PRF Technologies Ltd 20-F for FY2021

PRF Technologies Ltd. (PRFX)

20-F 2022-03-16 For: 2021-12-31

Added on April 10, 2026

About this 20-F

PRF Technologies Ltd filed this 20-F on March 16, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $7.25M; compared with a net loss of $4.05M a year earlier

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Israel		65 Yigal Alon St., Tel Aviv 6744316, Israel Tel: +972 3 7177050
(Jurisdiction of incorporation or organization)		(Address of principal executive offices)

Title of each class to be registered		Trading Symbol(s)		Name of each exchange on which each class is to be registered
Ordinary shares, par value NIS 0.03 per share		PRFX		The Nasdaq Stock Market LLC

	Large accelerated filer ☐		Accelerated filer ☐		Non-accelerated filer ☒
					Emerging Growth Company ☒

		Page
INTRODUCTION		3
EMERGING GROWTH COMPANY STATUS		3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		4
MARKET, INDUSTRY, AND OTHER DATA		5

PART I

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	5
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	5
ITEM 3.	KEY INFORMATION	5
A.	[RESERVED]	5
B.	Capitalization and Indebtedness	6
C.	Reasons for the Offer and Use of Proceeds	6
D.	Risk Factors	6
ITEM 4.	INFORMATION ON THE COMPANY	32
A.	History and Development of the Company	32
B.	Business Overview	34
C.	Organizational Structure	51
D.	Property, Plants and Equipment	51
ITEM 4A.	UNRESOLVED STAFF COMMENTS	51
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	51
A.	Operating Results	54
B.	Liquidity and Capital Resources	56
C.	Research and Development, Patents and Licenses	59
D.	Trend Information	59
E.	Critical Accounting Estimates	59
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	60
A.	Directors and Senior Management	60
B.	Compensation	62
C.	Board Practices	65
D.	Employees	78
E.	Share Ownership	78
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	79
A.	Major Shareholders	79
B.	Related Party Transactions	80
C.	Interests of Experts and Counsel	81
ITEM 8.	FINANCIAL INFORMATION	81
A.	Statements and Other Financial Information	81
B.	Significant Changes	82
ITEM 9.	THE OFFER AND LISTING	82
A.	Offer and Listing Details	82
B.	Plan of Distribution	82
C.	Markets	82
D.	Selling Shareholders	82
E.	Dilution	82
F.	Expenses of the Issue	82

ITEM 10.	ADDITIONAL INFORMATION	82
A.	Share Capital	82
B.	Articles of Association	82
C.	Material Contracts	82
D.	Exchange Controls	82
E.	Taxation	82
F.	Dividends and Paying Agents	92
G.	Statement by Experts	92
H.	Documents on Display	92
I.	Subsidiary Information	92
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	93
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	93
A.	Debt Securities	93
B.	Warrants and rights	93
C.	Other Securities	93
D.	American Depositary Shares	93

PART II

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	93
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	93
ITEM 15.	CONTROLS AND PROCEDURES	93
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	94
ITEM 16B.	CODE OF ETHICS	94
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	94
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	95
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	95
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	95
ITEM 16G.	CORPORATE GOVERNANCE	96
ITEM 16H.	MINE SAFETY DISCLOSURE	97
ITEM 16I	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

PART III

ITEM 17.	FINANCIAL STATEMENTS	97
ITEM 18.	FINANCIAL STATEMENTS	97
ITEM 19.	EXHIBITS	98
SIGNATURES		100

Phase 1:	The drug is initially introduced into healthy human subjects or, in certain indications such as cancer, patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness and to determine optimal dosage.
Phase 2:	The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.
Phase 3:	The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.
Phase 4:	Post-approval studies, which are conducted following initial approval, are typically conducted to gain additional experience and data from treatment of patients in the intended therapeutic indication.

	Year ended December 31,
	2021		2020		2019
	(US$ thousands)
Statement of comprehensive loss data:

Research and development		2,860		354		136,
General and administrative		4,348		1,317		553
Total operating loss		7,208		1,671		689
Financial expenses, net		32		2,162		590
Loss before taxes		7,240		3,833		1,279
Tax expenses		6		220		-
Net loss		7,246		4,053		1,279

	Payments due by period
	(US$ thousands)
	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Obligations under master clinical research organization agreement ⁽¹⁾	$	1,744		-		-		-		1,744
Obligations under master clinical trial agreement ⁽²⁾			$	7,205		-		-		7,205

Total	$	1,744		7,205		-		-		8,949

Name	Age	Position
Senior Management
Ilan Hadar	52	Chief Executive Officer and Chief Financial Officer
Prof. Eli Hazum	73	Chief Technology Officer and Director
Dr. Sigal Aviel	58	Chief Operating Officer
Rita Keynan	53	Vice President of Pharmaceutical Operations

Non-Employee Director
Dr. Ehud Geller	75	Chairman of the Board and Director
Efi Cohen-Arazi^{(1) (2) (3) (4)}	74	Director
Dr. Ellen S. Baron^{(1) (2) (3)(4)}	69	External Director
Augustine Lawlor^{(1) (2) (3)(4)}	70	External Director

		Salaries, fees, commissions, and bonuses (in thousands of U.S. dollars)				Pension, retirement and similar benefits (in thousands of U.S. dollars)				Value of Options Granted(1) (in thousands of U.S. dollars)
All senior management and directors as a group, consisting of 8 persons			1,269				168				797

Name and Position⁽¹⁾	Salary		Social Benefits⁽²⁾		Bonuses		Value of Options Granted⁽³⁾		All Other Compensation⁽⁴⁾		Total
	(in thousands of U.S. dollars)
Ehud Geller, Chairman		-		-		-		79		156		235
Ilan Hadar, Chief Executive Officer		276		60		93		317		24		770
Eli Hazum Chief Technology Officer		-		-		-		79		151		230
Rita Keynan Vice President of Pharmaceutical Operations		218		62		95		85				460
Sigal Aviel Chief Operating Officer		209		46		47		-		-		302

(1)	All executive officers listed in the table were employed on a full-time basis during 2021.

(2)	“Social Benefits” include payments to the National Insurance Institute, advanced education funds, managers’ insurance and pension funds, vacation pay and recuperation pay as mandated by Israeli law.

(3)	Consists of amounts recognized as share-based compensation expense for the year ended December 31, 2021. Assumptions and key variables used in the calculation of such amounts are discussed in Note 9 of our financial statements.

(4)	“All Other Compensation” includes chairman of the board of directors' annual fee, automobile-related expenses pursuant to the Company’s automobile leasing program and consulting related fees.

	Ordinary Shares Beneficially Owned		Percentage Owned**
Senior Management and Directors
Ilan Hadar⁽¹⁾		90,769		0.8	%
Dr. Ehud Geller⁽²⁾		3,310,417		30.2	%
Dr. Sigal Aviel⁽³⁾		102,331		0.9	%
Rita Keynan⁽⁴⁾		40,467		0.4	%
Prof. Eli Hazum⁽⁵⁾		172,049		1.6	%
Ellen S. Baron⁽⁶⁾		18,167		0.2	%
Augustine Lawlor⁽⁶⁾		18,167		0.2	%
Efi Cohen-Arazi⁽⁶⁾		18,167		0.2	%
All senior management and directors as a group (8 persons)		3,770,532		34.4	%
More than 5% Shareholders
XT Hi-Tech Investments (1992) Ltd. ⁽⁷⁾		852,959		8.1	%
Medica III Investment group ⁽²⁾		3,310,417		30.2	%

	Year Ended December 31,
	2021		2020
(USD in thousands)
Audit fees ⁽¹⁾		141		107
Audit-related fees		-		-
Tax fees		-		-
All other fees		-		45

Total		141		152

Exhibit No.		Exhibit Description

1.1		Amended and Restated Articles of Association of the Company, as currently in effect (unofficial English translation from Hebrew original) (included as Exhibit 3.2 to our Registration Statement on Form S-1 as filed with the Securities and Exchange Commission on August 5, 2020, and incorporated herein by reference).

2.1		Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (included as Exhibit 2.1 to our Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 18, 2021, and incorporated herein by reference)

2.2		Specimen Share Certificate (included as Exhibit 4.1 to the Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on August 5, 2020, as amended, and incorporated herein by reference).

4.1#		2019 Option Plan (included as Exhibit 10.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on June 30, 2020, and incorporated herein by reference)

4.2		Compensation Policy

4.3		Form of Indemnification Agreement (included as Exhibit 10.2 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on August 24, 2020, and incorporated herein by reference)

4.4#		Form of Option Award (included as Exhibit 10.7 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on June 30, 2020, and incorporated herein by reference)

4.5		Amended and Restated Investors’ Rights Agreement dated November 26, 2008 (included as Exhibit 10.8 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on June 30, 2020, and incorporated herein by reference)

4.6		Form of Representative Warrant (included as Exhibit 10.5 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on June 30, 2020, and incorporated herein by reference)

4.7		Form of Warrant Agency Agreement including Form of Unit Warrant (included as Exhibit 10.6 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on June 30, 2020, and incorporated herein by reference)

4.8		Securities Purchase Agreement dated as of March 8, 2021 by and between PainReform Ltd. and the purchasers identified on the signature pages thereto (included as Exhibit 10.1 to our Form 6-K filed with the Securities and Exchange Commission on March 9, 2021, and incorporated herein by reference)

4.9		Form of Warrant issued to certain institutional investors on March 10, 2021 (included as Exhibit 10.2 to our Form 6-K filed with the Securities and Exchange Commission on March 9, 2021, and incorporated herein by reference)

4.10		Registration Rights Agreement dated as of March 8, 2021 by and between PainReform and the purchasers signatory thereto (included as Exhibit 10.3 to our Form 6-K filed with the Securities and Exchange Commission on March 9, 2021, and incorporated herein by reference)


12.1*		Certification of the Chief Executive Officer pursuant to rule 13a-14(a) of the Securities Exchange Act of 1934

12.2*		Certification of the Chief Financial Officer pursuant to rule 13a-14(a) of the Securities Exchange Act of 1934

13.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350

13.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350

15.1*		Consent of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, Independent Registered Public Accounting Firm.

15.2*		Consent of Brightman Almagor Zohar & Co. (a Member of Deloitte Touche Tohmatsu Limited, Independent Registered Public Accounting Firm.

16.1		Letter from Brightman Almagor Zohar & Co. (a Member of Deloitte Touche Tohmatsu Limited) (included as Exhibit 16.1 to our Form 6-K filed with the Securities and Exchange Commission on October 25, 2021, and incorporated herein by reference)

101		The following financial information from PainReform Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2021, formatted in Inline Extensible Business Reporting Language (XBRL): (i) Statement of Financial Position, (ii) Statements of Comprehensive Loss, (iii) Statements of Changes in Equity, (iv) Statements of Cash Flows and (iv) Notes to Financial Statements.*

	PAINREFORM LTD.

Date: March 16, 2022	By:	/s/ Ilan Hadar
		Ilan Hadar
		Chief Executive Officer

	Page

Report of Independent Registered Public Accounting Firm	F-2
(Firm Name: Kesselman & Kesselman / PCAOB ID No. 1309)
(Firm Name: Brightman Almagor Zohar & Co / PCAOB ID No. 1197)

Balance Sheets	F-4

Statements of Comprehensive Loss	F-5

Statements of Changes in Convertible preferred shares and Shareholders’ Equity	F-6

Statements of Cash Flows	F-8

Notes to Financial Statements	F-9 - F-24

		As of December 31,
	Note	2021			2020
Assets
Current assets:
Cash and cash equivalents		$	16,537		$	15,677
Restricted cash	2e		34			13
Prepaid clinical trial expenses and deferred clinical trial costs	7c		1,728			1,294
Prepaid expenses and other current assets	3		721			807

Total current assets			19,020			17,791

Property and equipment, net			53			10

Total assets		$	19,073		$	17,801

Liabilities and shareholders’ equity

Trade payables		$	136		$	720
Employees and related liabilities			423			92
Accrued expenses			198			149

Total current liabilities		$	757		$	961

Non-current liabilities:
Provision for unrecognized tax positions	6f		234			220
Total non-current liabilities			234			220

Total liabilities		$	991		$	1,181

Commitments and contingencies	7

Shareholders’ Equity:	9
Ordinary shares, NIS 0.03 par value; Authorized: 26,666,667 and 16,666,667 shares as of December 31, 2021 and 2020, respectively; Issued and outstanding: 10,482,056 and 8,758,037 shares as of December 31, 2021 and 2020, respectively;		$	94		$	78
Additional paid-in capital			41,715			33,023
Accumulated deficit			(23,727	)		(16,481	)

Total shareholders’ equity			18,082			16,620

Total liabilities, shareholders’ equity		$	19,073		$	17,801

		For the Year Ended December 31,
	Note	2021			2020			2019

Operating expenses:
Research and development expenses	10a	$	(2,860	)	$	(354	)	$	(136	)
General and administrative expenses	10b		(4,348	)		(1,317	)		(553	)

Operating loss			(7,208	)		(1,671	)		(689	)

Financial expense, net	10c		(32	)		(2,162	)		(590	)

Loss before taxes			(7,240	)		(3,833	)		(1,279	)

Tax expenses			(6	)		(220	)		-
Net loss and comprehensive loss		$	(7,246	)	$	(4,053	)	$	(1,279	)

Basic and diluted net loss per share (*)	2m	$	(0.74	)	$	(1.25	)	$	(4.17	)

Weighted average number of shares of ordinary share used in computing basic and diluted net loss per share (*)			9,812,234			3,243,943			576,556

	Convertible preferred shares (Temporary equity)						Ordinary shares				Additional paid-in		Accumulated			Total shareholders’
	Number			Amount			Number		Amount		capital		deficit			equity (deficit)
Balance as of Jan 1, 2019		2,954,267		$	6,621			576,556	$	5	$	66	$	(11,149	)	$	(11,078	)

Share-based compensation		-			-			-		-		89		-			89

Operating lease provided by controlling shareholder		-			-			-		-		25		-			25

Net loss and comprehensive loss		-			-			-		-		-		(1,279	)		(1,279	)

Balance as of December 31, 2019		2,954,267		$	6,621			576,556	$	5	$	180	$	(12,428	)	$	(12,243	)

Conversion of preferred shares into ordinary shares		(2,954,267	)		(6,621	)		2,954,267		26		6,595		-			6,621

Conversion of convertible notes into ordinary shares		-			-			2,727,214		25		7,135		-			7,160

Share issuance under Initial Public Offering, net		-			-			2,500,000		22		17,288		-			17,310

Equity classification of a derivative warrant liability (Note 4)		-			-			-		-		1,552		-			1,552

Share-based compensation to employees		-			-			-		-		38		-			38

Share-based compensation to service providers		-			-			-		-		202		-			202

Operating lease provided by controlling shareholder		-			-			-		-		33		-			33

Net loss and comprehensive loss		-			-			-		-		-		(4,053	)		(4,053	)

Balance as of December 31, 2020		-		$	-			8,758,037	$	78	$	33,023	$	(16,481	)	$	16,620

	%
Computers, software and electronic equipment		33
Furniture and office equipment		7
Leasehold improvements		*

	December 31,
	2021		2020

Receivables from governmental authorities	$	218	$	53
Prepaid expenses		473		734
Other		30		20

	$	721	$	807

	September 3,	December 31
	2020	2019
Exercise price	$6.72-$8.80	$2.55-$4.74
Expected volatility	72.29%	72.29%
Risk free rate	0.22%	1.5-1.67%
Expected life (years)	3.98-5	4.65-5
Dividend yield	-	-

Balance as of December 31, 2018	$	-

Issuance of warrants in connection with convertible notes (Note 5 (b))		445
Changes in fair value		2

Balance as of December 31, 2019	$	447

Changes in fair value		1,105
Equity classification of a derivative warrant liability		(1,552	)
	$	-

	Convertible Preferred Shares - Series A
	Shares Authorized		Shares Issued and Outstanding		Carrying Value		Liquidation Preference
As of December 31, 2019		18,300,000		2,954,267	$	6,621	$	15,250

Type	ISSUANCE DATE	NUMBER OF WARRANTS	EXERCISE PRICE	EXERCISABLE THROUGH
August 2019 warrants (note 5b)	August 22, 2019	205,268	$6.72 (*)	August 22, 2024
December 2019 warrants (note 5b)	December 9, 2019	92,321	$6.72 (*)	December 8, 2024
Warrants to 2019 Convertible Notes placement agent (note 5c)	December 9, 2019	55,785	$6.72 (*)	December 8, 2024
Warrants to underwriters (note 9)	September 3, 2020	125,000	$10.00	September 1, 2025
Warrants to underwriters (note 9)	October 5, 2020	375,000	$8.80	September 3, 2025
IPO warrants (note 1d, note 5b)	September 3, 2020	2,812,170	$8.80	September 3, 2025
PIPE warrants (note 1c)	March 11, 2021	232,500	$4.60	September 10, 2026
Warrants to PIPE placement agent (note 1c)	March 11,2021	52,173	$5.06	March 8, 2026

Total		3,950,217

	Number of options		Weighted average exercise price		Weighted average remaining contractual life

Options outstanding as of December 31, 2019		153,882	$	0.24		4.25
Options granted in 2020
Options outstanding as of December 31, 2020		153,882	$	0.24		3.25
Options granted in 2021
Options outstanding as of December 31, 2021		153,882	$	0.24		2.25

Options exercisable as of December 31, 2021		153,882	$	0.24		2.25

	Year ended December 31, 2021				Year ended December 31, 2020				Year ended December 31, 2019
	Number of options		Weighted average Exercise price		Number of options		Weighted average exercise price		Number of options		Weighted average exercise price

Outstanding at the beginning of the year		219,456		2.62		219,456		2.62		-		-

Granted		752,020		5.07		-		-		219,456		2.62

Forfeited		-		-		-		-		-		-

Exercised		-		-		-		-		-		-

Outstanding at the end of the year		971,476		4.51		219,456		2.62		219,456		2.62

Exercisable at the end of the year		361,280		3.58		200,269		2.55		156,386		2.77

	Year ended December 31
	2021			2020		2019
Expected life		5.86-6.11			-		5.75-10
Risk-free interest rates		0.52%-1.13	%		-		1.43%-2.13	%
Volatility		69.67%-78.99	%		-		82.29%-85.56	%
Dividend yield		-			-		-
Exercise price	$	3.013-5.738			-	$	0.24-3.339

	2021		2020

Employees accrued salaries	$	356	$	79
Directors accrued expenses	$	82	$	35

	$	438	$	114