ~~accounting~~of $2,943, and ~~legal~~decrease ~~professionals~~in travel and other expenses in the amount of $27,241.

~~Loss~~- ~~from~~26 Operations: Loss of costs from operations for 2012 of $632,726 was up $95,535 or 18% from the loss from operations in 2011 of $537,191, mainly as a result of the decrease in sales ($108,890), partially balanced by decrease in R&D expenses ($9,230) and in G&A expenses ($3,925). -

~~Financing~~ General and Administrative Expenses: ~~Our~~General ~~total financing~~and administrative expenses indecreased ~~2012~~by ~~amounted~~$76,523 or 26% in 2013, to $63218,~~016~~532 ~~and~~from ~~were~~ $6295,~~659~~055 ~~lower~~in ~~than~~2012, ~~our~~due ~~financing~~to ~~expenses~~decrease ofin ~~$69,675~~professional fee in ~~2011.~~the ~~This~~amount ~~was~~of ~~mostly a~~$68,502, ~~result~~and in cost of ~~decrease~~labor and others in ~~convertible~~the ~~loans~~amount ~~interest~~of ~~expenses~~$8,020.

~~Net~~ Loss from Operations: ~~Net~~Loss ~~loss~~from operations for 2013 of $~~695~~410,~~742 in~~668 ~~2012~~ was down $88222,~~876,~~058 or 1535% ~~more~~from ~~than~~ the ~~net~~ loss from operations in ~~2011~~2012 of $~~606~~632,~~866~~726, mainly as a result of ~~decrease~~the increase in sales ($~~108~~170,~~690)~~705, ~~partially balanced by~~ decrease in RG&DA expenses ($976,~~230)~~523, inpartially ~~G&A~~balanced ~~expenses~~by ~~($3,925),~~increase ~~and~~ in ~~financing~~R&D expenses ($625,~~659)~~170.

25 Financing Expenses: Our total financing expenses in 2013 amounted to $58,144 and were $4,872 lower than our financing expenses of $63,016 in 2012.

~~Results~~ Net Loss: Net loss of ~~Operations~~$468,812 ~~for~~in 2013 was $226,930 or 33% less than the ~~Year Ended~~ ~~December~~net 31loss in 2012 of $695,742, ~~2011~~mainly ~~compared~~as toa ~~Year~~result ~~Ended~~of ~~December~~increase 31in sales $170,705, ~~2010~~decrease in G&A expenses $76,523, partially balanced by increase in R&D expenses $25,170.

~~Total Net Sales: Total Net Sales~~ ~~increased~~Results ~~$186,088~~of orOperations ~~68%~~for tothe Year ~~$460,089~~Ended inDecember ~~2011~~31, ~~from~~2012 ~~$274,001~~compared ~~for 2010. The increase is due~~ to ~~the~~Year ~~commencement~~Ended ofDecember ~~sales~~31, ~~of our products on a small commercial scale in Israel.~~2011

~~R&D~~ Total ~~Expenses~~Net Sales: ~~R&D~~Total ~~Expenses for~~Net ~~2011~~Sales ofdecreased $~~698~~108,~~300~~690 ~~increased $131,185~~ or 2324% ~~from~~to ~~the~~ $~~567~~351,~~115~~399 in ~~2010~~2012, ~~due~~from ~~to (i) increase in cost of salaries and professional services (~~$35460,~~895),~~089 asfor a2011. ~~result~~The ofdecrease ~~recruiting~~is ~~balanced~~due ~~partially~~to bya ~~reducing~~focus ~~professional~~in ~~consultants'~~2012 ~~services;~~on ~~(ii)~~Pimi’s ~~increase in~~citrus ~~cost~~pilot ~~of materials ($48~~lines,~~377);~~ ~~and~~while ~~(iii) increase~~ in ~~car~~2011 ~~expenses~~the ~~and~~Company ~~others~~commenced ~~($46,913) due to increase in~~ small ~~commercial~~ scale ~~activities~~ sales of ~~post-harvest~~products intreating ~~Israel,~~citrus ~~which~~fruits ~~also~~and ~~caused an increase in the Company’s 2011 revenues in comparison to 2010~~potatoes.

~~General~~ R&D ~~and~~Expenses: ~~Administrative~~R&D Expenses~~: General~~ ~~and~~for ~~administrative~~2012 ~~expenses~~of ~~increased~~$689,070 bydecreased $189,~~481,~~230 or 71% from the $698,300 in 2011, due to ~~$298,980~~decrease ~~from~~in ~~$280,499~~cost of materials in ~~2010~~the amount of $69,465, ~~mostly~~partially ~~due~~balanced toby increase in cost of labor and professional ~~fee~~services ~~expenses~~in ~~paid~~the toamount ~~accounting~~of $40,585, and ~~legal~~increase ~~professionals~~in ~~after~~travel and ~~reduction~~other ~~plan~~expenses ~~applied~~ in ~~2010~~the amount of $19,650.

~~Loss from Operations: Loss~~ ofGeneral ~~costs~~and ~~from~~Administrative ~~operations~~Expenses: ~~for~~General ~~2011~~and ofadministrative ~~$537,191~~expenses ~~was~~decreased ~~down~~by $363,~~422~~925, or 61% ~~from the loss from operations~~ in ~~2010~~2012, ofto $~~573~~295,~~613,~~055 ~~mainly as~~from a$298,980 ~~result of the increase~~ in ~~sales ($186~~2011,~~088),~~ ~~partially~~mostly ~~balanced~~due byto ~~increase~~decrease in ~~R&D~~professional fee expenses ~~($131,185)~~paid ~~and~~to inaccounting ~~G&A~~and ~~expenses ($18,481)~~legal professionals.

~~Financing~~ Loss ~~Expenses~~from Operations: Loss ~~Our~~of ~~total financing~~costs ~~expenses~~from inoperations ~~2011~~for ~~amounted~~2012 toof $69632,~~675~~726 ~~and~~was ~~were~~up $1495,~~250~~535 ~~higher~~or ~~than~~18% ~~our~~from ~~financing~~the ~~expenses~~loss from operations in 2011 of $55537,~~425~~191, inmainly ~~2010.~~as ~~These changes were~~ a result of ~~convertible~~the ~~bonds~~decrease ~~interest~~in ~~and~~sales ~~beneficial conversion feature with respect to convertible bonds~~ ($18108,~~548~~890), partially balanced by decrease in ~~credit~~R&D ~~lines usage as well as higher bank~~ expenses ($9,230) and ~~changes~~ in ~~the~~G&A ~~exchange~~expenses ~~rates~~ ($43,~~298~~925).

~~Net~~ Financing ~~Loss~~Expenses: Our ~~Net~~total ~~loss~~financing ofexpenses ~~$606,866~~ in ~~2011~~2012 ~~was~~amounted to $2263,~~172,~~016 orand 4%were ~~less~~$6,659 lower than ~~the~~our ~~net~~financing ~~loss~~expenses ~~in 2010~~ of $~~629~~69,~~038,~~675 ~~mainly as a result of increase~~ in ~~sales~~2011. ~~($186,088),~~This ~~partially balanced~~was bymostly ~~increase~~a inresult ~~R&D~~of ~~expenses~~decrease ~~($131,185),~~ in ~~G&A~~convertible ~~expenses~~loans ~~($18,481),~~interest ~~and increase in financing~~ expenses ~~($14,250)~~.

~~Liquidity~~ Net Loss: Net loss of $695,742 in 2012 was $88,876, or 15% more than the net loss in 2011 of $606,866, mainly as a result of decrease in sales ($108,690), partially balanced by decrease in R&D expenses ($9,230), in G&A expenses ($3,925), and ~~Capital~~in ~~Resources~~financing expenses ($6,659).

~~As of December 31, 2012, we had liabilities~~ ofLiquidity ~~$1,199,038 ($560,356 as of December 31, 2011), including $187,177 ($174,356 as of December 31, 2011) of Convertible Bonds~~ and ~~$571,225~~ ~~($0~~Capital as of December 31, 2011) of convertible preferred stock, $293,261 ($280,291 as of December 31, 2011) of third party liabilities, and $147,375 ($105,709 as of December 31, 2011) was due to related parties. The amounts due to related parties are for consulting, services and salaries.Resources

As of December 31, ~~2012~~2013, we ~~did not use credit lines and~~ had ~~cash~~liabilities inof ~~the~~$1, ~~sum~~107,365 of ($161,~~073.~~199,038 Asas of ~~Feb~~December 2831, ~~2013~~2012), weincluding ~~have used our credit lines in the sum of~~ $16303,~~073~~266 ($187, ~~and~~177 ~~have~~as noof ~~cash.~~December ~~Our~~31, ~~shortage~~2012) inof ~~available~~Convertible ~~cash~~Bonds ~~flow~~and ~~led~~$0 us($571,225 toas aof ~~delay~~December in31, ~~interest~~2012) ~~payments~~of ~~on our~~ convertible preferred stock, ~~and~~$387,462 ($293,261 ~~payments~~as ~~for~~of ~~certain~~December ~~service~~31, ~~providers;~~2012) ~~these~~of ~~payments~~third ~~will~~party beliabilities, ~~delayed~~and ~~until~~$416,637 ~~additional~~($147,375as ~~funds~~of ~~are~~December ~~secured.~~31, ~~Our executive~~2012) ~~officers~~was ~~have~~due ~~also agreed~~ to arelated ~~postponement~~parties. ofThe ~~salary~~amounts ~~payments~~due ~~aggregating approximately $12,500 per month. Payments~~ to ~~our~~related ~~executive~~parties ~~officers~~are ~~have~~for ~~been~~consulting, ~~postponed~~services ~~since~~and ~~November 2012~~salaries.

As of December 31, 2013 we used our credit lines in the ~~filing~~amount ~~date~~of 43,312 and had cash in the sum of ~~this~~$13,082. ~~report~~As of Feb 1, 2014 we used our ~~net~~credit ~~burn~~lines ~~rate~~in isthe ~~approximately~~amount of $5026,~~000~~223, ~~per~~and ~~month~~had unused credit lines in the amount of $33,777. Our ~~management~~shortage isin ~~utilizing~~available ~~best~~cash ~~efforts~~flow led us to ~~reduce~~a delay in interest payments on our ~~burn~~convertible ~~rate~~preferred stock and ~~minimize Company~~payments ~~expenses.~~for ~~Additionally,~~certain onservice ~~March~~providers; ~~21,~~these ~~2013~~payments wewill ~~secured~~be andelayed until additional ~~credit~~funds ~~line~~are ofsecured. ~~approximately~~Our ~~$55,000~~executive ~~from~~officers ~~Bank~~have ~~Hapoalim in~~also ~~Israel.~~agreed Asto ofa ~~the~~postponement ~~filing~~of ~~date~~salary ofpayments ~~this~~aggregating ~~report~~approximately $22,500 weper ~~are~~month. ~~negotiating~~Payments to ~~attain~~our ~~convertible~~executive ~~loans~~officers inhave ~~the~~been ~~approximate~~postponed ~~amount~~since ofSeptember ~~$125,000 from~~2012 ~~several~~in ~~controlling~~aggregating ~~shareholders~~monthly toamount ~~finance~~of ~~the~~$12,500, ~~Company’s~~which ~~operations~~increased instarting ~~the~~April ~~short~~2013 ~~term~~to $22,500.

~~Since~~- an27 unconditional Notice of Registration for FreshProtectTM has been obtained from the EPA, the Company anticipates generating revenue from the sale of its products to growers and packaging facilities in the United States in addition to current revenues from the sale of its products in Israel.-

~~The Company anticipates that it will begin~~ toAs ~~realize material revenues in the Citrus season~~ of ~~2013 (~~the ~~first~~filing ~~and~~date ~~fourth quarter~~ of ~~2013)~~this report, asour ~~customers~~net ~~will~~burn ~~begin~~rate tois ~~buy the~~approximately ~~Company’s~~$25,000 ~~products~~per ~~and~~month ~~technologies. Realization~~(not ofincluding ~~revenues~~delayed ispayments ~~subject~~ to ~~regulatory~~executive ~~approval~~officers ofand ~~the~~employees ~~relevant regulator,~~ in ~~each~~the ~~country~~amount ~~where~~of ~~we intend to deliver~~$25,000 ~~distribute~~per ~~and~~month). ~~sell~~Our ~~our~~management ~~products,~~is ~~which~~utilizing webest ~~currently~~efforts doto ~~not~~reduce ~~have,~~our ~~except~~burn ~~for~~rate ~~the state of Israel,~~ and ~~the~~minimize ~~U.S~~Company ~~for our FreshProtect™ and SpuDefender™~~expenses.

~~The~~ On ~~Company’s~~January ~~management~~3, ~~believes that~~2014 we filed an S-1 Registration Statement with the ~~current~~Securities ~~trend~~and Exchange Commission in ~~the~~connection ~~markets~~with toa ~~use~~best-efforts ~~environmentally~~offering ~~friendly~~of ~~products~~up to $5,000,000 ~~which~~of ~~are~~Common ~~residue~~Stock ~~free~~and orCommon ~~low~~Stock ~~residue~~Class A Warrants, ~~and~~led by Sandlapper Securities as placement agent. The Registration Statement has yet to ~~replace~~ be declared effective by the ~~subsisting~~Securities ~~chemicals,~~and ~~which~~Exchange ~~leave~~Commission ~~high~~and ~~residues~~is currently under review. To the extent we raise capital pursuant to such offering, ~~together~~a ~~with~~portion of such capital would be used towards general working capital as more fully described in the ~~trend~~use of proceeds section of the ~~regulators~~registration statement. This disclosure shall not constitute an offer to ~~reduce~~sell ~~the~~or ~~usage~~a solicitation of ~~high~~an ~~residue chemicals~~offer ~~(such~~to asbuy ~~CIPC~~the securities, ~~Imazalil~~nor ~~and~~shall ~~TBZ)~~there by any sale of these securities in any jurisdiction in which an offer, ~~will~~solicitation ~~cause~~or ~~farmers~~sale ~~and~~would ~~packing~~be ~~houses~~unlawful prior to ~~prefer~~registration ~~Pimi’s~~or ~~solutions~~qualification under the securities laws of such jurisdiction. ~~The~~Any ~~Company has~~offer ~~already~~of ~~begun~~the ~~testing~~securities atwill ~~several~~be ~~facilities~~solely by means of the prospectus included in the ~~United~~registration ~~States~~statement and ~~anticipates~~one ~~that~~or ~~additional~~more ~~facilities~~prospectus supplements that will ~~test~~be issued at the ~~company’s products~~time inof the ~~future~~offering.

~~The~~ Since ~~Company~~an ~~has~~unconditional ~~sustained~~Notice ~~operating~~of ~~losses and~~Registration ~~its~~for ~~cash~~FreshProtectTM ~~needs~~has ~~extend~~been ~~beyond~~obtained ~~its~~from ~~current~~the ~~resources.~~EPA, Inas ~~addition~~well as from CDPR, ~~the~~and ~~Company~~due ~~does~~to ~~not~~successful ~~have~~commercial aimplementation ~~reliable~~in ~~consistent~~Sun ~~source~~Pacific, ~~of future~~the ~~funding.~~Company ~~These~~anticipates ~~factors~~that ~~create~~additional ancustomers ~~uncertainty~~will ~~about~~begin to buy the Company’s ~~ability~~products toand ~~continue~~technologies asin a2014 ~~going~~and ~~concern.~~thus ~~Moreover,~~ the Company’s ~~auditors~~revenues, ~~report~~mainly ~~expresses~~generated ~~substantial~~in ~~doubt~~Israel as toof the ~~Company’s~~date ~~ability~~of tothis ~~continue~~report, aswill ~~a going concern~~increase. ~~The~~ Realization ~~Company~~of revenues is insubject ~~discussions~~to ~~with~~regulatory ~~several~~approval ~~investors~~of tothe ~~provide~~relevant ~~interim~~regulator, ~~financing~~in ~~pending~~each ~~our~~country ~~ability~~where towe ~~secure~~intend ~~additional~~to ~~funds necessary~~deliver, todistribute ~~fully~~and ~~implement~~sell our ~~business~~products, ~~plan.~~which ~~There~~we ~~are~~currently nodo ~~assurances~~not ~~that~~have, except for the ~~interim~~State ~~financing~~of orIsrael, ~~additional~~and ~~funds~~the ~~will~~U.S ~~be obtained~~for our FreshProtect™ and SpuDefender™.

26 The Company’s management believes that the current trend in the markets to use environmentally friendly products, which are residue free or low residue, and to replace the subsisting chemicals, which leave high residues, together with the trend of the regulators to reduce the usage of high residue chemicals (such as CIPC, Imazalil and TBZ), will cause farmers and packing houses to prefer Pimi’s solutions. The Company has already begun commercial sales of certain of its products in the United States and anticipates that such sales will increase in the future.

The Company has ~~not~~sustained ~~yet~~operating ~~generated~~losses ~~sufficient revenues~~and ~~from~~its cash needs extend beyond its ~~operations~~current resources. In addition, the Company does not have a reliable consistent source of future funding. These factors create an uncertainty about the Company’s ability to ~~fund~~continue ~~its~~as ~~activities~~a going concern. Moreover, the Company’s auditors report expresses substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to raise additional funds necessary to implement our business plan by means of public offering and isto ~~therefore~~that ~~dependent~~end ~~upon~~has ~~external~~recently ~~sources~~filed ~~for~~the ~~financing~~draft ~~its~~of ~~operations~~S-1registration statement with the SEC. There are no assurances that such additional funds will be obtained by means of public offering.

~~Net~~ The ~~Cash~~Company ~~Used~~has innot ~~Operating~~yet ~~Activities for~~generated ~~the~~sufficient ~~years~~revenues ~~2012~~from its operations to fund its activities and ~~2011~~is therefore dependent upon external sources for financing its operations.

Net ~~cash~~Cash ~~used~~Used in ~~operating~~Operating ~~activities, generated~~Activities ~~from continuing operations was $540,994 and $660,175~~ for the years ~~ended~~2013 ~~December 31, 2012~~ and 2011, respectively. Net cash used in operating activities primarily reflects the net loss for those periods, which was reduced in part by depreciation and amortization, stock-based compensation and changes in operating assets and liabilities.2012

Net ~~Cash~~cash ~~Used~~used in ~~Investing~~operating ~~Activities~~ activities continuing operations was $129,330 and $540,994 for the years ended December 31, 2013 and 2012, respectively. Net cash used in operating activities primarily reflects the net loss for those periods, which was reduced in part by depreciation and ~~2011~~amortization, stock-based compensation and changes in operating assets and liabilities.

Net ~~cash~~Cash ~~used~~Used in ~~investing~~Investing ~~activities~~Activities ~~was $21,016 and $12,865,~~ for the years ~~ended~~2013 ~~December 31, 2012~~ and ~~2011,~~ ~~respectively, which was used primarily to purchase equipment (such as computers, and office equipment), and funds deposit in respect of employees rights upon retirement.~~2012

Net ~~Cash~~cash ~~Provided~~used byin ~~Financing~~investing ~~Activities~~ activities was $26,611 and $21,016, for the years ended December 31, 2013 and 2012, respectively, which was used primarily to purchase equipment (such as computers, and ~~2011~~office equipment), and funds deposit in respect of employees rights upon retirement.

Net ~~cash~~Cash ~~provided~~Provided by ~~financing~~Financing ~~activities was~~Activities ~~$573,400 and $695,486~~ for the years ~~ended~~2013 ~~December 31, 2012~~ and ~~2011, respectively, primarily attributable to capital raised and issuance of convertible preferred stock.~~2012

Net ~~Cash~~cash ~~Used~~provided inby ~~Operating~~financing ~~Activities~~ activities was $135,539 and $573,400 for the years ~~2011~~ended December 31, 2013 and ~~2010~~2012, respectively, attributable to capital raised and issuance of convertible preferred stock ($93,900), and credit lines ($41,639).

Net cash used in operating activities, generated from continuing operations was $660,175 and $430,887 for the years ended December 31, 2011 and 2010, respectively. Net cash used in operating activities primarily reflects the net loss for those periods, which was reduced in part by depreciation and amortization, stock-~~based~~ ~~compensation~~28 ~~and changes in operating assets and liabilities.~~-

Net Cash Used in ~~Investing~~Operating Activities for the years ~~2011~~2012 and ~~2010~~2011

Net cash used in ~~investing~~operating activities continuing operations was $12540,~~865~~994 and $33660,~~161,~~175 for the years ended December 31, ~~2011~~2012 and ~~2010~~ 2011, respectively,. ~~which~~Net ~~was~~cash used in operating activities primarily toreflects ~~purchase equipment~~the ~~(such~~net asloss ~~computers~~for those periods, ~~and~~which ~~office~~was ~~equipment),~~reduced in part by depreciation and ~~funds~~amortization, ~~deposit~~stock-based incompensation ~~respect~~and ofchanges ~~employees~~in ~~rights~~operating ~~upon~~assets ~~retirement~~and liabilities.

Net Cash ~~Provided~~Used byin ~~Financing~~Investing Activities for the years ~~2011~~2012 and ~~2010~~2011

Net cash ~~provided~~used byin ~~financing~~investing activities was $~~695~~21,~~486~~016and ~~and~~ $~~464~~12,~~048~~865, for the years ended December 31, ~~2011~~2012 and ~~2010~~ 2011, respectively, ~~primarily~~which ~~attributable~~was used primarily to ~~capital~~purchase ~~raised~~equipment (such as computers, and office equipment), and funds deposit in respect of employees rights upon retirement.

~~Off-Balance~~ Net ~~Sheet~~Cash ~~Arrangements~~Provided by Financing Activities for the years 2012 and 2011

We Net docash ~~not~~provided ~~have~~by ~~any~~financing ~~off~~activities ~~balance~~was ~~sheet~~$573,400 ~~arrangements that~~and ~~are~~$695,486 ~~reasonably~~for ~~likely~~the toyears ~~have~~ended aDecember ~~current~~31, or2012 ~~future~~and ~~effect~~2011, onrespectively, ~~our~~primarily ~~financial~~attributable ~~condition,~~to ~~revenues,~~capital raised and ~~results~~issuance of ~~operations, liquidity~~convertible orpreferred ~~capital expenditures~~stock.

~~Effect~~ Off-Balance ofSheet ~~Recently Issued Accounting Pronouncements~~Arrangements

~~N/A~~ We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

~~ITEM~~ Effect ~~7A.~~of ~~QUANTITATIVE~~Recently ~~AND~~Issued ~~QUALITATIVE~~Accounting ~~DISCLOSURES ABOUT MARKET RISK~~Pronouncements

~~Not applicable.~~ N/A

27 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~ITEM~~ Not 8applicable. ~~FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA~~

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

~~PIMI~~- ~~AGRO~~29 ~~CLEANTECH, INC.~~-

(A PIMI ~~Development~~AGRO ~~Stage~~CLEANTECH, ~~Company)~~INC.

~~Consolidated~~ (A ~~Financial~~Development ~~Statements~~Stage Company)

as Consolidated ofFinancial ~~December 31, 2012~~Statements

28 as of December 31, 2013

~~PIMI~~- ~~AGRO~~30 ~~CLEANTECH, INC.~~-

(A PIMI ~~Development~~AGRO ~~Stage~~CLEANTECH, ~~Company)~~INC.

~~Consolidated~~ (A ~~Financial~~Development ~~Statements~~Stage Company)

as Consolidated ofFinancial ~~December 31, 2012~~Statements

~~Table~~ as of ~~Contents~~December 31, 2013

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements
Balance Sheets	F-3
Statements of Operations and Comprehensive Loss	F-4
Statements of Changes in Stockholders’ Deficit	F-5 – F-11
Statements of Cash Flows	F-12
Notes to Consolidated Financial Statements	F-13 – F-35

Table of Contents

F-1

	Page

Report of Independent Registered Public Accounting Firm	31

Consolidated Financial Statements

Balance Sheets	33

Statements of Operations and Comprehensive Loss	34

Statements of Changes in Stockholders’ Deficit	35 – 41

Statements of Cash Flows	42

Notes to Consolidated Financial Statements	43 – 66

Report of Independent Registered Public Accounting Firm To the Stockholders of PIMI AGRO CLEANTECH, INC. (A Development Stage Company) Fahn Kanne & Co. Head Office Levinstein Tower 23 Menachem Begin Road Tel-~~Aviv~~ ~~66184,~~31 ~~ISRAEL P.O.B. 36172, 61361 T +972 3 7106666 F +972 3 7106660 www.gtfk.co.il~~-

We have audited the accompanying consolidated balance sheets of Pimi Agro Cleantech, Inc. (a development stage company) and subsidiary (hereinafter: the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2012 and for the cumulative period from January 14, 2004 (date of inception) through December 31, 2012. These consolidated financial statements are the responsibility of the Board of Directors and management of the Company. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

		Fahn Kanne & Co.
		Head Office
		Levinstein Tower
		23 Menachem Begin Road
		Tel-Aviv 66184, ISRAEL
		P.O.B. 36172, 61361
Report of Independent Registered Public Accounting Firm
To the Stockholders of		T +972 3 7106666
PIMI AGRO CLEANTECH, INC.		F +972 3 7106660
(A Development Stage Company)		www.gtfk.co.il

We ~~conducted~~have ~~our~~audited ~~audits~~the inaccompanying ~~accordance~~consolidated ~~with the~~balance ~~standards~~sheets of ~~the~~Pimi ~~Public~~Agro ~~Company~~Cleantech, ~~Accounting~~Inc. ~~Oversight~~(a ~~Board~~development ~~(United~~stage ~~States~~company). ~~Those standards require that we plan~~ and ~~perform the~~subsidiary ~~audit~~(hereinafter: ~~to obtain reasonable assurance about whether~~ the ~~financial~~"Company") ~~statements~~as ~~are free~~ of ~~material~~December 31, ~~misstatement.~~2013 ~~The~~and ~~Company is not required to have~~2012, ~~nor~~and ~~were~~the werelated ~~engaged~~consolidated tostatements ~~perform an audit~~ of ~~its~~operations ~~internal~~and ~~control~~comprehensive ~~over~~loss, ~~financial~~changes ~~reporting.~~in ~~Our~~stockholders’ ~~audits~~deficit ~~included consideration~~and ofcash ~~internal~~flows ~~control over financial reporting as a basis~~ for ~~designing~~each ~~audit~~of ~~procedures~~the ~~that~~three ~~are~~years ~~appropriate~~ in the ~~circumstances~~ period ended December 31, ~~but~~2013 ~~not~~and for the ~~purpose~~cumulative ofperiod ~~expressing~~from anJanuary 14, ~~opinion~~2004 on(date ~~the effectiveness~~ of ~~the~~inception) ~~Company's~~through ~~internal control over financial reporting. Accordingly~~December 31, ~~we express no such opinion~~2013. AnThese ~~audit~~consolidated ~~also~~financial ~~includes~~statements ~~examining,~~are ~~on a test basis, evidence supporting~~ the ~~amounts~~ ~~and~~responsibility ~~disclosures~~of in the ~~financial~~Board ~~statements,~~of ~~assessing~~Directors ~~the accounting principles used~~ and ~~significant estimates made by~~ management, asof ~~well~~the asCompany. ~~evaluating~~Our ~~the~~responsibility ~~overall~~is ~~financial~~to ~~statement~~express ~~presentation.~~an Weopinion ~~believe~~on ~~that~~these ~~our~~consolidated ~~audits~~financial ~~provide~~statements abased ~~reasonable basis~~on ~~for~~ our ~~opinion~~audits.

In We conducted our ~~opinion,~~audits in accordance with the ~~consolidated~~standards ~~financial statements~~of ~~referred~~the toPublic ~~above~~Company ~~present~~Accounting ~~fairly,~~Oversight inBoard ~~all~~(United ~~material~~States). ~~respects,~~Those standards require that we plan and perform the ~~consolidated~~audit to obtain reasonable assurance about whether the financial ~~position~~statements are free of ~~Pimi~~material ~~Agro~~misstatement. ~~Cleantech~~The Company is not required to have, ~~Inc.~~ ~~and~~nor ~~subsidiary~~were aswe engaged to perform an audit of ~~December 31,~~its ~~2012~~internal ~~and~~control ~~2011,~~over ~~and~~financial ~~the~~reporting. ~~consolidated~~Our ~~results~~audits included consideration of ~~their~~internal ~~operations~~control ~~and~~over ~~their~~financial ~~cash~~reporting ~~flows~~ as a basis for ~~each~~designing ofaudit ~~the~~procedures ~~three~~that ~~years~~are appropriate in the ~~period ended December 31~~circumstances, ~~2012~~but ~~and~~not for the ~~cumulative~~purpose ~~period~~of ~~from~~expressing ~~January 14,~~an ~~2004 (date~~opinion on the effectiveness of ~~inception)~~the ~~through~~Company's ~~December 31~~internal control over financial reporting. Accordingly, ~~2012~~we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in ~~conformity~~the ~~with~~financial statements, assessing the accounting principles ~~generally~~used ~~accepted~~and insignificant estimates made by management, as well as evaluating the ~~United~~overall ~~States of~~financial ~~America~~statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~The~~ ~~accompanying~~In ~~consolidated~~our ~~financial~~opinion, ~~statements have been prepared assuming that~~ the ~~Company~~consolidated ~~will~~financial ~~continue~~statements asreferred ato ~~going~~above ~~concern.~~present ~~As discussed~~fairly, in ~~Note 1,~~all ~~the~~material ~~Company~~respects, ~~is in~~ the ~~development~~consolidated ~~stage~~financial asposition ~~defined~~of inPimi ~~FASB~~Agro ~~Accounting Standards Codification (ASC) Topic 915~~Cleantech, ~~"Development~~ ~~Stage Entities"~~Inc. ~~It has not yet generated sufficient revenues from its operations to fund its activities~~ and issubsidiary ~~therefore~~as ~~dependent upon external sources for financing its operations. As~~ of December 31, 2013 and 2012, and the ~~Company~~consolidated ~~has~~results ~~incurred accumulated losses~~ of ~~US$ 5,007,417,~~their ~~stockholders'~~operations ~~deficit of US$ 886,202~~ and ~~cumulative~~their ~~negative operating~~ cash ~~flow of~~flows ~~US$ 4,291,122.~~for ~~These~~each ~~factors~~of ~~among~~the ~~others,~~three asyears ~~discussed~~ in ~~Note 1 to~~ the ~~consolidated~~period ~~financial statements~~ended ~~raise~~December 31, ~~substantial~~2013 ~~doubt~~and ~~about~~for the ~~Company’s~~cumulative ~~ability~~period tofrom ~~continue~~January 14, as2004 a(date ~~going~~of ~~concern.~~inception) ~~Management’s~~through ~~plans~~December 31, 2013, in ~~regards~~ toconformity ~~these~~with ~~matters~~accounting ~~are~~principles ~~also~~generally ~~described~~accepted in ~~Note 1. The consolidated financial statements do not include any adjustments that might result from~~ the ~~outcome~~United States of ~~this uncertainty~~America.

~~FAHN~~ The ~~KANNE~~accompanying &consolidated COfinancial statements have been prepared assuming that the Company will continue as a going concern. ~~GRANT~~As ~~THORNTON~~discussed ~~ISRAEL~~in Note 1, the Company is in the development stage as defined in FASB Accounting Standards Codification (ASC) Topic 915, "Development Stage Entities". It has not yet generated sufficient revenues from its operations to fund its activities and is therefore dependent upon external sources for financing its operations. As of December 31, 2013, the Company has incurred accumulated losses of US$ 5,562,047, stockholders' deficit of US$ 746,708 and cumulative negative operating cash flow of US$ 4,420,452. These factors among others, as discussed in Note 1 to the consolidated financial statements raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Certified~~ S/FAHN ~~Public~~KANNE ~~Accountants~~& ~~(Isr~~CO.) GRANT THORNTON ISRAEL

~~Tel-Aviv,~~ Certified ~~Israel~~Public Accountants (Isr.)

~~March 25~~ Tel-Aviv, ~~2013~~Israel

~~F-2~~ March 10, 2014

~~PIMI~~ Certified ~~AGRO~~Public ~~CLEANTECH, INC.~~Accountants

(A Fahn ~~Development~~Kanne ~~Stage~~& ~~Company)~~Co. is the Israeli member firm of Grant Thornton International Ltd

~~CONSOLIDATED~~- ~~BALANCE~~32 ~~SHEETS~~-

	US dollars (except share data)
	December 31,
	2012			2011
A S S E T S
Current Assets
Cash and cash equivalents		33,484			22,446
Accounts receivable		138,040			186,842
Other current assets (Note 3)		29,409			22,487
Total current assets		200,933			231,775
Property and Equipment, Net (Note 4)		25,633			27,559
Funds in Respect of Employee Rights Upon Retirement		86,270			68,015
Total assets		312,836			327,349
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable:
Trade (Note 5A)		141,078			145,189
Other (Note 5B)		212,854			167,357
Convertible Bonds (Note 7)		187,177			174,356
Total current liabilities		541,109			486,902
Series A Convertible preferred stock (Note 8)		571,225			-
Liability for employee rights upon retirement		86,704			73,454
Total liabilities		1,199,038			560,356
Commitments (Note 9)
Stockholders’ Deficit (Note 10)
Common stocks of US$ 0.01 par value ("Common stocks"):
30,000,000 shares authorized as of December 31, 2012 and 2011; issued and outstanding 8,553,587 shares and 8,541,087 shares as of December 31, 2012 and 2011, respectively		85,535			85,410
Additional paid in capital		4,100,695			4,055,026
Accumulated other comprehensive loss		(65,015	)		(61,768	)
Deficit accumulated during the development stage		(5,007,417	)		(4,311,675	)
Total stockholders' deficit		(886,202	)		(233,007	)
Total liabilities and stockholders’ deficit		312,836			327,349

PIMI AGRO CLEANTECH, INC.

~~The accompanying notes are an integral~~ ~~part~~(A ofDevelopment ~~the~~Stage ~~consolidated financial statements.~~Company)

F-3CONSOLIDATED BALANCE SHEETS

PIMI AGRO CLEANTECH, INC.

	US dollars (except share data)
	December 31,
	2013	2012
ASSETS
Current Assets
Cash and cash equivalents	13,082	33,484
Accounts receivable	190,199	138,040
Other current assets (Note 3)	18,128	29,409
Total current assets	221,409	200,933

Property and Equipment, Net (Note 4)	34,553	25,633

Funds in Respect of Employee Rights Upon Retirement	104,695	86,270
Total assets	360,657	312,836

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Short-term loan from banking institution (Note 6)	43,312	-
Accounts payable:
Trade (Note 5A)	120,145	141,078
Other (Note 5B)	534,933	212,854
Convertible Bonds (Note 7)	303,266	187,177
Total current liabilities	1,001,656	541,109

Series A Convertible preferred stock (Note 8)	-	571,225

Liability for employee rights upon retirement	105,709	86,704
Total liabilities	1,107,365	1,199,038

Commitments (Note 9)
Stockholders’ Deficit (Note 10)
Common stocks of US$ 0.01 par value ("Common stocks"):
30,000,000 shares authorized as of December 31, 2013 and 2012; issued and outstanding 9,336,087 shares and 8,553,587 shares as of December 31, 2013 and 2012, respectively	93,360	85,535
Preferred stocks of US$ 0.01 par value ("Preferred stocks"):
600,000 shares authorized as of December 31, 2013 and 2012; issued and outstanding 0 shares as of December 31, 2013 and 2012	-	-
Additional paid in capital	4,809,501	4,100,695
Accumulated other comprehensive loss	(87,522)	(65,015)
Deficit accumulated during the development stage	(5,562,047)	(5,007,417)

Total stockholders' deficit	(746,708)	(886,202)

Total liabilities and stockholders’ deficit	360,657	312,836

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~CONSOLIDATED~~- ~~STATEMENTS~~33 ~~OF OPERATIONS AND COMPREHENSIVE LOSS~~-

	US dollars (except share data)
	Year ended December 31,									Cumulative period from January 14, 2004 (date of inception) through December 31,
	2012			2011			2010			2012(*)
Revenues from sales of products		351,399			460,089			274,001			1,355,281
Research and development expenses (Note 11)		(689,070	)		(698,300	)		(567,115	)		(4,239,886	)
General and administrative expenses (Note 12)		(295,055	)		(298,980	)		(280,499	)		(1,825,857	)
Operating loss		(632,726	)		(537,191	)		(573,613	)		(4,710,462	)
Financing expenses, net		(63,016	)		(69,675	)		(55,425	)		(216,621	)
Loss from continuing operation		(695,742	)		(606,866	)		(629,038	)		(4,927,083	)
Loss from discontinued operation, net		-			-			-			(80,334	)
Loss for the year		(695,742	)		(606,866	)		(629,038	)		(5,007,417	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(3,247	)		8,114			(28,216	)		(65,015	)
Comprehensive loss for the period		(698,989	)		(598,752	)		(657,254	)		(5,072,432	)
Loss per share (basic and diluted) (Note 14)		(0.08	)		(0.07	)		(0.09	)		0

PIMI AGRO CLEANTECH, INC.

(*)A AsDevelopment ~~described~~Stage ~~in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the~~ Company ~~from its stockholders on April 27, 2009.~~)

~~The accompanying notes are an integral~~ ~~part~~CONSOLIDATED ofSTATEMENTS ~~the~~OF ~~consolidated~~OPERATIONS ~~financial~~AND ~~statements.~~COMPREHENSIVE LOSS

F-4

	US dollars (except share data)
	Year ended December 31,			Cumulative period from January 14, 2004 (date of inception) through December 31,
	2013	2012	2011	2013(*)

Revenues from sales of products	522,104	351,399	460,089	1,877,385
Research and development expenses (Note 11)	(714,240)	(689,070)	(698,300)	(4,954,126)
General and administrative expenses (Note 12)	(218,532)	(295,055)	(298,980)	(2,044,389)
Operating loss	(410,668)	(632,726)	(537,191)	(5,121,130)
Financing expenses, net	(58,144)	(63,016)	(69,675)	(274,765)
Loss from continuing operation	(468,812)	(695,742)	(606,866)	(5,395,895)
Loss from discontinued operation, net	-	-	-	(80,334)
Loss for the period	(468,812)	(695,742)	(606,866)	(5,476,229)
Other comprehensive income (loss):
Foreign currency translation adjustments	(22,507)	(3,247)	8,114	(87,522)
Comprehensive loss for the period	(491,319)	(698,989)	(598,752)	(5,563,751)

Loss per share (basic and diluted) (Note 14)	(0.06)	(0.08)	(0.07)

~~PIMI~~(*) ~~AGRO~~As ~~CLEANTECH~~described in Note 1A, ~~INC~~the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~STATEMENTS~~- OF34 ~~CHANGES IN STOCKHOLDERS’ DEFICIT (*)~~-

	US Dollars (except share data)
	Common stock													Deficit
	Number of shares		Amount		Additional paid in capital			Accumulated other comprehensive income (loss)			Receipts on account of shares			accumulated during the development stage			Total stockholders equity (deficit)
January 14, 2004 (date of inception)		-		-		-			-			-			-			-
120,000 common stock issued for cash of US$ 0.002 per share		120,000		1,200		(932	)		-			-			-			268
Balance as of December 31, 2004		120,000		1,200		(932	)		-			-			-			268
Loss for the year		-		-		-			-			-			(223,285	)		(223,285	)
Other comprehensive (loss) income		-		-		-			5,989			-			-			5,989
Receipts on account of shares		-		-		-			-			100,000			-			100,000
Balance as of December 31, 2005		120,000		1,200		(932	)		5,989			100,000			(223,285	)		(117,028	)
Loss for the year		-		-		-			-			-			(831,415	)		(831,415	)
Other comprehensive (loss) income		-		-		-			(12,748	)		-			-			(12,748	)
Issuance of 25,200 common stock for cash of US$ 7.50 per share on January 2, 2006		25,200		252		188,748			-			(100,000	)		-			89,000
Issuance of 24,000 common stock for cash of US$ 7.56 per share on July 19, 2006		24,000		240		181,293			-			-			-			181,533
Issuance of 72,000 common stock for cash of US$ 7.53 per share on December 28, 2006		72,000		720		541,600			-			-			-			542,320
Issuance of 1,688 common stock for cash of US$ 8.33 per share on December 28, 2006		1,688		17		14,043			-			-			-			14,060
Receipts on account of shares		-		-		-			-			33,644			-			33,644
Balance as of December 31, 2006		242,888		2,429		924,752			(6,759	)		33,644			(1,054,700	)		(100,634	)

PIMI AGRO CLEANTECH, INC.

~~The~~ STATEMENTS ~~accompanying~~OF ~~notes~~CHANGES ~~are~~IN anSTOCKHOLDERS’ ~~integral~~DEFICIT ~~part of the consolidated financial statements.~~(*)

F-5

	US Dollars (except share data)
						Deficit
				Accumulated		accumulated
	Common stock			other	Receipts on	during the	Total
	Number		Additional	comprehensive	account of	development	stockholders
	of shares	Amount	paid in capital	income (loss)	shares	stage	equity (deficit)
January 14, 2004 (date of inception)	-	-	-	-	-	-	-
120,000 common stock issued for cash of US$ 0.002 per share	120,000	1,200	(932)	-	-	-	268
Balance as of December 31, 2004	120,000	1,200	(932)	-	-	-	268

Loss for the year	-	-	-	-	-	(223,285)	(223,285)
Other comprehensive (loss) income	-	-	-	5,989	-	-	5,989
Receipts on account of shares	-	-	-	-	100,000	-	100,000
Balance as of December 31, 2005	120,000	1,200	(932)	5,989	100,000	(223,285)	(117,028)

Loss for the year	-	-	-	-	-	(831,415)	(831,415)
Other comprehensive (loss) income	-	-	-	(12,748)	-	-	(12,748)
Issuance of 25,200 common stock for cash of US$ 7.50 per share on January 2, 2006	25,200	252	188,748	-	(100,000)	-	89,000
Issuance of 24,000 common stock for cash of US$ 7.56 per share on July 19, 2006	24,000	240	181,293	-	-	-	181,533
Issuance of 72,000 common stock for cash of US$ 7.53 per share on December 28, 2006	72,000	720	541,600	-	-	-	542,320
Issuance of 1,688 common stock for cash of US$ 8.33 per share on December 28, 2006	1,688	17	14,043	-	-	-	14,060
Receipts on account of shares	-	-	-	-	33,644	-	33,644
Balance as of December 31, 2006	242,888	2,429	924,752	(6,759)	33,644	(1,054,700)	(100,634)

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~STATEMENTS~~- OF35 ~~CHANGES IN STOCKHOLDERS’ DEFICIT (*) (cont.)~~-

	US Dollars (except share data)
	Common stock													Deficit
	Number of shares		Amount		Additional paid in capital			Accumulated other comprehensive income (loss)			Receipts on account of shares			accumulated during the development stage			Total stockholders equity (deficit)
Loss for the year		-		-		-			-			-			(341,453	)		(341,453	)
Other comprehensive (loss) income		-		-		-			(23,206	)		-			-			(23,206	)
Issuance of 8,708 common stock for cash of US$ 2.37 per share, 30,006 common stock for cash of US$ 3.28 per share, 7,754 common stock for cash of US$ 0.0025 per share and 591 common stock for cash of US$ 3.45 per share in April 2007		47,059		471		119,375			-			(33,644	)		-			86,202
Issuance of 6,937 common stock for cash of US$ 4.10 per share in June 2007		6,937		69		28,339			-			-			-			28,408
Issuance of 747,390 common stock for cash of US$ 0.078 per share in July 2007		747,390		7,474		51,061			-			-			-			58,535
Issuance of 996,520 common stock for cash of US$ 0.024 per share in August 2007		996,520		9,965		14,007			-			-			-			23,972
Issuance of 996,520 common stock for cash of US$ 0.024 per share in November 2007		996,520		9,965		15,212			-			-			-			25,177
Issuance of 996,520 common stock for cash of US$ 0.0026 per share in December 2007		996,520		9,965		(7,405	)		-			-			-			2,560
Receipts on account of shares		-		-		-			-			100,000			-			100,000
Balance as of December 31, 2007		4,033,834		40,338		1,145,341			(29,965	)		100,000			(1,396,153	)		(140,439	)

PIMI AGRO CLEANTECH, INC.

~~The~~ STATEMENTS ~~accompanying~~OF ~~notes~~CHANGES ~~are~~IN anSTOCKHOLDERS’ ~~integral~~DEFICIT ~~part~~(*) ~~of the consolidated financial statements~~(cont.)

F-6

	US Dollars (except share data)
						Deficit
				Accumulated		accumulated
	Common stock			other	Receipts on	during the	Total
	Number		Additional paid	comprehensive	account of	development	stockholders
	of shares	Amount	in capital	income (loss)	shares	stage	equity (deficit)

Loss for the year	-	-	-	-	-	(341,453)	(341,453)
Other comprehensive (loss) income	-	-	-	(23,206)	-	-	(23,206)
Issuance of 8,708 common stock for cash of US$ 2.37 per share, 30,006 common stock for cash of US$ 3.28 per share, 7,754 common stock for cash of US$ 0.0025 per share and 591 common stock for cash of US$ 3.45 per share in April 2007	47,059	471	119,375	-	(33,644)	-	86,202
Issuance of 6,937 common stock for cash of US$ 4.10 per share in June 2007	6,937	69	28,339	-	-	-	28,408
Issuance of 747,390 common stock for cash of US$ 0.078 per share in July 2007	747,390	7,474	51,061	-	-	-	58,535
Issuance of 996,520 common stock for cash of US$ 0.024 per share in August 2007	996,520	9,965	14,007	-	-	-	23,972
Issuance of 996,520 common stock for cash of US$ 0.024 per share in November 2007	996,520	9,965	15,212	-	-	-	25,177
Issuance of 996,520 common stock for cash of US$ 0.0026 per share in December 2007	996,520	9,965	(7,405)	-	-	-	2,560
Receipts on account of shares	-	-	-	-	100,000	-	100,000
Balance as of December 31, 2007	4,033,834	40,338	1,145,341	(29,965)	100,000	(1,396,153)	(140,439)

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~STATEMENTS~~- OF36 ~~CHANGES IN STOCKHOLDERS’ DEFICIT (*) (cont.)~~-

	US Dollars (except share data)
	Common stock												Deficit
	Number of shares		Amount		Additional paid in capital		Accumulated other comprehensive income (loss)			Receipts on account of shares			accumulated during the development stage			Total stockholders equity (deficit)
Loss for the year		-		-		-		-			-			(602,994	)		(602,994	)
Other comprehensive (loss) income		-		-		-		109			-			-			109
Issuance of 716,589 common stock for cash of US$ 0.041 per share in February 2008		716,589		7,166		22,370		-			-			-			29,536
Issuance of 235,334 common stock for cash of US$ 0.72 per share in February 2008		235,334		2,353		166,600		-			(100,000	)		-			68,953
Issuance of 291,515 common stock for cash of US$ 0.69 per share in June 2008		291,515		2,915		197,085		-			-			-			200,000
Issuance of 310,382 common stock for cash of US$ 0.71 per share in September 2008		310,382		3,104		216,161		-			-			-			219,265
Issuance of 444,004 common stock for cash of US$ 0.74 per share in November 2008		444,004		4,440		323,548		-			-			-			327,988
Stock based compensation		-		-		43,767		-			-			-			43,767
Balance as of December 31, 2008		6,031,658		60,316		2,114,872		(29,856	)		-			(1,999,147	)		146,185

PIMI AGRO CLEANTECH, INC.

~~The~~ STATEMENTS ~~accompanying~~OF ~~notes~~CHANGES ~~are~~IN anSTOCKHOLDERS’ ~~integral~~DEFICIT ~~part~~(*) ~~of the consolidated financial statements~~(cont.)

F-7

	US Dollars (except share data)
						Deficit
				Accumulated		accumulated
	Common stock			other	Receipts on	during the	Total
	Number		Additional paid	comprehensive	account of	development	stockholders
	of shares	Amount	in capital	income (loss)	shares	stage	equity (deficit)

Loss for the year	-	-	-	-	-	(602,994)	(602,994)
Other comprehensive (loss) income	-	-	-	109	-	-	109
Issuance of 716,589 common stock for cash of US$ 0.041 per share in February 2008	716,589	7,166	22,370	-	-	-	29,536
Issuance of 235,334 common stock for cash of US$ 0.72 per share in February 2008	235,334	2,353	166,600	-	(100,000)	-	68,953
Issuance of 291,515 common stock for cash of US$ 0.69 per share in June 2008	291,515	2,915	197,085	-	-	-	200,000
Issuance of 310,382 common stock for cash of US$ 0.71 per share in September 2008	310,382	3,104	216,161	-	-	-	219,265
Issuance of 444,004 common stock for cash of US$ 0.74 per share in November 2008	444,004	4,440	323,548	-	-	-	327,988
Stock based compensation	-	-	43,767	-	-	-	43,767
Balance as of December 31, 2008	6,031,658	60,316	2,114,872	(29,856)	-	(1,999,147)	146,185

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~STATEMENTS~~- OF37 ~~CHANGES IN STOCKHOLDERS’ DEFICIT (*) (cont.)~~-

	US Dollars (except share data)
	Common stock											Deficit
	Number of shares		Amount		Additional paid in capital		Accumulated other comprehensive income (loss)			Receipts on account of shares		accumulated during the development stage			Total stockholders equity (deficit)
Loss for the year		-		-		-		-			-		(1,076,624	)		(1,076,624	)
Other comprehensive (loss) income		-		-		-		(11,810	)		-		-			(11,810	)
Issuance of 26,399 common stock for cash of US$ 1.33 per share in January 2009		26,399		264		34,721		-			-		-			34,985
Issuance of 3,373 common stock for cash of US$ 1.33 per share in March 2009		3,373		34		24,966		-			-		-			25,000
Issuance of 201,972 common stock for cash of US$ 0.73 per share in March 2009		201,972		2,020		122,980		-			-		-			125,000
Issuance of 45,328 common stock for cash of US$ 1.32 per share in March 2009		45,328		453		59,547		-			-		-			60,000
Issuance of 4,459 common stock for cash of US$ 1.32 per share in April 2009		4,459		45		5,516		-			-		-			5,561
Issuance of 45,328 common stock for cash of US$ 1.32 per share in June 2009		45,328		453		59,547		-			-		-			60,000
Issuance of 40,000 common stock for cash of US$ 1.35 per share in June 2009		40,000		400		53,600		-			-		-			54,000
Issuance of 20,000 common stock for cash of US$ 1.35 per share in August 2009		20,000		200		26,800		-			-		-			27,000
Issuance of 20,000 common stock for cash of US$ 1.35 per share in September 2009		20,000		200		26,800		-			-		-			27,000
Issuance of 35,000 common stock for cash of US$ 1.35 per share in October 2009		35,000		350		46,900		-			-		-			47,250
Issuance of 45,330 common stock for cash of US$ 1.32 per share in October 2009		45,330		453		59,547		-			-		-			60,000
Issuance of 54,263 common stock for cash of US$ 1.35 per share in November 2009		54,263		542		68,193		-			-		-			68,735
Stock based compensation		-		-		91,077		-			-		-			91,077
Balance as of December 31, 2009		6,573,110		65,730		2,795,066		(41,666	)		-		(3,075,771	)		(256,641	)

PIMI AGRO CLEANTECH, INC.

~~The~~ STATEMENTS ~~accompanying~~OF ~~notes~~CHANGES ~~are~~IN anSTOCKHOLDERS’ ~~integral~~DEFICIT ~~part~~(*) ~~of the consolidated financial statements~~(cont.)

F-8

	US Dollars (except share data)
						Deficit
				Accumulated		accumulated
	Common stock		Additional	other	Receipts on	during the	Total
	Number		paid in	comprehensive	account of	development	stockholders
	of shares	Amount	capital	income (loss)	shares	stage	equity (deficit)
Loss for the year	-	-	-	-	-	(1,076,624)	(1,076,624)
Other comprehensive (loss) income	-	-	-	(11,810)	-	-	(11,810)
Issuance of 26,399 common stock for cash of US$ 1.33 per share in January 2009	26,399	264	34,721	-	-	-	34,985
Issuance of 3,373 common stock for cash of US$ 1.33 per share in March 2009	3,373	34	24,966	-	-	-	25,000
Issuance of 201,972 common stock for cash of US$ 0.73 per share in March 2009	201,972	2,020	122,980	-	-	-	125,000
Issuance of 45,328 common stock for cash of US$ 1.32 per share in March 2009	45,328	453	59,547	-	-	-	60,000
Issuance of 4,459 common stock for cash of US$ 1.32 per share in April 2009	4,459	45	5,516	-	-	-	5,561
Issuance of 45,328 common stock for cash of US$ 1.32 per share in June 2009	45,328	453	59,547	-	-	-	60,000
Issuance of 40,000 common stock for cash of US$ 1.35 per share in June 2009	40,000	400	53,600	-	-	-	54,000
Issuance of 20,000 common stock for cash of US$ 1.35 per share in August 2009	20,000	200	26,800	-	-	-	27,000
Issuance of 20,000 common stock for cash of US$ 1.35 per share in September 2009	20,000	200	26,800	-	-	-	27,000
Issuance of 35,000 common stock for cash of US$ 1.35 per share in October 2009	35,000	350	46,900	-	-	-	47,250
Issuance of 45,330 common stock for cash of US$ 1.32 per share in October 2009	45,330	453	59,547	-	-	-	60,000
Issuance of 54,263 common stock for cash of US$ 1.35 per share in November 2009	54,263	542	68,193	-	-	-	68,735
Stock based compensation	-	-	91,077	-	-	-	91,077
Balance as of December 31, 2009	6,573,110	65,730	2,795,066	(41,666)	-	(3,075,771)	(256,641)

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~STATEMENTS~~- OF38 ~~CHANGES IN STOCKHOLDERS’ DEFICIT (*) (cont.)~~-

	US Dollars (except share data)
	Common stock											Deficit
	Number of shares		Amount		Additional paid in capital		Accumulated other comprehensive income (loss)			Receipts on account of shares		accumulated during the development stage			Total stockholders equity (deficit)
Loss for the year		-		-		-		-			-		(629,038	)		(629,038	)
Other comprehensive (loss) income		-		-		-		(28,216	)		-		-			(28,216	)
Issuance of 3,225 common stock for cash of US$ 1.55 per share in February 2010		3,225		32		4,968		-			-		-			5,000
Issuance of 35,000 common stock for cash of US$ 1.35 per share in February 2010		35,000		350		46,900		-			-		-			47,250
Issuance of common stock and warrants, net of issuance costs in August 2010 (**)		385,108		3,851		197,215		-			-		-			201,066
Issuance of 134,121 common stock for cash of US$ 0.6 per share in December 2010		134,121		1,341		76,118		-			-		-			77,459
Amounts attributed to detachable warrants issued in connection with convertible bonds (***)		-		-		41,208		-			-		-			41,208
Beneficial conversion feature on convertible bonds (***)		-		-		41,207		-			-		-			41,207
Stock based compensation (****)		30,000		300		82,046		-			-		-			82,346
Balance as of December 31, 2010		7,160,564		71,604		3,284,728		(69,882	)		-		(3,704,809	)		(418,359	)

PIMI AGRO CLEANTECH, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (**) ~~See Note 10G~~(cont.)

(***) See Note 7.

	US Dollars (except share data)
						Deficit
				Accumulated		accumulated
	Common stock		Additional	other	Receipts on	during the	Total
	Number		paid in	comprehensive	account of	development	stockholders
	of shares	Amount	capital	income (loss)	shares	stage	equity (deficit)
Loss for the year	-	-	-	-	-	(629,038)	(629,038)
Other comprehensive (loss) income	-	-	-	(28,216)	-	-	(28,216)
Issuance of 3,225 common stock for cash of US$ 1.55 per share in February 2010	3,225	32	4,968	-	-	-	5,000
Issuance of 35,000 common stock for cash of US$ 1.35 per share in February 2010	35,000	350	46,900	-	-	-	47,250
Issuance of common stock and warrants, net of issuance costs in August 2010 (**)	385,108	3,851	197,215	-	-	-	201,066
Issuance of 134,121 common stock for cash of US$ 0.6 per share in December 2010	134,121	1,341	76,118	-	-	-	77,459
Amounts attributed to detachable warrants issued in connection with convertible bonds (***)	-	-	41,208	-	-	-	41,208
Beneficial conversion feature on convertible bonds (***)	-	-	41,207	-	-	-	41,207
Stock based compensation (****)	30,000	300	82,046	-	-	-	82,346
Balance as of December 31, 2010	7,160,564	71,604	3,284,728	(69,882)	-	(3,704,809)	(418,359)

(*~~***~~) ~~Including~~As ~~US$~~described 24in Note 1A,~~850~~ ~~with~~the ~~respect~~financial statements were retroactively restated to reflect the ~~issuance~~historical financial statements of 30the subsidiary Pimi Agro Cleantech Ltd.,~~000~~ ~~common~~which ~~stock~~was toacquired aby ~~service~~the ~~provider~~Company from its stockholders on April 27, 2009.

~~The~~(**) ~~accompanying~~See ~~notes~~Note ~~are an integral part of the consolidated financial statements~~10G.

~~F-9~~(***) See Note 7.

~~PIMI~~(****) ~~AGRO~~Including ~~CLEANTECH~~US$ 24,850 ~~INC~~with respect to the issuance of 30,000 common stock to a service provider.

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~STATEMENTS~~- OF39 ~~CHANGES IN STOCKHOLDERS’ DEFICIT (*) (cont.)~~-

	US Dollars (except share data)
	Common stock												Deficit
	Number of shares		Amount		Additional paid in capital			Accumulated other comprehensive income (loss)			Receipts on account of shares		accumulated during the development stage			Total stockholders equity (deficit)
Loss for the year		-		-		-			-			-		(606,866	)		(606,866	)
Other comprehensive (loss) income		-		-		-			8,114			-		-			8,114
Issuance of 125,000 common stock and warrants for cash of US$ 0.8 per share in January 2011		125,000		1,250		98,750			-			-		-			100,000
Issuance of 125,000 common stock and warrants for cash of US$ 0.8 per share in February 2011		125,000		1,250		98,750			-			-		-			100,000
Issuance of 250,000 common stock and warrants for cash of US$ 0.8 per share in March 2011		250,000		2,500		197,500			-			-		-			200,000
Issuance of 368,750 common stock and warrants for cash of US$ 0.8 per share in April 2011		368,750		3,688		291,312			-			-		-			295,000
Issuance of 125,000 common stock and warrants for cash of US$ 0.8 per share in May 2011		125,000		1,250		98,750			-			-		-			100,000
Issuance of 12,500 common stock and warrants for cash of US$ 0.8 per share in September 2011		12,500		125		9,875			-			-		-			10,000
Issuance of 62,500 common stock and warrants, and payment of US$ 50,000 in cash as equity issuance costs (see Note 10O)		62,500		625		(50,625	)		-			-		-			(50,000	)
Exercise of options		311,773		3,118		-			-			-		-			3,118
Stock based compensation		-		-		25,986											25,986
Balance as of December 31, 2011		8,541,087		85,410		4,055,026			(61,768	)		-		(4,311,675	)		(233,007	)

PIMI AGRO CLEANTECH, INC.

~~The~~ STATEMENTS ~~accompanying~~OF ~~notes~~CHANGES ~~are~~IN anSTOCKHOLDERS’ ~~integral~~DEFICIT ~~part~~(*) ~~of the consolidated financial statements~~(cont.)

F-10

	US Dollars (except share data)
						Deficit
				Accumulated		accumulated
	Common stock		Additional	other	Receipts on	during the	Total
	Number		paid in	comprehensive	account of	development	stockholders
	of shares	Amount	capital	income (loss)	shares	stage	equity (deficit)
Loss for the year	-	-	-	-	-	(606,866)	(606,866)
Other comprehensive income	-	-	-	8,114	-	-	8,114
Issuance of 125,000 common stock and warrants for cash of US$ 0.8 per share in January 2011	125,000	1,250	98,750	-	-	-	100,000
Issuance of 125,000 common stock and warrants for cash of US$ 0.8 per share in February 2011	125,000	1,250	98,750	-	-	-	100,000
Issuance of 250,000 common stock and warrants for cash of US$ 0.8 per share in March 2011	250,000	2,500	197,500	-	-	-	200,000
Issuance of 368,750 common stock and warrants for cash of US$ 0.8 per share in April 2011	368,750	3,688	291,312	-	-	-	295,000
Issuance of 125,000 common stock and warrants for cash of US$ 0.8 per share in May 2011	125,000	1,250	98,750	-	-	-	100,000
Issuance of 12,500 common stock and warrants for cash of US$ 0.8 per share in September 2011	12,500	125	9,875	-	-	-	10,000
Issuance of 62,500 common stock and warrants, and payment of US$ 50,000 in cash to a service provider as equity issuance costs	62,500	625	(50,625)	-	-	-	(50,000)
Exercise of options	311,773	3,118	-	-	-	-	3,118
Stock based compensation	-	-	25,986				25,986
Balance as of December 31, 2011	8,541,087	85,410	4,055,026	(61,768)	-	(4,311,675)	(233,007)

(A The ~~Development~~accompanying ~~Stage~~notes ~~Company)~~are an integral part of the consolidated financial statements.

~~STATEMENTS~~- OF40 ~~CHANGES IN STOCKHOLDERS’ DEFICIT (*) (cont.)~~-

	US Dollars (except share data)
	Common stock											Deficit
	Number of shares		Amount		Additional paid in capital		Accumulated other comprehensive income (loss)			Receipts on account of shares		accumulated during the development stage			Total stockholders equity (deficit)
Loss for the year		-		-		-		-			-		(695,742	)		(695,742	)
Other comprehensive loss		-		-		-		(3,247	)		-		-			(3,247	)
Issuance of 12,500 common stock and warrants for cash of US$ 0.8 per share in March 2012		12,500		125		9,875		-			-		-			10,000
Stock based compensation		-		-		35,794		-			-		-			35,794
Balance as of December 31, 2012		8,553,587		85,535		4,100,695		(65,015	)		-		(5,007,417	)		(886,202	)

PIMI AGRO CLEANTECH, INC.

~~The~~ STATEMENTS ~~accompanying~~OF ~~notes~~CHANGES ~~are~~IN anSTOCKHOLDERS’ ~~integral~~DEFICIT ~~part~~(*) ~~of the financial statements~~(cont.)

F-11

	US Dollars (except share data)
						Deficit
				Accumulated		accumulated
	Common stock		Additional	other	Receipts on	during the	Total
	Number		paid in	comprehensive	account	development	stockholders
	of shares	Amount	capital	income (loss)	of shares	stage	equity (deficit)
Loss for the year	-	-	-	-	-	(695,742)	(695,742)
Other comprehensive loss	-	-	-	(3,247)	-	-	(3,247)
Issuance of 12,500 common stock and warrants for cash of US$ 0.8 per share in March 2012	12,500	125	9,875	-	-	-	10,000
Stock based compensation	-	-	35,794	-	-	-	35,794
Balance as of December 31, 2012	8,553,587	85,535	4,100,695	(65,015)	-	(5,007,417)	(886,202)

Loss for the year	-	-	-	-	-	(468,812)	(468,812)
Other comprehensive loss	-	-	-	(22,507)	-	-	(22,507)
Conversion of Series A convertible preferred stock into common shares during March 9, 2013 (**)	782,500	7,825	563,400	-	-	-	571,225
Modification of the conversion terms of warrants (****)	-	-	85,818	-	-	(85,818)	-
Amounts attributed to detachable warrants issued in connection with convertible bonds(***)	-	-	15,518

Filing Compare · PIMI AGRO CLEANTECH, INC.