QTREX Quantum Ltd 20-F for FY2025
QTREX Quantum Ltd. (QTEX)
About this 20-F
QTREX Quantum Ltd filed this 20-F on March 26, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $289K
- compared with $0 a year earlier
- Net loss
- $13.22M
- compared with a net loss of $11.05M a year earlier
- Diluted EPS
- -$0.45
- compared with -$0.60 a year earlier
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
OR
For the fiscal year ended
OR
OR
Commission File No.:
(Exact name of registrant as specified in its charter)
Translation of registrant’s name into English: Not applicable
State of
(Jurisdiction of incorporation or organization)
Tel: +972.4.6230333
(Address of principal executive offices)
Tel: +
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act of 1934.
Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Emerging Growth Company |
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange
Act.
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Yes ☐ No
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company.
Yes ☐ No
TABLE OF CONTENTS
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Inspira Technologies Oxy B.H.N. Ltd.
INTRODUCTION
We are a specialty medical device company focused on the research, development, manufacturing, and commercialization of proprietary life-support technologies. Our development efforts are directed toward technologies that are intended to address certain limitations associated with traditional mechanical ventilators, which currently represents the standard of care for the treatment of acute respiratory failure.
Mechanical ventilation is widely used as a life-saving intervention for patients with severe respiratory conditions. However, its use may be associated with risks and complications, as well as significant healthcare costs, prolonged hospital stays, increased incidence of infections, ventilator dependence, and high mortality rates.
We are developing life-support technologies designed to support patients with acute respiratory failure, with the goal of providing potential alternatives or complementary approaches to mechanical ventilation. These technologies are intended to enable patients to maintain spontaneous breathing and potentially reduce the need for invasive interventions such as intubation and medically induced coma.
As part of our business strategy, and in parallel with pursuing regulatory approvals, we are seeking to establish collaborations with strategic partners, hospitals, medical device companies, and distributors to support clinical evaluation, endorsement, and potential early adoption of our technologies. We intend to focus our commercial efforts on intensive care units, general medical units, operating theaters, and smaller urban and rural hospitals. These efforts are intended to support our broader strategy to expand market access and adoption of our life-support technologies, subject to applicable regulatory approvals and successful commercialization.
We are developing the following products:
The INSPIRATM ART
The INSPIRA Augmented Life-support Respiratory Technology, or the ART system, also known as the INSPIRA ART500, is our flagship product. The system is being developed as an advanced life-support platform intended to monitor and oxygenate blood in patients with acute respiratory failure. The technology is designed to increase oxygen saturation levels while allowing patients to remain awake and maintain spontaneous breathing, potentially reducing the need for invasive mechanical ventilation and associated interventions such as intubation and medically induced coma.
The INSPIRA ART system integrates blood monitoring and oxygenation capabilities into a single platform and is being developed for use in hospital settings, including intensive care units and other acute care environments. We believe that, subject to regulatory approvals and successful clinical validation, the INSPIRA ART system may provide healthcare providers with an additional tool for managing patients with severe respiratory conditions.
The INSPIRA ART system is being developed as a potential alternative or complementary approach for patients with acute respiratory failure who currently require mechanical ventilation in intensive care units, or ICUs. Each year, millions of patients worldwide require mechanical ventilation in ICUs, and mortality rates may be particularly high among those undergoing prolonged ventilation, in some cases exceeding 50%.
Mechanical ventilation delivers oxygen by forcing air into the lungs through an invasive procedure that typically requires intubation and deep sedation or medically induced coma. The INSPIRA ART system is intended to oxygenate blood directly through an extracorporeal process to elevate and stabilize declining oxygen saturation levels while simultaneously providing real-time monitoring of key blood parameters. Our objective is to support patient treatment without the need for invasive mechanical ventilation and potentially reduce certain risks, complications, and costs associated with such interventions.
The technology is expected to enrich small volumes of blood with oxygen while simultaneously removing carbon dioxide and continuously monitoring relevant blood parameters. By improving oxygen saturation levels within minutes, the system may allow patients to remain awake during treatment. Subject to regulatory approvals and clinical validation, this approach could potentially expand treatment beyond ICUs to additional care settings such as emergency departments, general medical units, emergency medical services, and smaller hospitals without ICU capabilities.
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The INSPIRA ART system is being developed to provide prolonged extracorporeal life support for patients with acute respiratory failure, including physiologic gas exchange through oxygenation and carbon dioxide removal. We believe this approach may enable treatment without intubation, induced coma, or ventilator weaning, procedures that are often associated with complications such as lung injury and infection that may prolong hospitalization.
The INSPIRATM ART100
The INSPIRA ART100 system, previously referred to as the ALICE, Liby, INSPIRA ART (Gen1) or ECLS system, is also referred to as a device or system. The INSPIRA ART100 is an FDA-cleared advanced form of life support system, better known by the medical industry as a cardiopulmonary bypass, or CPB, system designed for use in surgical procedures with duration of six hours or less. The INSPIRA ART100 utilizes a technique that circulates, adds oxygen to and removes carbon dioxide from blood, with the enriched blood being circulated back to the patient. The device takes over the function of the heart and/or lungs in critical care patients undergoing life-saving procedures.
In May 2024, the INSPIRA ART100 received 510(k) class II regulatory clearance from the FDA. In July 2024, we received an Israeli Medical Equipment Division Ministry of Health, or AMAR, regulatory approval for extra-corporeal membrane oxygenation, or ECMO, and CPB procedure. In December 2024, the INPIRA ART100 devices were shipped for deployment to Westchester Medical Center in Valhalla, New York, as part of an evaluation and collaboration for the INSPIRA ART100.
The INSPIRA™ ART100 system includes software that navigates the physician through the setup process and provides alerts while offering potential troubleshooting solutions. The system has a compact design, with extended battery life to support intra-hospital patient transfers and is compatible with various disposable parts, allowing for customization of tubing and oxygenators, which simplifies purchase and inventory management.
INSPIRATM ART100 System and CART
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The HYLATM Blood Sensor
The HYLA blood sensor, described herein as the HYLA or HYLA blood sensor, is being designed to perform real-time sampling and analysis of key blood parameter measurements, without the need for blood drawings. The HYLA is being designed to measure continuously, in real-time, thousands of blood samples during a single ICU treatment or operating room procedure.
The HYLA blood sensor is being developed to provide continuous, real-time monitoring of key blood parameters that may indicate oxygen deficiencies, without the need to take intermittent blood draws. Intended for patients undergoing medical procedures or requiring frequent monitoring, the technology is designed to detect sudden changes in a patient’s condition by tracking critical blood indicators.
The HYLA is being developed as both an integrated component of the INSPIRA ART100 and INSPIRA ART systems, and as a standalone device. This versatility may expand our market offering across multiple critical care applications and market segments.
Our development process combines in-house laboratory testing with hospital collaborations for clinical research. This comprehensive approach may allow for better validation of the technology in real-world medical settings, refinement of the sensor’s accuracy against industry standards, and optimization of the disposable components for practical clinical use.
We have a goal to set a new standard of care in various areas of patient care. As part of our strategy to reach these goals, and in parallel to pursuing regulatory approvals, we are actively working to establish collaborations with strategic partners and globally ranked health centers to provide endorsement and clinical adoption for regional deployments of our products and technologies. We plan to target ICUs, general medical units, operating theaters, and small urban and rural hospitals, with the goal of making our solutions more accessible to millions of patients.
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Hyla TM Blood Monitoring System
We are an Israeli corporation based in Ra’anana, Israel, and were incorporated in Israel in 2018 under the name Clearx Medical Ltd. On April 10, 2018, our name was changed to Insense Medical Ltd. On July 30, 2020, our name was further changed to our current name, Inspira Technologies Oxy B.H.N. Ltd. Our principal executive offices are located at 2 Ha-Tidhar St., Ra’anana, 4366504 Israel. Our telephone number in Israel is +972 996 644 88. Our website address is www.inspira-technologies.com. The information contained on, or that can be accessed through, our website is not part of this annual report. We have included our website address in this annual report solely as an inactive textual reference.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included or incorporated by reference in this annual report on Form 20-F may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “predict,” “should,” “intend,” “project” or other similar words, but are not the only way these statements are identified.
These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:
| ● | Our planned level of revenues, capital expenditures and liquidity; |
| ● | Our available cash and our ability to obtain additional funding; |
| ● | Our financial statements for the period ended December 31, 2025, contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms, if at all; |
| ● | Our expectation regarding the sufficiency of our existing cash and cash equivalents to fund our current operations; |
| ● | Our ability to advance the development of our products and future potential product candidates; |
| ● | Our ability to commercialize and sell our products and future potential products and future sales of our product or any other future potential products; |
| ● | Our assessment of the potential of our products and future potential product candidates; |
| ● | Our planned level of capital expenditures and liquidity; |
| ● | Our plans to continue to invest in research and development to develop technology for new products; |
| ● | Our ability to maintain our relationships with suppliers, manufacturers, distributors and other partners; |
| ● | Anticipated actions of the FDA, state regulators, if any, or other similar foreign regulatory agencies, including approval to conduct clinical trials, the timing and scope of those trials and the prospects for regulatory approval or clearance of, or other regulatory action with respect to our products or services; |
| ● | The regulatory environment and changes in the health policies and regimes in the countries in which we intend to operate, including the impact of any changes in regulation and legislation that could affect the medical device industry; |
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| ● | Our ability to meet our expectations regarding the commercial supply of our products and future product candidates; |
| ● | Our ability to retain key executive members; |
| ● | Our ability to internally develop new inventions and intellectual property; |
| ● | The overall global economic environment; |
| ● | The impact of competition and new technologies; |
| ● | The possible impacts of cybersecurity incidents on our business and operations; | |
| ● | Our ability to comply with continued listing requirements and standards of Nasdaq; |
| ● | General market, political and economic conditions in the countries in which we operate, including those related to recent unrest and actual or potential armed conflict in Israel and other parts of the Middle East; |
| ● | The impact of competition and new technologies; |
| ● | Our ability to internally develop new inventions and intellectual property; |
| ● | Changes in our strategy; and |
| ● | Litigation. |
Readers are urged to carefully review and consider the various disclosures made throughout this annual report on Form 20-F which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
You should not put undue reliance on any forward-looking statements. Any forward-looking statements in this annual report on Form 20-F are made as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
In addition, the sections of this annual report on Form 20-F entitled “Introduction” and “Item 4. Information on the Company” contain information obtained from independent industry sources and other sources that we have not independently verified.
Unless otherwise indicated, all references to the “Company,” “we,” “our” and “Inspira” refer to Inspira Technologies Oxy B.H.N. Ltd. References to “U.S. dollars, “dollars,” and “$” are to currency of the United States of America, and references to “NIS” are to New Israeli Shekels.
Beginning with the year ended December 31, 2023, we transitioned from preparing and reporting our financial statements in accordance with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, to preparing and reporting our financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, which may cause our financial results to differ from results, or impact the comparability to our financial statements, prepared in accordance with IFRS.
Notwithstanding the foregoing, we have retroactively converted the historical financial statements that were prepared in accordance with IFRS and included in this report to present such financial statements in accordance with U.S. GAAP.
All trademarks or trade names referred to in this Form 20-F are the property of their respective owners. Solely for convenience, the trademarks and trade names in this annual report on Form 20-F are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
This Form 20-F contains various depictions and illustrations of the various products we are developing. These illustrations are representative of the current expected designs for our products and are subject to change.
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Summary Risk Factors
The risk factors described below are a summary of the principal risk factors associated with an investment in us. These are not the only risks we face. You should carefully consider these risk factors, together with the risk factors set forth in Item 3D. of this annual report on Form 20-F and the other reports and documents filed by us with the SEC.
| ● | Our financial statements for the year ended December 31, 2025, contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. This going concern assessment may prevent us from obtaining new financing on reasonable terms, if at all, and imperil our ability to continue operating as a going concern; |
| ● | Our officers and directors currently beneficially own approximately 9.2% of our securities and may therefore be able to exert control over matters submitted to our shareholders for approval; |
| ● | We have a limited operating history, and we have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future; |
| ● | We could fail to maintain the listing of our securities on Nasdaq, which could seriously harm the liquidity of our shares and our ability to raise capital; |
| ● | We have not generated any significant revenue from product sales and may never be profitable; |
| ● | We will need to raise substantial additional funding, which may not be available on acceptable terms, if at all. Failure to obtain funding on acceptable terms and on a timely basis may require us to curtail, delay or discontinue our product development efforts or other operations; |
| ● | We are highly dependent on the successful development, marketing and sale of our products and on receiving the required regulatory approvals for such products; |
| ● | Our success depends on our ability to generate demand for our products, develop and commercialize new products and generate revenues and identify new markets for our technology; |
| ● | Medical device development is costly and involves continual technological change, which may render certain of our current or future products obsolete; |
| ● | Our customer acquisition strategy may not succeed; |
| ● | We are dependent upon third-party service providers. If such third-party service providers fail to maintain a high quality of service, the functionality of our products could be impaired, which in turn may adversely affect our products, business, operating results and reputation; |
| ● | We may be exposed to foreign currency exchange rate fluctuations, which could adversely affect our results of operations; |
| ● | We manage our business through a small number of employees and key consultants; |
| ● | We may need to expand our company but we may experience difficulties in recruiting additional employees and consultants, which could disrupt our operations; |
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| ● | International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risk associated with doing business outside of the United States, or U.S., or Israel; |
| ● | If third-party payors do not provide adequate coverage and reimbursement for the use of our products or services or any future product candidates, our revenue will be negatively impacted; |
| ● | Our products and operations are subject to extensive government regulation and oversight both in the U.S. and abroad and our failure to comply with applicable requirements could harm our business; |
| ● | We may not receive, or may be delayed in receiving, the necessary clearances or approvals for our products and failure to timely obtain necessary clearances or approvals for our products would adversely affect our ability to grow our business; |
| ● | Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market; |
| ● | Our products may cause or contribute to adverse medical events or be subject to failures or malfunctions that we are required to report to the FDA, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations. The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us; |
| ● | Healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations; |
| ● | Legislative or regulatory reforms in the U.S. or the European Union, or the EU, may make it more difficult and costly for us to obtain regulatory clearances or approvals for our products or to manufacture, market or distribute our products after clearance or approval is obtained; |
| ● | If we are unable to obtain and maintain effective patent rights for our products and services, we may not be able to compete effectively in our markets. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us; |
| ● | We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties; |
| ● | Our business and operations might be adversely affected by security breaches, including any cybersecurity incidents; and |
| ● | Potential political, economic and military instability in Israel, where our headquarters, members of our management team and our research and development facilities are located, may adversely affect our results of operations. |
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
| A. | [Reserved] |
| B. | Capitalization and Indebtedness. |
Not applicable.
| C. | Reasons for the Offer and Use of Proceeds. |
Not applicable.
| D. | Risk Factors |
You should carefully consider the risks and uncertainties described below, together with all of the other information in this annual report on Form 20-F. If any of these risks actually occurs, our business and financial condition could suffer, and the price of our securities could decline.
Risks Related to Our Business and Industry
We are highly dependent on the successful development, marketing and sale of our products and on receiving the required regulatory approvals.
Our products, focused on the treatment of respiratory failure, are the basis of our business. As a result, the success of our business plan is highly dependent on our ability to develop, manufacture and commercialize our products, and our failure to do so could cause our business to fail. Successful commercialization of medical devices is a complex and uncertain process, dependent on the efforts of management, manufacturers, local operators, integrators, medical professionals, third-party payors, as well as general economic conditions, among other factors. Any factor that adversely impacts the development and commercialization of our products, will have a negative impact on our business, financial condition, results of operations and prospects. We have limited experience in commercializing our products and we may face several challenges with respect to our commercialization efforts, including, among others, that:
| ● | we may not have adequate financial or other resources to complete the development of our products; |
| ● | we may not be able to manufacture our products in commercial quantities, at an adequate quality or at an acceptable cost; |
| ● | we may not be able to establish adequate sales, marketing and distribution channels; |
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| ● | healthcare professionals and patients may not accept our products; |
| ● | we may not be aware of possible complications from the continued use of our products since we have limited clinical experience with respect to the actual use of our products; |
| ● | we may not be able to compete with existing solutions for respiratory failure; |
| ● | technological breakthroughs in the respiratory support solutions may reduce the demand for our products; |
| ● | third-party payors may not agree to reimburse patients for any or all of the purchase price of our products, which may adversely affect patients’ willingness to use our products; |
| ● | we may face third-party claims of intellectual property infringement; and |
| ● | we may fail to obtain or maintain regulatory clearance or approvals in our target markets or may face adverse regulatory or legal actions even if regulatory approval is obtained. |
If we are unable to meet any one or more of these challenges successfully, our ability to effectively commercialize our products and services could be limited, which in turn could have a material adverse effect on our business, financial condition and results of operations.
Our success depends upon market acceptance of our products, our ability to develop and commercialize new products and generate revenues and our ability to identify new markets for our technology.
We have developed, and are engaged in the development of, respiratory support technology. Our success will depend on the approval and acceptance of our products and any future products in the healthcare market. We are faced with the risk that the marketplace will not be receptive to our products or any future products over competing products and that we will be unable to compete effectively. Factors that could affect our ability to successfully commercialize our current and any potential future products:
| ● | the challenges of developing (or acquiring externally developed) technology solutions that are adequate and competitive in meeting the requirements of next-generation design challenges; and |
| ● | the dependence upon referrals from physicians for the sale of our products and provision of our service. |
We cannot assure that our products or any future products will gain broad market acceptance. If the market for our products fails to develop or develops more slowly than expected, our business and operating results would be materially and adversely affected.
If we fail to maintain existing strategic relationships with Glo-Med, our other distributors, or are unable to identify additional distributors of our products or any future products and technologies, our revenues may decrease.
We currently expect to record revenue through our strategic relationships and distribution agreements with Glo-Med Networks Inc., or Glo-Med, as well as other distributors for the deployment of our products. If our relationships with our distributors are terminated or impaired for any reason and we are unable to replace these relationships with other means of distribution, we could suffer a material decrease in revenues.
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In addition, we have a number of existing distribution agreements that are non-binding, which can be terminated at will. These distribution agreements cover our products that are still under development and have not received FDA clearance. Therefore, these agreements may not result in any sales at all if our products that are currently under development do not receive FDA clearance.
We may need, or decide it is otherwise advantageous to us, to obtain the assistance of additional distributors to market and distribute our future products and technologies, as well as to market and distribute our INSPIRA ART system, INSPIRA ART100 system, HYLA blood sensors, and Inspira disposable devices to existing or new markets or geographical areas. We may not be able to find additional distributors who will agree to and are able to successfully market and distribute our systems and technologies on commercially reasonable terms, if at all. If we are unable to establish additional distribution relationships on favorable terms, our revenues may decline. In addition, our distributors may choose to favor the products of our competitors over ours and give preference to them.
Pursuant to our agreements with the aforementioned distributors, we will be responsible for obtaining and maintaining any and all regulatory approvals for our products. If we are unable to obtain or maintain such approvals, or if the parties to the distribution agreement fail to purchase the agreed upon products at the agreed upon pricing, it may adversely impact our relationships with these distributors, and we may never realize any revenues from these agreements ships as a result.
Medical device development is costly and involves continual technological change which may render our current or future products obsolete.
The market for medical device technologies and products is characterized by factors such as rapid technological change, medical advances, changing consumer requirements, short device lifecycles, changing regulatory requirements and evolving industry standards. Any one of these factors could reduce the demand for our devices or require substantial resources and expenditures for, among other things, research, design and development, to avoid technological or market obsolescence.
Our success will depend on our ability to enhance our current technology and develop or acquire new technologies to keep pace with technological developments and evolving industry standards, while responding to changes in customer needs. A failure to adequately develop or acquire device enhancements or new devices that will address changing technologies and customer requirements adequately, or to introduce such devices on a timely basis, may have a material adverse effect on our business, financial condition and results of operations.
We might have insufficient financial resources to improve our products, advance technologies and develop new devices at competitive prices. Technological advances by one or more competitors or future entrants into the field may result in our present services or devices becoming non-competitive or obsolete, which may decrease revenues and profits and adversely affect our business and results of operations.
We may encounter significant competition across our product lines and in each market in which we will sell our products and services from various companies, some of which may have greater financial and marketing resources than we do. Our competitors may include any companies engaged in the research, development, manufacture, and marketing of respiratory support solutions and technologies, as well as a wide range of medical device companies that sell a single or limited number of competitive products and services or participate in only a specific market segment.
Our customer acquisition strategy may not succeed and although we have executed distribution agreements with various parties in various geographic region, we may never realize any significant revenues from such agreements.
Our business will be dependent upon success in our customer acquisition strategy. To date, we have executed various distribution agreements in various geographic regions which are subject to regulatory approvals. If we do not obtain regulatory approval, or if the parties to the distribution agreement fail to purchase the agreed upon products at the agreed upon pricing, we may not realize any revenues from such agreements.
In addition, if we fail to maintain a high quality of device technology, we may fail to retain or add new customers. If we fail, our revenue, financial results and business may be significantly harmed. Our future success depends upon expanding our commercial operations in the U.S., Israel and Europe, as well as entering additional markets to commercialize our products and any future products. We believe that our expanded growth will depend on the further development, regulatory approval and commercialization of our products. If we fail to expand the use of our products in a timely manner, we may not be able to expand our markets or to grow our revenue, and our business may be adversely impacted. If people do not perceive our products to be useful and reliable, we may not be able to attract or retain new customers. A decrease in costumer growth could render less attractive to developers, which may have a material and adverse impact on our revenue, business, financial condition and results of operations.
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Our business and operations would suffer in the event of computer system failures, cyber-attacks or a deficiency in our cybersecurity.
Despite the implementation of security measures intended to secure our data against impermissible access and to preserve the integrity and confidentiality of our data, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If such an event were to occur and cause interruptions to our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims and liability, including under data privacy laws such as the General Data Protection Regulation, or the GDPR, damage to our reputation, and the further development of our drug candidates could be delayed.
We are dependent upon third-party manufacturers and suppliers, which makes us vulnerable to potential supply shortages and problems, increased costs and quality or compliance issues, any of which could harm our business.
Our products are comprised of multiple components. We are planning to sell an assembled product as well as its disposable respiratory support unit. The components of the assembled product and the disposable unit consist of both proprietary and off the shelf components. Proprietary components will be manufactured on our behalf at good manufacturing practices, or GMP, approved production plant to adhere to regulatory requirements, whereas off the shelf components will be sourced and manufactured by GMP suppliers. GMP sub-contractors will assemble proprietary and off the shelf components together to create our products.
Therefore, we rely on third parties to manufacture and supply us with proprietary custom components. Although we rely on a number of suppliers who provide us with materials and components as well as manufacture and assemble certain components of our products, we do not rely on single-source suppliers. Our suppliers may encounter problems during manufacturing for a variety of reasons, including, for example, failure to follow specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, failure to properly conduct their own business affairs, and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our requirements. Our reliance on these third-party suppliers also subjects us to other risks that could harm our business, including:
| ● | we are not currently a major customer of many of our suppliers, and these suppliers may therefore prioritize other customers’ needs; |
| ● | we may not be able to obtain an adequate supply in a timely manner or on commercially reasonable terms; |
| ● | our suppliers, especially new suppliers, may make errors in manufacturing that could negatively affect the efficacy or safety of our products or cause delays in shipment; |
| ● | we may have difficulty locating and qualifying alternative suppliers; |
| ● | switching components or suppliers may require product redesign and possibly submission to the FDA or other similar foreign regulatory agencies, which could impede or delay our commercial activities; |
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| ● | one or more of our suppliers may be unwilling or unable to supply components of our products; |
| ● | the occurrence of a fire, natural disaster or other catastrophe impacting one or more of our suppliers may affect their ability to deliver products to us in a timely manner; and |
| ● | our suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements. |
We may not be able to quickly establish additional or alternative suppliers, if necessary, in part because we may need to undertake additional activities to establish such suppliers as required by the regulatory approval process. Any interruption or delay in obtaining products from our third-party suppliers, or our inability to obtain products from qualified alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to switch to competing products. Given our reliance on certain suppliers, we may be susceptible to supply shortages while looking for alternate suppliers.
We have limited manufacturing history on which to assess the prospects for our business and we anticipate that we will incur significant losses once we initiate our in-house manufacturing until we are able to successfully commercialize our products globally.
If our future manufacturing operation or any current or future contracted manufacturing operations become unreliable or unavailable, we may not be able to proceed with our intended business operations and our entire business plan could fail. There is no assurance that our manufacturing operation or any third-party manufacturers will be able to meet commercialized scale production requirements in a timely manner or in accordance with applicable standards.
We may not be able to replace our manufacturing capabilities in a timely manner.
If our future manufacturing facility or any current or future contracted manufacturing operations suffer any type of prolonged interruption, whether caused by regulator action, equipment failure, critical facility services (such as water purification, clean steam generation or building management and monitoring system), fire, natural disaster or any other event that causes the cessation of manufacturing activities, we may be exposed to long-term loss of sales and profits. There are limited facilities which are capable of contract manufacturing some of our products and product candidates. Replacement of our current manufacturing capabilities may have a material adverse effect on our business and financial condition.
We are dependent upon third-party service providers. If such third-party service providers fail to maintain a high quality of service, the utility of our products could be impaired, which could adversely affect the penetration of our products, our business, operating results and reputation.
The success of certain services and products that we provide are dependent upon third-party service providers. Such service providers include manufacturers of proprietary custom components for our products. As we expand our commercial activities, an increased burden will be placed upon the quality of such third-party providers. If third-party providers fail to maintain a high quality of service, our products, business, reputation and operating results could be adversely affected. In addition, poor quality of service by third-party service providers could result in liability claims and litigation against us for damages or injuries.
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Non-U.S. governments often impose strict price controls, which may adversely affect our future profitability.
We may be subject to rules and regulations in the U.S. and non-U.S. jurisdictions relating to our products or any future products. In some countries, including countries of the EU, each of which has developed its own rules and regulations, pricing may be subject to governmental control under certain circumstances. In these countries, pricing negotiations with governmental agencies can take considerable time after the receipt of marketing approval for a medical device candidate. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product to other available products. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability.
We manage our business through a small number of employees and key consultants.
As of March 22, 2026, we had 37 full-time employees (including our senior management team), four part-time employees, and four additional independent contractors and consultants in Israel and in the U.S. Our future growth and success depend to a large extent on the continued services of members of our current management including, in particular, Dagi Ben-Noon, our Chief Executive Officer. Any of our employees and consultants may leave our company at any time, subject to certain notice periods. The loss of the services of any of our executive officers or any key employees or consultants would adversely affect our ability to execute our business plan and harm our operating results. Our operational success will substantially depend on the continued employment of senior executives, technical staff and other key personnel. The loss of key personnel may have an adverse effect on our operations and financial performance.
We may need to expand our organization and we may experience difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.
As our development and commercialization plans and strategies develop and because we are leanly staffed, we may need additional managerial, operational, sales, marketing, financial, legal and other resources. The competition for qualified personnel in the medical device industry is intense. Due to this intense competition, we may be unable to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.
Our management may need to divert its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional medical device products. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize medical device products and services and compete effectively will depend, in part, on our ability to effectively manage any future growth.
International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the U.S. or Israel.
Other than our headquarters and other operations which are located in Israel (as further described below), our business strategy incorporates significant international expansion, particularly in anticipated expansion of regulatory approvals of our products. Doing business internationally involves a number of risks, including but not limited to:
| ● | multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; |
| ● | failure by us to obtain regulatory approvals for the use of our products and services in various countries; |
| ● | additional potentially relevant third-party patent rights; |
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| ● | complexities and difficulties in obtaining protection and enforcing our intellectual property; |
| ● | difficulties in staffing and managing foreign operations; |
| ● | complexities associated with managing multiple regulatory, governmental and reimbursement regimes; |
| ● | limits in our ability to penetrate international markets; |
| ● | financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; |
| ● | natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; |
| ● | certain expenses including, among others, expenses for travel, translation and insurance; and |
| ● | regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, its books and records provisions or its anti-bribery provisions. |
Any of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.
We face intense competition, and we may be unable to effectively compete in our industry.
The market participants in the ICU and the acute respiratory care space include Boston Scientific Corporation (NYSE: BSX), ResMed Inc., (NYSE: RMD), Masimo Corporation (Nasdaq: MASI), Becton, Dickinson and Company (NYSE: BDX), Chart Industries, Inc. (Nasdaq: GTLS), Philips Healthcare, Medtronic plc (NYSE: MDT), Fisher & Paykel Healthcare Corporation Limited, Drägerwerk AG & Co. KGaA, Drägerwerk AG, Hamilton Medical AG, Smiths Medical Inc. (acquired by ICU Medical Inc.), Siemens Healthineers AG ADR (OTCMKTS: SMMNY), Baxter International (NYSE: BAX), Getinge AB (OTCMKTS: GNGBY), GE HealthCare, Terumo Corporation (TYO: 4543, Nikkei 225 Component), LivaNova PLC (Nasdaq: LIVN), Fresenius SE & Co. KGaA (OTCMKTS: FSNUY), Johnson & Johnson (NYSE: JNJ), Zoll Medical Corporation (TYO: 3407 ), Resuscitec GmbH, Spectrum Medical Limited, Abiomed, Inc. (Nasdaq: ABMD), Abbott Laboratories (NYSE: ABT), DataMed s.r.l, Chalice Medical Ltd., APMTD Global Limited, Eurosets s.r.l. and Braile Biomedica. These companies have either developed or acquired respiratory care devices and solutions, such as ventilators, ECMO devices and blood sensors.
The aforementioned companies, have substantially greater brand recognition, research and development, and regulatory capabilities, as well as financial, technical, manufacturing, marketing and human resources than we do and significantly greater experience and infrastructure in the research and development of medical devices, obtaining FDA and other regulatory clearances of those devices and commercializing those devices around the world. Further, some of these companies hold significant market share. Their dominant market position and significant control over the market could significantly limit our ability to introduce or effectively market and generate sales of our products.
Many of our competitors have long histories and strong reputations within the industry. They have significantly greater brand recognition, financial and human resources than we do. They also have more experience and capabilities in researching and developing testing devices, obtaining and maintaining regulatory clearances and other requirements, manufacturing and marketing those products than we do. There is a significant risk that we may be unable to overcome the advantages held by our competition, and our inability to do so could lead to the failure of our business. In addition, we may be unable to develop additional products in the future or to keep pace with developments and innovations in the market and lose market share to our competitors.
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Competition in the medical devices and more specifically respiratory support technologies and solutions markets is intense, which can lead to, among other things, price reductions, longer selling cycles, lower product margins, loss of market share and additional working capital requirements. To succeed, we must, among other critical matters, gain consumer acceptance for our products, as compared to other solutions currently available in the market for the treatment of respiratory failure and potential future medical devices incorporating our principal technology or offering other advanced respiratory support solutions. If our competitors offer significant discounts on certain products and solutions, we may need to lower our prices or offer other favorable terms in order to compete successfully. Moreover, any broad-based changes to our prices and pricing policies could make it difficult to generate revenues or cause our revenues to decline. Moreover, if our competitors develop and commercialize products and solutions that are more effective or desirable than products and solutions that we may develop, we may not convince our customers to use our products and solutions. Any such changes would likely reduce our commercial opportunity and revenue potential and could materially adversely impact our operating results.
If third-party payors do not provide adequate coverage and reimbursement for the use of our products or any future products, our revenue will be negatively impacted.
With the exception of the FDA cleared ART100, which uses an existing code, our products are not yet approved for third-party payor coverage or reimbursement. Such reimbursement may vary based on the particular device used in providing services and is based on the identity of the third-party. Our ability to obtain and maintain a leading position in the medical device market, and specifically in the respiratory care market, depends on our relationships with private third parties.
We expect to engage with private third parties to allow our customers to receive reimbursement from insurance companies for our products. The loss of a significant number of private third-party contracts may have an adverse effect on our revenues, which could have an adverse effect on our business, financial condition and results of operations. Over the past few years, reimbursement rates from certain third parties have declined, in some cases significantly. There can be no assurance that this trend will not continue or apply on more third parties.
In addition, private third parties may not reimburse any new products offered by us or reimburse those new products at commercially viable rates. The failure to receive reimbursement at adequate levels for our existing or future products may adversely affect demand for those products, our revenues and expected growth. This could have an adverse effect on our business, financial condition and results of operations.
We may be subject to litigation for a variety of claims, which could adversely affect our results of operations, harm our reputation or otherwise negatively impact our business.
We may be subject to litigation for a variety of claims arising from our normal business activities. These may include claims, suits, and proceedings involving labor and employment, wage and hour, commercial and other matters. The outcome of any litigation, regardless of its merits, is inherently uncertain. Any claims and lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and expensive to resolve, divert management attention and resources, and lead to attempts on the part of other parties to pursue similar claims. Any adverse determination related to litigation could adversely affect our results of operations, harm our reputation or otherwise negatively impact our business. In addition, depending on the nature and timing of any such dispute, a resolution of a legal matter could materially affect our future operating results, our cash flows or both.
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We could become subject to product liability, warranty or similar claims and product recalls that could be expensive, divert management’s attention and harm our business reputation and financial results.
Our business exposes us to an inherent risk of potential product liability, warranty or similar claims and product recalls. The medical device industry has historically been litigious, and we face financial exposure to product liability, warranty or similar claims if the use of any of our products were to cause or contribute to injury or death. There is also the possibility that defects in the design or manufacture of any of our products might necessitate a product recall. Although we maintain product liability insurance, the coverage limits of these policies may not be adequate to cover future claims. In the future, we may be unable to maintain product liability insurance on acceptable terms or at reasonable costs and such insurance may not provide us with adequate coverage against potential liabilities. A product liability claim, regardless of merit or ultimate outcome, or any product recall could result in substantial costs to us, damage to our reputation, customer dissatisfaction and frustration and a substantial diversion of management attention. A successful claim brought against us in excess of, or outside of, our insurance coverage could have a material adverse effect on our business, financial condition and results of operations.
Our business may be impacted by changes in general economic conditions.
Our business is subject to risks arising from changes in domestic and global economic conditions, including adverse economic conditions in markets in which we operate, which may harm our business.
Disruption to the global economy could also result in a number of follow-on effects on our business, including a possible slow-down resulting from lower customer expenditures; inability of customers to pay for products, solutions or services on time, if at all; more restrictive export regulations which could limit our potential customer base; negative impact on our liquidity, financial condition and share price, which may impact our ability to raise capital in the market, obtain financing and secure other sources of funding in the future on terms favorable to us.
In addition, the occurrence of catastrophic events, such as hurricanes, storms, earthquakes, tsunamis, floods, epidemics and other catastrophes that adversely affect the business climate in any of our markets could have a material adverse effect on our business, financial condition and results of operations. Some of our operations are located in areas that have been in the past, and may be in the future, susceptible to such occurrences.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability. Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Further, inflation can adversely affect us by increasing our costs. Increased cost of living around the world has caused and may cause increased costs, such as higher wages, increase direct service costs, increased freight costs and costs of components, and higher manufacturing costs. Any significant increases in inflation and related increase in interest rates could have a material adverse effect on our business, results of operations and financial condition.
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We incur significant increased costs as a result of the listing of our securities for trading on Nasdaq. Our management is required to devote substantial time to new compliance initiatives as well as compliance with ongoing U.S. requirements.
As a public company in the U.S., we incur additional significant accounting, legal and other expenses that we did not incur prior to being a public company in the U.S. We also incur costs associated with corporate governance requirements of the SEC, as well as requirements under Section 404 and other provisions of the Sarbanes-Oxley Act. These rules and regulations increase our legal and financial compliance costs, introduce new costs such as investor relations, stock exchange listing fees and shareholder reporting, and make some activities more time consuming and costly. The implementation and testing of such processes and systems may require us to hire outside consultants and incur other significant costs. Any future changes in the laws and regulations affecting public companies in the U.S., including Section 404 and other provisions of the Sarbanes-Oxley Act, and the rules and regulations adopted by the SEC, for so long as they apply to us, will result in increased costs to us as we respond to such changes. These laws, rules and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as executive officers.
We could fail to maintain the listing of our securities on Nasdaq, which could seriously harm the liquidity of our shares and our ability to raise capital.
Companies trading on Nasdaq, such as our Company, must be reporting issuers under Section 12 of the Exchange Act, and must meet the listing requirements in order to maintain the listing of its shares on the Nasdaq Capital Market. If we do not meet these requirements, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.
On March 10, 2025, we received a written notice from Nasdaq indicating that we are not in compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. Under Nasdaq Listing Rule 5810(c)(3)(A), we were granted a period of 180 calendar days to regain compliance with the minimum bid price requirement, or until September 8, 2025. On July 17, 2025, we received a written notice from Nasdaq indicating that we regained compliance with the minimum bid price requirement.
On February 9, 2026, we again received a written notice, or the Notice, from Nasdaq indicating that we are not in compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. Under Nasdaq Listing Rule 5810(c)(3)(A), we were granted a period of 180 calendar days to regain compliance with the minimum bid price requirement, or until August 10, 2026. There is a risk that we could be subject to additional notices of delisting for failure to comply with Nasdaq Listing Rule 5550(a)(2) or other Nasdaq Listing Rules and no assurance can be given that we will remain eligible to be listed on Nasdaq. If we do not regain compliance with Nasdaq Listing Rule 5550(a)(2), our Ordinary Shares will be subject to delisting.
A delisting from Nasdaq would likely result in a reduction in some or all of the following, each of which could have a material adverse effect on shareholders:
| ● | the liquidity of our Ordinary Shares; |
| ● | the market price of our Ordinary Shares; |
| ● | the availability of information concerning the trading prices and volume of our Ordinary Shares; |
| ● | our ability to obtain financing or complete a strategic transaction; |
| ● | the number of institutional and other investors that will consider investing in our Ordinary Shares; and |
| ● | the number of market markers or broker-dealers for our Ordinary Shares. |
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If we are not able to attract and retain highly skilled managerial, scientific, technical and marketing personnel, we may not be able to implement our business model successfully.
Our success depends in part on our continued ability to attract, retain and motivate highly qualified management, clinical and scientific personnel. We are highly dependent upon our senior management as well as other employees, consultants and scientific and medical collaborators. Our management team must be able to act decisively to apply and adapt our business model in the rapidly changing markets in which we will compete. In addition, we will rely upon technical and scientific employees or third-party contractors to effectively establish, manage and grow our business. Consequently, we believe that our future viability will depend largely on our ability to attract and retain highly skilled managerial, sales, scientific and technical personnel. In order to do so, we may need to pay higher compensation or fees to our employees or consultants than currently expected and such higher compensation payments may have a negative effect on our operating results. Competition for experienced, high-quality personnel in the medical device field is intense. We may not be able to hire or retain the necessary personnel to implement our business strategy. Our failure to hire and retain quality personnel on acceptable terms could impair our ability to develop new products and services and manage our business effectively.
If we engage in future acquisitions or strategic partnerships, this may increase our capital requirements, dilute our shareholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks.
We may evaluate various acquisition opportunities and strategic partnerships, including licensing or acquiring complementary products, intellectual property rights, technologies or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:
| ● | increased operating expenses and cash requirements; |
| ● | the assumption of additional indebtedness or contingent liabilities; |
| ● | the issuance of our equity securities; |
| ● | assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; |
| ● | the diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; |
| ● | retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; |
| ● | risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and marketing approvals; and |
| ● | our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. |
We are subject to certain U.S. and foreign anticorruption, anti-money laundering, export control, sanctions and other trade laws and regulations. We can face serious consequences for violations.
Among other matters, U.S. and foreign anticorruption, anti-money laundering, export control, sanctions and other trade laws and regulations, which are collectively referred to as Trade Laws, prohibit companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors and other partners from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. We also expect our non-U.S. activities to increase over time. We plan to engage third parties for clinical trials and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals, and we can be held liable for the corrupt or other illegal activities of our personnel, agents or partners, even if we do not explicitly authorize or have prior knowledge of such activities.
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Our business and operations might be adversely affected by security breaches, including any cybersecurity incidents.
We depend on the efficient and uninterrupted operation of our computer and communications systems, and those of our consultants, contractors and vendors, which we use for, among other things, sensitive company data, including our intellectual property, financial data and other proprietary business information.
While certain of our operations have business continuity and disaster recovery plans and other security measures intended to prevent and minimize the impact of IT-related interruptions, our IT infrastructure and the IT infrastructure of our consultants, contractors and vendors are vulnerable to damage from cyberattacks, computer viruses, unauthorized access, electrical failures and natural disasters or other catastrophic events. We could experience failures in our information systems and computer servers, which could result in an interruption of our normal business operations and require substantial expenditure of financial and administrative resources to remedy. System failures, accidents or security breaches can cause interruptions in our operations and can result in a material disruption of our product development activities and other business operations. The loss of data from completed or future studies or clinical trials could result in delays in our research, development or regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur regulatory investigations and redresses, penalties and liabilities and the development of our products could be delayed or otherwise adversely affected.
Even though we believe we carry commercially reasonable business interruption and liability insurance, we may suffer losses as a result of business interruptions that exceed the coverage available under our insurance policies or for which we do not have coverage. For example, we are not insured against terrorist or cyber-attacks. Any natural disaster or catastrophic event could have a significant negative impact on our operations and financial results. Moreover, any such event could delay the development of our products.
Changes in laws or regulations relating to data protection, or any actual or perceived failure by us to comply with such laws and regulations or our privacy policies, could materially and adversely affect our business or could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results.
We expect to receive health information and other highly sensitive or confidential information and data of patients and other third parties (e.g., healthcare providers who refer patients for scans), which we expect to compile and analyze. Collection and use of this data might raise privacy and data protection concerns, which could negatively impact our business. There are numerous federal, state and international laws and regulations regarding privacy, data protection, information security, and the collection, storing, sharing, use, processing, transfer, disclosure, and protection of personal information and other data, and the scope of such laws and regulations may change, be subject to differing interpretations, and may be inconsistent among countries and regions we intend to operate in (e.g., the U.S., the EU and Israel), or conflict with other laws and regulations. The regulatory framework for privacy and data protection worldwide is, and is likely to remain for the foreseeable future, uncertain and complex, and this or other actual or alleged obligations may be interpreted and applied in a manner that we may not anticipate or that is inconsistent from one jurisdiction to another and may conflict with other rules or practices including ours. Further, any significant change to applicable laws, regulations, or industry practices regarding the collection, use, retention, security, or disclosure of data, or their interpretation, or any changes regarding the manner in which the consent of relevant users for the collection, use, retention, or disclosure of such data must be obtained, could increase our costs and require us to modify our services and candidate products, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process patients’ data or develop new services and features.
In particular, we will be subject to U.S. data protection laws and regulations (i.e., laws and regulations that address privacy and data security) at both the federal and state levels. The legislative and regulatory landscape for data protection continues to evolve, and in recent years there has been an increasing focus on privacy and data security issues. Numerous federal and state laws, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern the collection, use, and disclosure of health-related and other personal information. Failure to comply with such laws and regulations could result in government enforcement actions and create liability for us (including the imposition of significant civil or criminal penalties), private litigation and/or adverse publicity that could negatively affect our business. For instance, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which took effect on January 1, 2020. The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal data. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and in other states.
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In addition, we expect to obtain health information that is subject to privacy and security requirements under the Health Information Technology for Economic and Clinical Health, or HITECH, and its implementing regulations. The Privacy Standards and Security Standards under the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, establish a set of standards for the protection of individually identifiable health information by health plans, health care clearinghouses and certain health care providers, referred to as Covered Entities, and the business associates with whom Covered Entities enter into service relationships pursuant to which individually identifiable health information may be exchanged. Notably, whereas HIPAA previously directly regulated only Covered Entities, HITECH makes certain of HIPAA’s privacy and security standards also directly applicable to Covered Entities’ business associates. As a result, both Covered Entities and business associates are now subject to significant civil and criminal penalties for failure to comply with Privacy Standards and Security Standards. As part of our normal operations, we expect to collect, process and retain personal identifying information regarding patients, including as a business associate of Covered Entities, so we expect to be subject to HIPAA, including changes implemented through HITECH, and we could be subject to criminal penalties if we knowingly obtain or disclose individually identifiable health information in a manner that is not authorized or permitted by HIPAA. A data breach affecting sensitive personal information, including health information, also could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.
HIPAA requires Covered Entities (like many of our potential customers) and business associates, like us, to develop and maintain policies and procedures with respect to protected health information that is used or disclosed, including the adoption of administrative, physical and technical safeguards to protect such information. HITECH expands the notification requirement for breaches of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information and provides for civil monetary penalties for HIPAA violations. HITECH also increased the civil and criminal penalties that may be imposed against Covered Entities and business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA and its implementing regulations and seek attorney’s fees and costs associated with pursuing federal civil actions. Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.
Internationally, many jurisdictions have or are considering enacting privacy or data protection laws or regulations relating to the collection, use, storage, transfer, disclosure and/or other processing of personal data, as well as certification requirements for the hosting of health data specifically. Such laws and regulations may include data hosting, data residency or data localization requirements (which generally require that certain types of data collected within a certain country be stored and processed within that country), data export restrictions, international transfer laws (which prohibit or impose conditions upon the transfer of such data from one country to another), or may require companies to implement privacy or data protection and security policies, enable users to access, correct and delete personal data stored or maintained by such companies, inform individuals of security breaches that affect their personal data or obtain individuals’ consent to use their personal data. For example, European legislators adopted the EU’s GDPR which became effective on May 25, 2018, and are now in the process of finalizing the ePrivacy Regulation to replace the European ePrivacy Directive (Directive 2002/58/EC as amended by Directive 2009/136/EC). The GDPR, supplemented by national laws and further implemented through binding guidance from the European Data Protection Board, imposes more stringent EU data protection requirements and provides for significant penalties for noncompliance.
Virtually every jurisdiction in which we expect to operate has established its own data security and privacy legal framework with which we must, and our target customers will need to, comply, including the rules and regulation mentioned above. We may also need to comply with varying and possibly conflicting privacy laws and regulations in other jurisdictions. As a result, we could face regulatory actions, including significant fines or penalties, adverse publicity and possible loss of business.
While we are preparing to implement various measures intended to enable us to comply with applicable privacy or data protection laws, regulations and contractual obligations, these measures may not always be effective and do not guarantee compliance. Any failure or perceived failure by us to comply with our contractual or legal obligations or regulatory requirements relating to privacy, data protection, or information security may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our customers, partners or patients to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers or partners may limit the adoption and use of, and reduce the overall demand for, our products and services. Additionally, if third parties we work with violate applicable laws, regulations, or agreements, such violations may put the data we have received at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our customers, partners or patients to lose trust in us, and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.
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Risks Related to Our Financial Condition and Capital Requirements
Our financial statements for the year ended December 31, 2025, contained an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. This going concern opinion could prevent us from obtaining new financing on reasonable terms or at all and risk our ability to continue operating as a going concern.
To date, the Company has not generated significant revenues from its activities and has incurred substantial operating losses. In part because we have incurred losses in each year since our inception, our audited financial statements for the period ended December 31, 2025 contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. These events and conditions, along with other matters, indicated that a material uncertainty existed as of December 31, 2025, that raises substantial doubt on our ability to continue as a going concern. The financial statements for the year ended December 31, 2025 have been prepared assuming that we will continue as a going concern. Management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through the utilization of its current financial resources, sales of its products, and through additional raises of capital. As of December 31, 2025, we incurred accumulated losses of approximately $80 million. A going concern assessment could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise in the future. Further financial statements may also include an explanatory paragraph with respect to our ability to continue as a going concern. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through existing cash, debt or equity financing. We expect to require additional financing to fund our operations in the near future. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to our products and it risks our ability to continue operating as a going concern.
Our officers and directors currently beneficially own 9.2% of our Ordinary Shares. They may therefore be able to exert control over matters submitted to our shareholders for approval.
As of March 24, 2026, our officers and directors beneficially own approximately 9.2% of our Ordinary Shares. As a result, these shareholders, if they acted in concert, could influence matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other business combination transactions. The interests of these shareholders may not always coincide with our interests or the interests of other shareholders.
We have a limited operating history, have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future.
We are a specialty medical device company with a limited operating history. To date, we have focused almost exclusively on developing our INSPIRA ART system, INSPIRA ART100 system followed by our HYLA blood sensor, VORTX device and Inspira disposables. We have funded our operations to date primarily through our initial public offering, or IPO, convertible loans and royalty-bearing grants that we received from the Israel Innovation Authority, or the IIA.
We have only a limited operating history upon which you can evaluate our business and prospects. In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the medical device industry. To date, we have not generated significant revenue from the sale of our products (see “Item 5. Operating and Financial Review and Prospects” for additional information). We have incurred losses in each year since our inception, including net losses of approximately $13 million and $11 million for the years ended December 31, 2025 and 2024, respectively. As of December, 2025, we had an accumulated deficit of approximately $80 million. Substantially all of our operating losses resulted from costs incurred in connection with our development of our products and from general and administrative costs associated with our operations.
We expect our research and development expenses to increase in connection with our planned expanded studies. Having obtained marketing approval for one of our products, if we obtain marketing approval for additional products which are currently under development, we will likely incur significant sales, marketing and outsourced manufacturing expenses, as well as continued research and development expenses and costs associated with operating as a public company. As a result, we expect to continue to incur significant and increasing operating losses for the foreseeable future. Because of the numerous risks and uncertainties associated with developing a medical device, we are unable to predict the extent of any future losses or when we will become profitable, if at all.
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We expect to continue to incur significant losses until and even when we are able to commercialize our products, which we may not be successful in achieving. We anticipate that our expenses will increase substantially if and as we:
| ● | continue the research and development of our products; |
| ● | seek regulatory and marketing approvals for our products; |
| ● | establish a sales, marketing, and distribution infrastructure to commercialize our products; |
| ● | seek to identify, assess, acquire, license, and/or develop other product candidates and subsequent generations of our current product candidate; |
| ● | seek to maintain, protect, and expand our intellectual property portfolio; |
| ● | seek to attract and retain skilled personnel; |
| ● | create additional infrastructure to support our operations as a public company and our product candidate development and planned future commercialization efforts; and |
| ● | experience any delays or encounter issues with respect to any of the above, including, but not limited to, failed studies, complex results, safety issues or other regulatory challenges that require longer follow-up of existing studies or additional supportive studies in order to pursue marketing approval. |
The amount of our future operating losses will depend, in part, on the rate of our future expenditures. Even though we obtained regulatory approval to market one of our products and even if we obtain regulatory approval to market the rest of our products or any future product candidates, our future revenue will depend upon the size of any markets in which our products or any future product candidates receive approval and our ability to achieve sufficient market acceptance, pricing, reimbursement from third-party payors for our products or any future product candidates. Further, the operating losses that we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. Other unanticipated costs may also arise.
We have not generated significant revenue from product sales and may never be profitable.
Although we have received marketing authorization for one of our products from the FDA and from AMAR, to date, we have not generated significant revenue from product sales. Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize all our products or any future product candidates. We do not know when, or if, we will generate any such revenue. Our ability to generate future revenue from product sales will depend heavily on our success in many areas, including but not limited to:
| ● | complete research and development of our products and any future product candidates in a timely and successful manner; |
| ● | obtain regulatory and marketing approval for any product candidates; |
| ● | maintain and enhance a commercially viable, sustainable, scalable, reproducible and transferable manufacturing process for our products and any future product candidates that is compliant with current good manufacturing practices, or cGMPs; |
| ● | establish and maintain supply and, if applicable, manufacturing relationships with third parties that can provide, in both amount and quality, adequate products to support development and the market demand for our products and any future product candidates, if and when approved; |
| ● | identify, assess, acquire and/or develop new product candidates; |
| ● | launch and commercialize any product candidates for which we obtain regulatory and marketing approval, either directly by establishing a sales force, marketing and distribution infrastructure, and/or with collaborators or distributors; |
| ● | accurately identify demand for our products or any future product candidates; |
| ● | expose and educate physicians and other medical professionals to use our products; |
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| ● | obtain market acceptance, if and when approved, of our products and any future product candidates from the medical community and third-party payors; |
| ● | ensure our product candidates are approved for reimbursement from governmental agencies, health care providers and insurers in jurisdictions where they have been approved for marketing; |
| ● | address any competing technological and market developments that impact our products and any future product candidates or their prospective usage by medical professionals; |
| ● | negotiate favorable terms in any collaboration, licensing or other arrangements into which we may enter and perform our obligations under such collaborations; |
| ● | maintain, protect and expand our portfolio of intellectual property rights, including patents, patent applications, trade secrets and know-how; |
| ● | avoid and defend against third-party interference or infringement claims; |
| ● | attract, hire and retain qualified personnel; and |
| ● | locate and lease or acquire suitable facilities to support our clinical development, manufacturing facilities and commercial expansion. |
Even though we obtained marketing approval for one of our products and even if all our product candidates are approved for marketing and sale, we anticipate incurring significant incremental costs associated with commercializing such product and product candidates. Our expenses could increase beyond expectations if we are required by the FDA, or other regulatory agencies, domestic or foreign, to change our manufacturing processes or assays or to perform studies in addition to those that we currently anticipate. Even if we are successful in obtaining regulatory approvals to market all our products or any future product candidates, our revenue earned from such product candidates will be dependent in part upon the size of the markets in the territories for which we gain regulatory approval for such products, the accepted price for such products, our ability to obtain reimbursement for such products at any price, whether we own the commercial rights for that territory in which such products have been approved and the expenses associated with manufacturing and marketing such products for such markets. Therefore, we may not generate significant revenue from the sale of such products, even if approved. Further, if we are not able to generate significant revenue from the sale of our approved products, we may be forced to curtail or cease our operations. Due to the numerous risks and uncertainties involved in product development, it is difficult to predict the timing or amount of increased expenses, or when, or if, we will be able to achieve or maintain profitability.
We will need to raise substantial additional funding, which may not be available on acceptable terms, or at all. Failure to obtain funding on acceptable terms and on a timely basis may require us to curtail, delay or discontinue our product development efforts or other operations.
As of December 31, 2025, our cash and cash equivalents, short-term deposits and long-term deposits were approximately $3.1 million, not including restricted cash of $98,000, and we had a working capital of approximately $1.6 million and an accumulated deficit of approximately $80 million. Based upon our currently expected level of operating expenditures, we expect that our existing cash and cash equivalent will only be sufficient to fund operations through the next six months. We expect that we will require substantial additional capital to operate and to commercialize our products and we need to expect to seek additional funds to enable us to fund our operations for the text twelve months. Our future funding requirements will depend on many factors, including but not limited to:
| ● | the progress, results and costs of our ongoing and planned studies and, if applicable, clinical trials of products and any future product candidates; |
| ● | the cost, timing and outcomes of regulatory review of products and any future product candidates; |
| ● | the costs of maintaining our own commercial-scale cGMP manufacturing facility, including costs related to obtaining and maintaining regulatory compliance, and/or engaging third-party manufacturers therefor; |
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| ● | the scope, progress, results and costs of product development, testing, manufacturing, preclinical development and, if applicable, clinical trials for any other product candidates that we may develop or otherwise obtain in the future; |
| ● | the cost of our future activities, including establishing sales, marketing and distribution capabilities for any product candidates in any particular geography where we receive marketing approval for such product candidates |
| ● | the terms and timing of any collaborative, licensing and other arrangements that we may establish; |
| ● | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and |
| ● | the level of revenue, if any, received from commercial sales of any product candidates for which we receive marketing approval. |
Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products and any future product candidates. In addition, future financing may not be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of holders of our securities and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our securities to decline. The incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects. Even if we believe that we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the development or commercialization, if any, of our products or any other product candidates or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
Raising additional capital would cause dilution to our existing shareholders, and may adversely affect the rights of existing shareholders.
We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the issuance of equity or otherwise including through convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Future sales of our Ordinary Shares or of securities convertible into our Ordinary Shares, or the perception that such sales may occur, could cause immediate dilution and adversely affect the market price of our Ordinary Shares and tradable warrants, or Warrants.
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Risks Related to Product Development and Regulatory Approval
Our products and operations are subject to extensive government regulation and oversight both in the U.S. and abroad and our failure to comply with applicable requirements could harm our business.
We expect our products and any future products we develop to be regulated by the FDA as medical devices. Our product candidates are subject to extensive regulation in the U.S. and elsewhere, including by the FDA and its foreign counterparts, the U.S. Department of Justice, or the DOJ, and the U.S. Health and Human Services-Office of the Inspector General, or the HHS. The FDA and foreign regulatory agencies regulate, among other things, with respect to medical devices: design, development and manufacturing; testing, labeling, content and language of instructions for use and storage; clinical trials; product safety; establishment registration and device listing; marketing, sales and distribution; pre-market clearance and approval; conformity assessment procedures; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to occur, could lead to death or serious injury; post-market approval studies; and product import and export.
The regulations our product is subject to are complex and have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales for any approved product. Failure to comply with applicable regulations could jeopardize our ability to sell our future products, if cleared or approved, and result in enforcement actions such as: warning or untitled letters; fines; injunctions; consent decrees; civil penalties; customer notifications; termination of distribution; recalls or seizures of products; administrative detention of medical devices believed to be adulterated or misbranded; delays in the introduction of products into the market; operating restrictions; total or partial suspension of production; refusal to grant future clearances or approvals for new products, new intended uses or modifications to our products; withdrawals or suspensions of current approvals, resulting in prohibitions on sales of our products; and in the most serious cases, criminal prosecution or penalties. The occurrence of any of these events would have a material adverse effect on our business, financial condition and results of operations and could result in shareholders losing their entire investment.
We may not receive, or may be delayed in receiving, the necessary clearances or approvals for our products and failure to timely obtain necessary clearances or approvals for our products would adversely affect our ability to grow our business.
In the U.S., before we can market a new medical device, or a new use of, new claim for or significant modification to an existing product, we must first receive either clearance under Section 510(k) of the Federal Food, Drug, and Cosmetic Act, or the FDCA, and/or PMA from the FDA, unless an exemption applies. In the 510(k) clearance process, before a device may be marketed, the FDA must determine that a proposed device is “substantially equivalent” to a legally-marketed “predicate” device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device that was originally on the U.S. market pursuant to an approved PMA and later down-classified, or a 510(k)-exempt device. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support substantial equivalence. In the process of obtaining PMA approval, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not limited to, technical, pre-clinical, clinical trial, manufacturing and labeling data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices.
Modifications to products that are approved through a PMA application generally require FDA approval. Similarly, certain modifications made to products cleared through a 510(k) may require a new 510(k) clearance. Both the PMA approval and the 510(k) clearance process can be expensive, lengthy and uncertain. The FDA’s 510(k) clearance process usually takes from three to twelve months but can last longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is submitted to the FDA. In addition, a PMA generally requires the performance of one or more clinical trials. The FDA may not approve or clear any device which we may seek to have approved or cleared. Any delay or failure to obtain necessary regulatory clearances or approvals could harm our business. Furthermore, even if we are granted regulatory clearances or approvals, they may include significant limitations on the indicated uses for the device or other restrictions or requirements, which may limit the market for the device.
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In the U.S., we expect to take a multi-step approach to the regulatory clearance process. As a first step, we intend to submit a Q-Submission, or Q-Sub, application to the FDA for our advanced INSPIRA ART (Gen 2) device and may also choose to do so, for the VORTX device. The pre-IDE program was established in 1995, to provide sponsors a mechanism to obtain FDA feedback on future Investigational Device Exemption, or IDE, applications prior to their submission. An IDE allows an investigational device to be used in order to collect safety and effectiveness data required to support a premarket approval application or a premarket notification submission to Food and Drug Administration. Over time, the pre-IDE program evolved to include feedback on PMAs, Humanitarian Device Exemptions, or HDEs, De Novo requests, and 510(k) submissions, as well as to address whether a clinical study requires submission of an IDE. To capture this evolution, the HHS 2012 Commitment Letter to Congress regarding the Medical Device User Fee Amendments of 2012 (MDUFA III) included FDA’s commitment to institute a structured process for managing these interactions, referring to them as Pre-Submissions, or Pre-Subs. The Q-Submission Guidance, published on June 2, 2023, named “Requests for Feedback and Meetings for Medical Device Submissions: The Q-Submission Program” implemented the broader Q-Program, which includes Pre-Subs, as well as additional opportunities to engage with the FDA.
Early interaction with the FDA on planned non-clinical and clinical studies, risk determination, and careful consideration of the FDA’s feedback may improve the quality of subsequent submissions, shorten total review times, and facilitate the development process for new devices. The FDA believes that interactions provided within Pre-Subs are likely to contribute to a more transparent review process for the FDA and the submitter. We intend to align and update our regulatory and clinical plans based on the FDA’s feedback as part of this Q-sub process.
We submitted a 510(k) application for our INSPIRA ART100 system in September 2023. In May 2024, we received 510(k) class II regulatory clearance. Even with this clearance, any modification to our INSPIRA ART100 system that has not been previously cleared may require us to submit a new 510(k) premarket notification and obtain clearance, or submit a PMA and obtain FDA approval prior to implementing the change. Specifically, any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design or manufacture, requires a new 510(k) clearance or, possibly, approval of a PMA. The FDA requires every manufacturer to make this determination in the first instance, but the FDA may review any manufacturer’s decision. The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary. We may make modifications or add additional features in the future that we believe do not require a new 510(k) clearance or approval of a PMA. If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or PMA applications for modifications to our previously cleared products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties. If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, product introductions or modifications could be delayed or canceled, which could adversely affect our ability to grow our business.
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The FDA can delay, limit or deny clearance or approval of a medical device for many reasons, including:
| ● | our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our product candidates are safe or effective for their intended uses; | |
| ● | the disagreement of the FDA or the applicable foreign regulatory body with the design or the interpretation of data from pre-clinical studies or clinical trials; | |
| ● | serious and unexpected adverse effects experienced by participants in our clinical trials; | |
| ● | the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required; | |
| ● | our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; | |
| ● | the manufacturing process or facilities we use may not meet applicable requirements; and | |
| ● | the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval. |
In order to sell our products in member countries of the European Economic Area, or EEA, our products must comply with the General Safety and Performance Requirements of the EU Medical Devices Regulation (Regulation (EU) 2017/745). Compliance with these requirements is a prerequisite to be able to affix the Conformité Européene, or CE, mark to our products, without which they cannot be sold or marketed in the EEA. To demonstrate compliance with the general safety and performance requirements we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification. Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can issue a European Community, or EC, Declaration of Conformity based on a self-assessment of the conformity of its products with the general safety and performance requirements of the EU Medical Devices Regulation, a conformity assessment procedure requires the intervention of an organization accredited by a member state of the EEA to conduct conformity assessments, or a Notified Body. Depending on the relevant conformity assessment procedure, the Notified Body would typically audit and examine the technical file and the quality system for the manufacture, design and final inspection of our devices. The Notified Body issues a certificate of conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the general safety and performance requirements. This certificate entitles the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EC Declaration of Conformity.
Some of our products may also need to comply with the following European Directives in order to be sold in the EEA:
| ● | ROHS Directive 2011/65/EU of the European Parliament and of the Council of June 8, 2011 on the restriction of the use of certain hazardous substances in electrical and electronic equipment, as amended by (EU) 2017/2102. |
| ● | WEEE Directive 2012/19/EU of the European Parliament and of the Council of July 4, 2012 on waste electrical and electronic equipment. |
| ● | RED Directive 2014/53/EU of the European Parliament and of the Council of April 16, 2014 on the harmonization of the laws of the Member States relating to the making available on the market of radio equipment and repealing Directive 1999/5/EC Text with EEA relevance. Applicable as of June 13, 2016. |
| ● | Machinery Directive 2006/42/EC of the European Parliament and of the Council of May 17, 2006 on machinery, and amending Directive 95/16/EC |
| ● | Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (GDPR) |
Our products may be required to comply with additional EU Directives.
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As a general rule, demonstration of conformity of medical devices and their manufacturers with the general safety and performance requirements and essential requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use. Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence. If we fail to remain in compliance with applicable European laws, regulations and directives, we will be unable to continue to affix the CE mark to our products, which would prevent us from selling them within the EEA.
Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market.
If we receive regulatory clearance or approval of the products or other future products, we will remain subject to ongoing and pervasive regulatory requirements governing, among other things, the manufacture, marketing, advertising, medical device reporting, sale, promotion, import, export, registration, and listing of devices. For example, we are required to submit periodic reports to the FDA as a condition of 510(k) clearance. These reports include information about failures and certain adverse events associated with the device after its clearance. Failure to submit such reports, or failure to submit the reports in a timely manner, could result in enforcement action by the FDA. Following its review of the periodic reports, the FDA might ask for additional information or initiate further investigation.
The regulations to which we are subject are complex and have become more stringent over time. Regulatory changes could result in restrictions on our ability to continue or expand our operations, higher than anticipated costs, or lower than anticipated sales. Even after we have obtained the proper regulatory clearance to market a device, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations. The FDA, state and foreign regulatory authorities have broad enforcement powers. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions:
| ● | untitled letters or warning letters; | |
| ● | fines, injunctions, consent decrees and civil penalties; |
| ● | recalls, termination of distribution, administrative detention, or seizure of our products; | |
| ● | customer notifications or repair, replacement or refunds; | |
| ● | operating restrictions or partial suspension or total shutdown of production; | |
| ● | delays in or refusal to grant our requests for future clearances or approvals or foreign marketing authorizations of new products, new intended uses, or modifications to existing products; |
| ● | withdrawals or suspensions of product clearances or approvals, resulting in prohibitions on sales of our products; | |
| ● | FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and | |
| ● | criminal prosecution. |
Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations.
In addition, the FDA or state or foreign authorities may change their clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay clearance or approval of our future products under development on a timely basis. Such policy or regulatory changes could impose additional requirements upon us that could delay our ability to obtain new clearances or approvals, increase the costs of compliance or restrict our ability to maintain any approvals we are able to obtain.
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Our products must be manufactured in accordance with federal, state and foreign regulations, and we could be forced to recall our devices or terminate production if we fail to comply with these regulations.
The methods used in, and the facilities used for, the manufacture of our products must comply with the Quality System Regulation, or ISO 13485 standard requirements, as basic reference for requirements to establish a Quality Management System for the company, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices. As manufacturers of electron radiation-emitting products, we are also responsible for compliance with the radiological health regulations and certain radiation safety performance standards.
Furthermore, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the Quality System (QS) Regulation, or QSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors. Our products are also subject to similar state regulations and various laws and regulations of foreign countries governing manufacturing.
Our third-party manufacturers may not take the necessary steps to comply with applicable regulations, which could cause delays in the delivery of our products. In addition, failure to comply with applicable FDA or state or foreign requirements or later discovery of previously unknown problems with our products or manufacturing processes could result in, among other things: warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals; seizures or recalls of our products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for our products; clinical holds; refusal to permit the import or export of our products; and criminal prosecution of us, our suppliers or our employees.
Any of these actions could significantly and negatively affect supply of our products. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs.
The misuse or off-label use of our products may harm our reputation in the marketplace and result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.
Advertising and promotion of our future products that obtains approval in the U.S. may be heavily scrutinized by the FDA, the DOJ, HHS, state attorneys general, members of Congress, and the public. In addition, advertising and promotion of any future product that obtains approval outside of the U.S. will be heavily scrutinized by comparable foreign regulatory authorities.
We expect that, if cleared or approved, our products will be cleared by the requisite regulatory authorities for specific indications. We expect to train our marketing personnel and direct sales force to not promote our devices for uses outside of the FDA-approved indications for use, or any other regulatory authority approved indications for use in a relevant territory, known as “off-label uses.” We cannot, however, prevent a physician from using our devices off-label, when in the physician’s independent professional medical judgment, he or she deems it appropriate. There may be increased risk of injury to patients if physicians attempt to use our devices off-label. Furthermore, the use of our devices for indications other than those approved by the FDA or approved by any foreign regulatory body may not effectively treat such conditions, which could harm our reputation in the marketplace among healthcare providers and patients.
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If the FDA or any state or foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action under other regulatory authority, such as false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations. We may become subject to such actions and, if we are not successful in defending against such actions, those actions may have a material adverse effect on our business, financial condition and results of operations. Equivalent laws and potential consequences exist in foreign jurisdictions.
In addition, if our products are cleared or approved, healthcare providers may misuse our products or use improper techniques if they are not adequately trained, potentially leading to injury and an increased risk of product liability. If our devices are misused or used with improper technique, we may become subject to costly litigation by our customers or their patients. As described above, product liability claims could divert management’s attention from our core business, be expensive to defend and result in sizeable damage awards against us that may not be covered by insurance.
Our products may cause or contribute to adverse medical events or be subject to failures or malfunctions that we are required to report to the FDA, or any other regulatory authority in a relevant territory, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations. The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us.
If our products or our other future products receive clearance or approval, we will be subject to the FDA’s medical device reporting regulations and similar foreign regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, could cause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the product. If we fail to comply with our reporting obligations, the FDA or other regulatory bodies could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearance or approval, seizure of our products or delay in clearance or approval of future products.
The FDA and foreign regulatory bodies have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health. Generally, a regulator’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found. A government-mandated or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects, labeling or design deficiencies, packaging defects or other deficiencies or failures to comply with applicable regulations. Product defects or other errors may occur in the future.
Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA and any other regulatory authority may require, or we may decide, that we will need to obtain new clearances or approvals for the device before we may market or distribute the corrected device. Seeking such clearances or approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.
Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we determine do not require notification of the FDA or to any other regulatory authority in a relevant territory. If the FDA or any other regulatory authority in a relevant territory, disagrees with our determinations, it could require us to report those actions as recalls and we may be subject to enforcement action. A future recall announcement could harm our reputation with customers, potentially lead to product liability claims against us and negatively affect our sales. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.
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We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
Many federal state and foreign healthcare laws and regulations apply to medical devices. We may be subject to certain federal and state regulations, including the federal healthcare programs’ Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, offering, receiving, or paying any remuneration, directly or indirectly, in cash or in kind, to induce or reward purchasing, ordering or arranging for or recommending the purchase or order of any item or service for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; HIPAA, which imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of, or payment for, healthcare benefits, items or services; the federal Civil Monetary Penalties Law, which authorizes the imposition of substantial civil monetary penalties against an entity that engages in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal healthcare programs to provide items or services reimbursable by a federal healthcare program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment; the federal False Statements Statute, which prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items, or services; the federal civil False Claims Act, or the FCA, which prohibits, among other things, knowingly presenting, or causing to be presented claims for payment of government funds that are false or fraudulent, or knowingly making, using or causing to be made or used a false record or statement material to such a false or fraudulent claim, or knowingly concealing or knowingly and improperly avoiding, decreasing, or concealing an obligation to pay money to the federal government; and other federal and state false claims laws. The FCA prohibits anyone from knowingly presenting, conspiring to present, making a false statement in order to present, or causing to be presented, for payment to federal programs (including Medicare and Medicaid) claims for items or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. This law also prohibits anyone from knowingly underpaying an obligation owed to a federal program. Increasingly, U.S. federal agencies are requiring nonmonetary remedial measures, such as corporate integrity agreements in FCA settlements. The DOJ announced in 2016 its intent to follow the “Yates Memo,” taking a far more aggressive approach in pursuing individuals as FCA defendants in addition to corporations.
The majority of states also have statutes similar to the federal Anti-Kickback Statute and false claims laws that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, that apply regardless of whether the payer is a government entity or a private commercial entity. The Federal Open Payments, or Physician Payments Sunshine Act, program requires manufacturers of products for which payment is available under Medicare, Medicaid or the State Children’s Health Insurance Program, to track and report annually to the federal government (for disclosure to the public) certain payments and other transfers of value made to physicians and teaching hospitals as well as disclosure of payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations. Our failure to appropriately track and report payments to the government could result in civil fines and penalties, which could adversely affect the results of our operations. In addition, several U.S. states and localities have enacted legislation requiring medical device companies to establish marketing compliance programs, file periodic reports with the state, and/or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities. Other state laws prohibit certain marketing-related activities including the provision of gifts, meals or other items to certain healthcare providers. Many of these laws and regulations contain ambiguous requirements that government officials have not yet clarified. Given the lack of clarity in the laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent federal and state laws and regulations.
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The medical device industry has been under heightened scrutiny as the subject of government investigations and enforcement actions involving manufacturers who allegedly offered unlawful inducements to potential or existing customers in an attempt to procure their business, including arrangements with physician consultants. If our operations or arrangements are found to be in violation of such governmental regulations, we may be subject to civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs and the curtailment of our operations. All of these penalties could adversely affect our ability to operate our business and our financial results.
If we do not obtain and maintain international regulatory registrations, clearances or approvals for our products, we will be unable to market and sell our products outside of the U.S.
Sales of our products outside of the U.S. are subject to foreign regulatory requirements that vary widely from country to country. Approval procedures vary among countries and can involve additional testing. The time required to obtain approval outside of the U.S. may differ substantially from that required to obtain FDA approval. While the regulations of some countries may not impose barriers to marketing and selling our products or only require notification, others require that we obtain the clearance or approval of a specified regulatory body. Complying with foreign regulatory requirements, including obtaining registrations, clearances or approvals, can be expensive and time-consuming, and we may not receive regulatory clearances or approvals in each country in which we plan to market our products, or we may be unable to do so on a timely basis. The time required to obtain registrations, clearances or approvals, if required by other countries, may be longer than that required for FDA clearance or approval, and requirements for such registrations, clearances or approvals may significantly differ from FDA requirements. If we modify our products, we may need to apply for additional regulatory clearances or approvals before we are permitted to sell the modified product. In addition, we may not continue to meet the quality and safety standards required to maintain the authorizations that we have received. If we are unable to maintain our authorizations in a particular country, we will no longer be able to sell the applicable product in that country.
Regulatory clearance or approval by the FDA does not ensure registration, clearance or approval by regulatory authorities in other countries, and registration, clearance or approval by one or more foreign regulatory authorities does not ensure registration, clearance or approval by regulatory authorities in other foreign countries or by the FDA. However, a failure or delay in obtaining registration or regulatory clearance or approval in one country may have a negative effect on the regulatory process in others.
Legislative or regulatory reforms in the U.S. or the EU may make it more difficult and costly for us to obtain regulatory clearances or approvals for our products or to manufacture, market or distribute our products after clearance or approval is obtained.
From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulation of medical devices. In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay approval or clearance of our future products under development or impact our ability to modify our currently cleared products on a timely basis. Over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products. For example, in November 2018, FDA officials announced forthcoming steps that the FDA intends to take to modernize the premarket notification pathway under Section 510(k) of the FDCA. Among other things, the FDA announced that it planned to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates. These proposals included plans to potentially sunset certain older devices that were used as predicates under the 510(k) clearance pathway, and to potentially publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old. In May 2019, the FDA solicited public feedback on these proposals. The FDA requested public feedback on whether it should consider certain actions that might require new authority, such as whether to sunset certain older devices that were used as predicates under the 510(k) clearance pathway. These proposals have not yet been finalized or adopted, and the FDA may work with Congress to implement such proposals through legislation. Accordingly, it is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances, increase the costs of compliance, or restrict our ability to maintain our current clearances, or otherwise create competition that may negatively affect our business.
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In September 2019, the FDA finalized guidance describing an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process. The FDA has developed and maintains a list device types appropriate for the “safety and performance based” pathway and will continue to develop product-specific guidance documents that identify the performance criteria for each such device type, as well as the testing methods recommended in the guidance documents, where feasible. The FDA may establish performance criteria for classes of devices for which we or our competitors seek or currently have received clearance, and it is unclear the extent to which such performance standards, if established, could impact our ability to obtain new 510(k) clearances or otherwise create competition that may negatively affect our business. In September 2023, the FDA introduced draft guidance regarding best practices for selecting a device in 510(k) submissions to enhance the predictability, consistency, and transparency of the 510(k) Program. The recommendations focus on characteristics of the predicate, including selecting a predicate device that was cleared using well-established methods, meets or exceeds expected safety and performance, is without unmitigated use-related or design-related safety issues, and is without an associated design-related recall. According to the FDA, these practices will encourage the evolution of safer and more effective medical devices in the 510(k) program over time.
Similarly, particular common specifications, or sets of technical and/or clinical requirements (other than a standard) that provide a means of complying with the legal obligations applicable to a device, process or system, are issued by the EU’s competent authorities and are mandatory as part of the CE certification process. The EU competent authorities may establish performance criteria for classes of devices for which we or our competitors seek or currently have received certification and it is unclear the extent to which such performance standards, if established, could impact our ability to obtain new CE certifications or otherwise create competition that may negatively affect our business.
In addition, FDA or any other relevant regulatory authority, regulations and guidance are often revised or reinterpreted by the FDA or any other regulatory authority, in ways that may significantly affect our business and our products. Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more difficult to obtain clearance or approval for, manufacture, market or distribute our products. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require: additional testing prior to obtaining clearance or approval; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record keeping.
The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be promulgated that could prevent, limit or delay regulatory clearance or approval of our future products. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the U.S. or abroad. For example, certain policies of the Trump administration, as well as decisions by the U.S.’ legislative or judicial branches may impact our business and industry.
On April 27, 2020, the U.S. Supreme Court reversed a Federal Circuit decision that previously upheld Congress’ denial of $12 billion in “risk corridor” funding. Congress may consider additional legislation to repeal, or repeal and replace, other elements of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the PPACA, On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued that the PPACA is unconstitutional in its entirety because the individual mandate was repealed by Congress. Thus, the PPACA will remain in effect in its current form. Prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the PPACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the PPACA. In addition, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or the IRA, into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in PPACA marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost through a newly established manufacturer discount program. It is possible that the PPACA will be subject to judicial or Congressional challenges in the future. It is unclear how such challenges and any potential future healthcare reform measures of the Trump administration will impact the PPACA and our business. We continue to evaluate the PPACA and its possible repeal and replacement, as the extent to which any such changes may impact our business or financial condition remains uncertain. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval or clearance that we may have obtained and we may not achieve or sustain profitability.
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In the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize any of our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the EU or member state level may result in significant additional requirements or obstacles that may increase our operating costs. The delivery of healthcare in the EU, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than EU, law and policy. National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing EU and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any products for which we obtain marketing approval. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU member states, and parallel trade, i.e., arbitrage between low-priced and high-priced member states, can further reduce prices. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if approved in those countries. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.
On April 5, 2017, the European Parliament passed the Medical Devices Regulation (Regulation 2017/745), which became effective on May 26, 2021 and repeals and replaces the EU Medical Devices Directive. Unlike directives, which must be implemented into the national laws of the EEA member states, the regulations would be directly applicable, i.e., without the need for adoption of EEA member state laws implementing them, in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among EEA member States. The Medical Devices Regulation, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. Among other things, the Medical Devices Regulation:
| ● | Strengthen the rules on placing devices on the market and reinforce surveillance once they are available; | |
| ● | Establish explicit provisions on manufacturers’ responsibilities for follow-up regarding the quality, performance and safety of devices placed on the market; | |
| ● | Improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; |
| ● | Set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and | |
| ● | Strengthened rules for the assessment of certain high-risk devices, which may have to undergo an additional check by experts before they are placed on the market. |
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These modifications may have an effect on the way we conduct our business in the EEA. We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payors. Further, there is no guarantee that we can use existing reimbursement codes or receive reimbursement at all. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our drugs, once marketing approval is obtained. We cannot predict what healthcare reform initiatives may be adopted in the future. However, it is possible that there will be further legislation or regulation that could harm the business, financial condition and results of operations.
Healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations.
Our industry is highly regulated and changes in law may adversely impact our business, operations or financial results. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the PPACA, is a sweeping measure intended to, among other things, expand healthcare coverage within the U.S., primarily through the imposition of health insurance mandates on employers and individuals and expansion of the Medicaid program. Several provisions of the law may affect us and increase certain of our costs.
In addition, other legislative changes have been adopted since the PPACA was enacted. These changes include aggregate reductions in Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013. These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will remain in effect until 2031.
In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These and new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and, accordingly, our financial operations.
We anticipate that the PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and an additional downward pressure on the reimbursement our customers may receive for our products. Further, there have been, and there may continue to be, judicial and Congressional challenges to certain aspects of the PPACA. For example, the U.S. Tax Cuts and Jobs Act of 2017, or TCJA, includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the PPACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Further, prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 26, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the PPACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the PPACA. In addition, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or the IRA, into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in PPACA marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost through a newly established manufacturer discount program. Additional legislative and regulatory changes and judicial challenges to the PPACA, its implementing regulations and guidance and its policies, remain possible. However, it remains unclear how any new legislation, regulation or challenges in court might affect the prices we may obtain for any of our products for which regulatory approval is obtained. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payers. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate significant revenue, attain profitability or commercialize our products in scale.
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In addition, the delivery of healthcare in the EU, including the establishment and operation of health services, is almost exclusively a matter for national, rather than EU, law and policy. National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. Coupled with ever-increasing EU and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our products or any future product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any products for which we obtain marketing approval.
We are currently unable to predict what additional legislation or regulation, if any, relating to the health care industry may be enacted in the future or what effect recently enacted federal legislation or any such additional legislation or regulation would have on our business. The pendency or approval of such proposals or reforms could result in a decrease in the price of our securities or limit our ability to raise capital or to enter into collaboration agreements for the further development and potential commercialization of our products.
Inadequate funding for the FDA and other government agencies and/or potentially shifting priorities under the new administration could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared, approved or commercialized in a timely manner or at all, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and clear or approve new products, provide feedback on clinical trials and development programs, meet with sponsors and otherwise review regulatory submissions can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also increase the time necessary for new medical devices or modifications to cleared or approved medical devices to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, the Trump administration has discussed several changes to the reach and oversight of the FDA, which could affect its relationship with the pharmaceutical industry, transparency in decision making and ultimately the cost and availability of prescription drugs. Additionally, over the last several years, the U.S. government has shut down multiple times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA and other government employees and stop critical activities. If funding for the FDA is reduced, FDA priorities change, or a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, including our future-planned NDA submission for INSPIRA ART, which could have a material adverse effect on our business.
Environmental, social and corporate governance (ESG) issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet regulatory requirements or investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, Board of Director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us.
Customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, energy and water use, plastic waste and other sustainability concerns. Concern over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Changing customer and consumer preferences or increased regulatory requirements may result in increased demands or requirements regarding plastics and packaging materials, including single-use and non-recyclable plastic products and packaging, other components of our products and their environmental impact on sustainability, or increased customer and consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of substances present in certain of our products. Complying with these demands or requirements could cause us to incur additional manufacturing, operating or product development costs.
If we do not adapt to or comply with new regulations, or fail to meet evolving investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in our Company, and customers and consumers may choose to stop purchasing our products, which could have a material adverse effect on our reputation, business or financial condition.
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Risks Related to Our Intellectual Property
If we are unable to obtain and maintain effective patent rights for our products and services, we may not be able to compete effectively in our markets. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us.
Our success and future revenue growth will depend, in part, on our ability to protect our patent rights. In addition to the protection afforded by any patents that may be granted, historically, we have relied on trade secret protection and confidentiality agreements with our employees, consultants, and contractors to protect proprietary know-how that is not patentable or that we elect not to patent, processes that are not easily known, knowable or easily ascertainable, and for which patent infringement is difficult to monitor and enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, agreements may be breached, trade secrets may be difficult to protect, and we may not receive adequate remedies for any breach. In addition, our trade secrets and intellectual property may otherwise become known or be independently discovered by competitors or other unauthorized third parties.
There is no guarantee that the patent applications that we submitted with regards to our technologies will result in patent registration. In the event of failure to complete patent registration, our developments will not be proprietary, which might allow other entities to manufacture our products or design our services and compete with them.
Further, there is no assurance that all potentially relevant prior art relating to our patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover our products or services, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, our patent applications and any future patents may not adequately protect our intellectual property, products or services and provide exclusivity for our new products or services or prevent others from designing around our claims. Furthermore, there is no guarantee that third parties will not infringe or misappropriate our patents or similar proprietary rights. In addition, there can be no assurance that we will not have to pursue litigation against other parties to assert its rights.
Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
If we cannot obtain and maintain effective patent rights for our products and services, we may not be able to compete effectively, and our business and results of operations would be harmed.
We cannot provide any assurances that our trade secrets and other confidential proprietary information will not be disclosed in violation of our confidentiality agreements or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Also, misappropriation or unauthorized and unavoidable disclosure of our trade secrets and intellectual property could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets and intellectual property are deemed inadequate, we may have insufficient recourse against third parties for misappropriating any trade secret.
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Intellectual property rights of third parties could adversely affect our ability to commercialize our products and services, and we might be required to litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.
It is inherently difficult to conclusively assess our freedom to operate without infringing on third-party rights. Our competitive position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or other third-party intellectual property rights are held to cover our products or services or elements thereof, or our manufacturing or uses relevant to our development plans. In such cases, we may not be in a position to develop or commercialize products or services or our product candidates (and any relevant services) unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms. There may also be pending patent applications that if they result in issued patents, could be alleged to be infringed by our new products or services. If such an infringement claim should be brought and be successful, we may be required to pay substantial damages, be forced to abandon our new products or services or seek a license from any patent holders. No assurances can be given that a license will be available on commercially reasonable terms, if at all.
It is also possible that we have failed to identify relevant third-party patents or applications. For example, U.S. patent applications filed before November 29, 2000 and certain U.S. patent applications filed after that date that will not be filed outside the U.S. remain confidential until patents issue. Patent applications in the U.S. and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our new products or services could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our services, our new products or the use of our new products. Third-party intellectual property right holders may also actively bring infringement claims against us. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or marketing our new products or services. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing our new products or services that are held to be infringing. We might, if possible, also be forced to redesign our new products so that we no longer infringe the third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.
Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.
Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing new products and services. If our business expands and more patents are issued, the risk increases that our products and services may be subject to claims of infringement of the patent rights of third parties.
Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, designs or methods of manufacture related to the use or manufacture of our products or services. There may be currently pending patent applications or continued patent applications that may later result in issued patents that our products or services may infringe. In addition, third parties may obtain patents or services in the future and claim that use of our technologies infringes upon these patents.
If any third-party patents were held by a court of competent jurisdiction to cover aspects of our processes for designs, or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our products or services. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or services, or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
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Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents.
Changes in either the patent laws or interpretation of the patent laws in the U.S. and other countries may diminish the value of any patents that may issue from our patent applications or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the U.S. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. We therefore cannot be certain that we were the first to file the invention claimed in our owned and licensed patent or pending applications, or that we or our licensor were the first to file for patent protection of such inventions. Assuming all other requirements for patentability are met, in the U.S. prior to March 15, 2013, the first to make the claimed invention without undue delay in filing, is entitled to the patent, while generally outside the U.S., the first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act, or the Leahy-Smith Act, enacted on September 16, 2011, the U.S. has moved to a first to file system. The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and may also affect patent litigation. In general, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business and financial condition.
We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful.
Competitors may infringe our intellectual property. If we were to initiate legal proceedings against a third-party to enforce a patent covering one of our new products or services, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the U.S., defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. Patent and Trademark Office, or USPTO, or made a misleading statement, during prosecution. Under the Leahy-Smith Act, the validity of U.S. patents may also be challenged in post-grant proceedings before the USPTO. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Derivation proceedings initiated by third parties or brought by us may be necessary to determine the priority of inventions and/or their scope with respect to our patent or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our new products or services to market.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our securities.
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We may be subject to claims challenging the inventorship of our intellectual property.
We may be subject to claims that former employees, collaborators or other third parties have an interest in, or right to compensation, with respect to our current patent and patent applications, future patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our products or services. Litigation may be necessary to defend against these and other claims challenging inventorship or claiming the right to compensation. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting, and defending patents on products and services, as well as monitoring their infringement in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries can be less extensive than those in the U.S. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the U.S.
Competitors may use our technologies develop their own products or services in jurisdictions where we have not obtained patent protection to and may export infringing products or services to territories where we have patent protection, but where patents are not enforced as strictly as they are in the U.S. These products or services may compete with our products or services. Future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products or services in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our future patents at risk of being invalidated or interpreted narrowly, put the issuance of our patent applications at risk, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and any damages or other remedies that we may be awarded, may not be commercially meaningful. Accordingly, our efforts to monitor and enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
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Risks Related to Ownership of our Securities
The market price of our securities is likely to continue to be highly volatile, and you may not be able to resell your Ordinary Shares at or above the price that you paid.
Since we completed our IPO in July 2021, the trading price of our Ordinary Shares and Warrants have been volatile and is likely to continue to be volatile. The stock market in general, and the market for medical device companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies, which has resulted in decreased share prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects. Broad market and industry factors, including potentially worsening economic conditions, inflation and other adverse effects, may negatively affect the market price of our securities, regardless of our actual operating performance. As a result of this volatility, you may not be able to sell your securities at or above the price you paid. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our securities:
| ● | Inability to obtain the approvals necessary to commence further clinical trials; | |
| ● | Unsatisfactory results of clinical trials; | |
| ● | Announcements of regulatory approval or the failure to obtain it, or specific label indications or patient populations for its use, or changes or delays in the regulatory review process; | |
| ● | Announcements of innovations or new products by us or our competitors; | |
| ● | Adverse actions taken by regulatory authorities with respect to our clinical trials, manufacturing supply chain or sales and marketing activities; | |
| ● | Any adverse changes to our relationship with manufacturers or suppliers; | |
| ● | Any intellectual property infringement actions in which we may become involved; | |
| ● | Achievement of expected product sales and profitability or our failure to meet expectations; | |
| ● | Our commencement of, or involvement in, litigation; |
| ● | Any major changes in our board of directors or management; | |
| ● | Our ability to recruit and retain qualified regulatory, research and development personnel; |
| ● | Legislation in the U.S. relating to the sale or pricing of medical devices; | |
| ● | The depth of the trading market in our Ordinary Shares and Warrants; | |
| ● | Economic weakness, including inflation, or political instability in particular foreign economies and markets; |
| ● | Business interruptions resulting from a local or worldwide pandemic or other health epidemic, geopolitical actions, including war and terrorism, or natural disasters; | |
| ● | The granting or exercise of employee share options or other equity awards; and | |
| ● | Changes in investors and securities analysts’ perception of the business risks and conditions of our business. |
In addition, the stock market in general, and Nasdaq in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of small companies. Broad market and industry factors may negatively affect the market price of our Ordinary Shares and Warrants, regardless of our actual operating performance. Further, a systemic decline in the financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly.
Future sales of our Ordinary Shares could reduce the market price of our securities.
Substantial sales of our Ordinary Shares on Nasdaq may cause the market price of our securities to decline. Sales by us or our security holders of substantial amounts of our Ordinary Shares, or the perception that these sales may occur in the future, could cause a reduction in the market price of our securities.
The issuance of any additional Ordinary Shares or any securities that are exercisable for or convertible into Ordinary Shares, may have an adverse effect on the market price of our Ordinary Shares and will have a dilutive effect on our existing shareholders and holders of Ordinary Shares.
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We have never paid cash dividends on our share capital, and we do not anticipate paying any cash dividends in the foreseeable future.
We have never declared or paid cash dividends, and we do not anticipate paying cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our securities as a source for any future dividend income. Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors.
The JOBS Act will allow us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adversely affect the market price of our securities.
For so long as we remain an “emerging growth company” as defined in the JOBS Act, we take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies” including:
| ● | the provisions of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting; and | |
| ● | any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements. |
We intend to take advantage of these exemptions until we are no longer an “emerging growth company.” We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, as defined in the rule under the Exchange Act, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We cannot predict if investors will find our securities less attractive because we may rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities, and our market prices may be more volatile and may decline.
As a “foreign private issuer” we are permitted, and intend, to follow certain home country corporate governance practices instead of otherwise applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.
Our status as a foreign private issuer also exempts us from compliance with certain SEC laws and regulations and certain regulations of Nasdaq, including the proxy rules, the short-swing profits recapture rules, and certain governance requirements such as independent director oversight of the nomination of directors and executive compensation. In addition, we are not required under the Exchange Act to file current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and we are generally exempt from filing quarterly reports with the SEC. Also, although the Israeli Companies Law, 5759-1999 and the regulations promulged thereunder, or the Companies Law, requires us to disclose the annual compensation of our five most highly compensated senior officers on an individual basis (rather than on an aggregate basis), this disclosure will not be as extensive as that required of a U.S. domestic issuer. Furthermore, as a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act.
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These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2026. In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic registrant may be significantly higher.
We may be a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes in the current taxable year or may become one in any subsequent taxable year. There generally would be negative tax consequences for U.S. taxpayers that are holders of the securities if we are or were to become a PFIC.
Based on the projected composition of our income and valuation of our assets, we do not expect that we will be treated as a PFIC for 2025 and we do not expect to become a PFIC in the future, although there can be no assurance in this regard. The determination of whether we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. We will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross income is “passive income” or (2) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account. The tests for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of the securities. Accordingly, there can be no assurance that we currently are not or will not become a PFIC in the future. If we are a PFIC in any taxable year during which a U.S. taxpayer holds the securities, such U.S. taxpayer would be subject to certain adverse U.S. federal income tax rules. In particular, if the U.S. taxpayer did not make an election to treat us as a “qualified electing fund”, or QEF, or make a “mark-to-market” election, then “excess distributions” to the U.S. taxpayer, and any gain realized on the sale or other disposition of our securities by the U.S. taxpayer: (1) would be allocated ratably over the U.S. taxpayer’s holding period for our securities; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the U.S. Internal Revenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. taxpayer to make a timely QEF or mark-to-market election. U.S. taxpayers that have held our securities during a period when we were a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. taxpayer who made a timely QEF or mark-to-market election. A U.S. taxpayer can make a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance with the instructions thereto. We do not intend to notify U.S. taxpayers that hold our securities if we believe we will be treated as a PFIC for any taxable year in order to enable U.S. taxpayers to consider whether to make a QEF election. In addition, we do not intend to furnish such U.S. taxpayers annually with information needed in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. U.S. taxpayers that hold our securities are strongly urged to consult their tax advisors about the PFIC rules, including tax return filing requirements and the eligibility, manner, and consequences to them of making a QEF or mark-to-market election with respect to our securities in the event that we are a PFIC.
We may be subject to securities litigation, which is expensive and could divert management attention.
In the past, companies that have experienced volatility in the market price of their shares have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.
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If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our securities, our share price and trading volume could decline.
The trading market for our securities will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our securities, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price of our securities or trading volume to decline.
You may experience future dilution as a result of future equity offerings.
In order to raise additional capital, we may in the future offer additional Ordinary Shares or other securities convertible into or exchangeable for Ordinary Shares at prices that may not be the same as the price per share in this offering. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing shareholders. The price per share at which we sell additional Ordinary Shares, or securities convertible or exchangeable into Ordinary Shares, in future transactions may be higher or lower than the price per share paid by investors in this offering.
We may need additional financing in the future. We may be unable to obtain additional financing or if we obtain financing it may not be on terms favorable to us. You may lose your entire investment.
Based on our current plans, we believe our existing cash and cash equivalents will be sufficient to fund our operating expense and capital requirements for the next six months. We expect that we will require substantial additional capital to operate and to commercialize our products and we expect to seek additional funds to enable us to fund our operations for the next twelve months. We may be unable to obtain additional funds through financing activities, and if we obtain financing it may not be on terms favorable to us. If we are unable to obtain additional funds on terms favorable to us, we may be required to cease or reduce our operating activities. If we must cease or reduce our operating activities, you may lose your entire investment.
We have never paid cash dividends on our share capital, and we do not anticipate paying any cash dividends in the foreseeable future.
We have never declared or paid cash dividends, and we do not anticipate paying cash dividends in the foreseeable future. Therefore, you should not rely on an investment in Ordinary Shares as a source for any future dividend income. Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors.
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Risks Related to Israeli Law and Our Operations in Israel
Our principal executive offices, most of our research and development activities and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel, including the attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them.
Our executive offices, corporate headquarters and principal research and development facilities are located in Israel. In addition, all of our officers and directors are residents of Israel. Accordingly, political, economic and military and security conditions in Israel and the surrounding region may directly affect our business. Any conflicts, political instability, terrorism, cyberattacks or any other hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could adversely affect our operations. Ongoing and revived hostilities in the Middle East or other Israeli political or economic factors, could harm our operations.
Following the October 7, 2023 attacks by Hamas terrorists in Israel’s southern border, Israel declared war against Hamas and since then, Israel has been involved in military conflicts with Hamas, Hezbollah, a terrorist organization based in Lebanon, and Iran, both directly and through proxies like the Houthi movement in Yemen and armed groups in Iraq and other terrorist organizations. Additionally, following the fall of the Assad regime in Syria, Israel has conducted limited military operations targeting the Syrian army, Iranian military assets and infrastructure linked to Hezbollah and other Iran-supported groups.
On June 13, 2025, Israel launched a strike against Iran, aimed to disrupt Iran’s capacity to coordinate or launch hostilities against Israel. Iran has retaliated in response, firing missiles and drones at Israeli military and civilian infrastructure. More recently, in February 2026, hostilities between Israel and Iran escalated again. In late February 2026, Israel, together with the U.S., conducted a major joint military campaign of air and missile strikes against targets in Iran, which triggered a broad Iranian response and contributed to significant regional instability. In addition, in early March 2026, Israel has been engaged with Hezbollah in Lebanon, that has been launching missile, rocket, and shooting attacks against Israeli military sites, troops, and Israeli towns. In response to these attacks, Israel has carried out a number of targeted strikes on sites associated with Hezbollah in Lebanon. The situation remains highly fluid, and we are unable to predict when, or on what terms, this escalation will be resolved.
Although certain ceasefire agreements have been reached with Hamas, and the level of hostilities has since decreased, the situation remains volatile, with the potential for escalation into a broader regional conflict involving additional terrorist organizations and possibly other countries, including as a result of instability arising from developments in Syria.
The vicissitudes of the multi-front conflict are difficult to predict, as are such conflict’s economic implications on the Company’s business and operations and on Israel’s economy in general. The potential deterioration of Israel’s economy, as a direct and indirect result of these events, may have a material adverse effect on the Company and its ability to effectively conduct its operations.
In connection with the current multi-front conflict, Israeli military reservists have been called up to perform military service, four of our employees have been called up. One employee is engaged in reserve duty as of March 22, 2026. There can be no guarantee that other employees will not be called up again. Not any of the employees called up holds a key position in our Company. Additional employees may be called up, for service, and such persons may be absent for an extended period of time. As a result, our operations may be disrupted by such absences, which in turn may materially and adversely affect our business, prospects, financial condition and results of operations.
The State of Israel and Israeli companies have been the subject of boycotts, divestment and sanctions in the past from state and non-state actors. These actions could expand in number and scope and may have an adverse impact on our operating results, financial condition or the expansion of our business.
The Israeli government has pursued extensive changes to Israel’s judicial system. In response to the foregoing developments, individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel due in part to the reluctance of foreign investors to invest or transact business in Israel, increased volatility in foreign exchange rates involving the Israeli new shekel, downgrades in the credit rating of Israel, increased volatility in securities markets, and other changes in macroeconomic conditions. To the extent that any reaction to judicial reform affect the Israeli economy, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors.
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The termination or reduction of tax and other incentives that the Israeli government provides to Israeli companies may increase our costs and taxes.
The Israeli government currently provides tax and capital investment incentives to Israeli companies, as well as grant and loan programs relating to research and development and marketing and export activities. In recent years, the Israeli government has reduced the benefits available under these programs and the Israeli governmental authorities may in the future further reduce or eliminate the benefits of these programs. We may take advantage of these benefits and programs in the future; however, there can be no assurance that such benefits and programs will be available to us. If we qualify for such benefits and programs and fail to meet the conditions thereof, the benefits could be canceled and we could be required to refund any benefits we might already have enjoyed and become subject to penalties. Additionally, if we qualify for such benefits and programs and they are subsequently terminated or reduced, it could have an adverse effect on our financial condition and results of operations.
We may be required to pay monetary remuneration to our Israeli employees for their inventions, even if the rights to such inventions have been duly assigned to us.
We enter into agreements with our Israeli employees pursuant to which such individuals agree that any inventions created in the scope of their employment are either owned exclusively by us or are assigned to us, depending on the jurisdiction, without the employee retaining any rights. A portion of our intellectual property has been developed by our Israeli employees during their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the course of his or her employment and within the scope of said employment are considered “service inventions.” Service inventions belong to the employer by default, absent a specific agreement between the employee and employer otherwise. The Patent Law also provides that if there is no agreement regarding the remuneration for the service inventions, even if the ownership rights were assigned to the employer, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for these inventions. The Committee has not yet determined the method for calculating this Committee-enforced remuneration. While it has previously been held that an employee may waive his or her rights to remuneration in writing, orally or by conduct, litigation is pending in the Israeli labor court is questioning whether such waiver under an employment agreement is enforceable. Although our Israeli employees have agreed that we exclusively own any rights related to their inventions, we may face claims demanding remuneration in consideration for employees’ service inventions. As a result, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negatively affect our business.
We received Israeli government grants for certain of our research and development activities, the terms of which may require us to pay royalties and to satisfy specified conditions in order to manufacture products and transfer technologies outside of Israel. If we fail to satisfy these conditions, we may be required to pay penalties and refund grants previously received.
Our research and development efforts have been financed in part through royalty-bearing and non-royalty-bearing grants in an aggregate amount of $1,194,000 that we received from the IIA as of December 31, 2025. With respect to the royalty-bearing grants we are committed to pay royalties at a rate of 3% on sales proceeds from our products up to the total amount of grants received, linked to the U.S. dollar and bearing interest. For IIA grants approved by the IIA prior to January 1, 2024 but which are outstanding thereafter, as of January 1, 2024 the annual interest is calculated at a rate based on the 12-month Secured Overnight Financing Rate, or SOFR, as published by the CME Group or any authorized body of the Federal Reserve on the first trading day of each year, or at an alternative rate published by the Bank of Israel plus 0.71513%; and, for grants approved on or following January 1, 2024 the annual interest will be the higher of (i)12 month SOFR, plus 1%, or (ii) a fixed annual interest rate of 4%.
Regardless of any royalty payment, we are further required to comply with the requirements of the Israeli Encouragement of Industrial Research and Development Law, 5744-1984, as amended, and related regulations, or the Research Law, with respect to those past grants. When a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA committee would be required for any transfer to third parties inside or outside of Israel of know-how or manufacturing or manufacturing rights related to those aspects of such technologies. We may not receive those approvals. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel.
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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 have non-competition agreements 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 and for up to 12 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.
Provisions of Israeli law and our amended and restated articles of association may delay, prevent or otherwise impede a merger with, or an acquisition of, us, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. For example, a merger may not be consummated unless at least 50 days have passed from the date on which a merger proposal is filed by each merging company with the Israel Registrar of Companies and at least 30 days have passed from the date on which the shareholders of both merging companies have approved the merger. In addition, a majority of each class of securities of the target company must approve a merger. Moreover, a tender offer for all of a company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the tender offer, unless, following consummation of the tender offer, the acquirer would hold at least 98% of our outstanding shares. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, claim that the consideration for the acquisition of the shares does not reflect their fair market value, and petition an Israeli court to alter the consideration for the acquisition accordingly, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisal rights, and the acquirer or the company published all required information with respect to the tender offer prior to the tender offer’s response date.
Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. These provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.
It may be difficult to enforce a judgment of a U.S. court against us and our executive officers and directors in Israel or the U.S., to assert U.S. securities laws claims in Israel or to serve process on our executive officers and directors and these experts.
We were incorporated in Israel. Substantially all of our executive officers and directors reside outside of the U.S., and all of our assets and most of the assets of these persons are located outside of the U.S. Therefore, a judgment obtained against us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the U.S. and may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the U.S. or to assert U.S. securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an action with respect to U.S. securities laws in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court.
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Your rights and responsibilities as a shareholder will be governed in key respects by Israeli laws, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.
The rights and responsibilities of the holders of our securities are governed by our amended and restated articles of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in U.S. companies. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders, and to refrain from abusing its power in such company, including, among other things, in voting at a general meeting of shareholders on matters such as amendments to a company’s amended and restated articles of association, increases in a company’s authorized share capital, mergers and acquisitions and related party transactions requiring shareholder approval, as well as a general duty to refrain from discriminating against other shareholders. In addition, a shareholder who is aware that it possesses the power to determine the outcome of a vote at a meeting of the shareholders or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the nature of these duties or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our securities that are not typically imposed on shareholders of U.S. companies.
ITEM 4. INFORMATION ON THE COMPANY
| A. | History and Development of the Company. |
We are an Israeli corporation based in Ra’anana, Israel and were incorporated in Israel in 2018 under the name Clearx Medical Ltd. On April 10, 2018, our name was changed to Insense Medical Ltd. and on July 30, 2020, our name was changed to our current name, Inspira Technologies Oxy B.H.N. Ltd. On July 16, 2021, our Ordinary Shares and the Warrants issued in our IPO began trading on Nasdaq under the symbols “IINN” and “IINNW”, respectively.
Our principal executive offices are located at 2 Ha-Tidhar St., Ra’anana, 4366504 Israel. Our telephone number in Israel is +972 996 644 88. Our website address is www.inspira-technologies.com. The information contained on our website or available through our website is not incorporated by reference into and should not be considered a part of this annual report on Form 20-F, and the reference to our website in this annual report on Form 20-F is an inactive textual reference only. Puglisi & Associates is our agent in the U.S., and its address is 850 Library Avenue, Suite 204, Newark, Delaware 19711.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the JOBS Act. As such, we are eligible to, and intend to, take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” such as not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceeds $1.235 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.
We are a foreign private issuer as defined by the rules under the Securities Act and the Exchange Act. Our status as a foreign private issuer also exempts us from compliance with certain laws and regulations of the SEC and certain regulations of the Nasdaq Capital Market, including the proxy rules, the short-swing profits recapture rules, and certain governance requirements such as independent director oversight of the nomination of directors and executive compensation. In addition, we are not required to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies registered under the Exchange Act.
For the years ended December 31, 2025, 2024, and 2023 our capital expenditures were $103,000, $164,000, and $206,000, respectively. Our current capital expenditures are primarily for computers, research and development equipment and office improvements substantially all in Israel, and we expect to finance these expenditures primarily from cash on hand.
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| B. | Business Overview. |
Overview
We are a specialty medical device company the research, development, manufacturing, and commercialization of proprietary life support technologies. We aim for our technology to supersede and revolutionize the global mechanical ventilation market.
Mechanical Ventilation – Major Disadvantages
An estimated up to 20 million patients each year in ICUs are treated with invasive mechanical ventilation. Mortality rates among patients undergoing prolonged mechanical ventilation may exceed 50%. Mechanical ventilators are typically used when patients are unable to breathe adequately on their own due to acute respiratory failure and require assisted breathing provided by a machine.
During mechanical ventilation, patients are generally placed under heavy sedation or medically induced coma, and a tube is inserted into the airway. The ventilator then delivers oxygen-rich air into the lungs to facilitate the transfer of oxygen into the bloodstream and vital organs.
Mechanical Ventilation – Associated Medical Complications
Patients can often experience complications associated with the use of mechanical ventilators, such as increased risk, costs of care, extended lengths of stay, frequent incidence of infections, ventilator dependence and high mortality rates. Associated complications may include:
| ● | Bacterial Infections: The tube in the patient’s airways can bring bacteria into the lungs, causing infections like pneumonia. |
| ● | Lung Damage: The positive pressure from the ventilator can damage patient lungs. |
| ● | Collapsed Lung: If part of patient lung is weak, it might develop a hole, causing the lungs to collapse. |
| ● | Heart and blood flow changes: Can decrease patient blood pressure or raise patient heart rate, with less oxygen reaching the blood (decreased perfusion). |
| ● | Prolonged Ventilation: The tube from the mouth is replaced with a tube inserted through a small cut (incision) in the patient’s neck. |
| ● | Prolonging the dying process: If a patient is unlikely to recover from its condition, mechanical ventilation may prolong the dying process. This can cause unnecessary suffering. |
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The INSPIRA ART novel technology could potentially assist those ICU patients who are placed on mechanical ventilators. To overcome the risks and medical complication typically associated with this treatment methodology, the INSPIRA ART is designed to treat the patients while allowing patients to be awake, boosting oxygen saturation levels to 95% or higher in minutes with small volumes of blood and monitoring patient blood with the HYLA blood sensor technology for the rapid detection of life-threatening medical conditions. This technology will potentially make the treatment suitable in the future to migrate from ICUs to emergency rooms, medical units, emergency medical services and smaller rural hospitals.
INSPIRA ART is designed to enable the following features:
| ● | Patients are treated awake and without mechanical ventilation. No coma; no tube in the throat; potentially reduces hospital overnight stays. |
| ● | Oxygen is delivered straight into the blood, with carbon dioxide removed. No lung infection; no lung injury. |
| ● | Blood parameters measured continuously and in real-time. Early detection of changes; provides decision-making assistance data. |
INSPIRA ART – Targeted Advantages
The INSPIRA ART is being designed to enable a patient’s body and vital organs to receive the necessary amount of oxygen. We intend for our INSPIRA ART system to be a low-cost, high-volume solution for critical care patients requiring advanced respiratory support. It is intended to provide an alternative to mechanical ventilation, so that patients with respiratory failure will be able to recover from their lung condition without being subjected to the risk of developing the various common complications brought on by intubation and mechanical ventilation. Our goal is to support healthcare systems by providing a practical and portable solution facilitating the treatment of respiratory failure, without the need for mechanical ventilation, and with the ability to deploy INSPIRA ART systems in and outside of ICUs to an ambulatory treatment that can be administered in all hospital wards as well as in ambulances.
Although our INSPIRA ART system remains in development, has not been tested in humans, and is not cleared or approved by the FDA or other foreign regulatory bodies, we believe that our INSPIRA ART has potential competitive advantages over FDA-approved treatments, which are discussed in the table below. Subject to regulatory clearances, we believe that our product will enable small medical teams to perform a simple bedside procedure, inserting our dual lumen cannula into the jugular vein. The INSPIRA ART is being designed to enable patients to be treated while awake and breath spontaneously, which may also result in potentially reducing the need or time of weaning off the INSPIRA ART. Accordingly, our INSPIRA ART system has the potential to minimize patients’ lengths of stay and costs in the ICU, rehabilitation period in the hospital, and re-admissions compared to mechanical ventilation.
While our INSPIRA ART system could potentially have unique advantages in comparison to currently available solutions used to provide life support, there are numerous potential risks that might be associated with the use of our INSPIRA ART system. Such risks may include low blood flow that could be associated with generation of thrombi, mechanical damage to the superior vena cava, generation of a systemic inflammatory response due to bio-compatibility issues, allergic reactions to catheter or its components, decreased venous returns, local venous bleeding following the extraction of our INSPIRA ART system or erroneous puncture of an artery during the insertion of our product. Additionally, any foreign material in a body increases the risk of infections and the patient’s membrane might be clogged for a short period of time. Finally, an individual patient’s requirements for gas exchange might significantly differ from the average, which means that the use of our INSPIRA ART system might not meet minimum requirements for blood saturation.
One of the main advantages of our INSPIRA ART system is that there is no anticipated need for an induced coma because there is no intubation involved, and the treated patient stays awake. Our INSPIRA ART system has yet to be tested in humans and, as such, these claims of a potential advantage in humans are unproven and speculative.
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We have developed and continue to develop the following technologies:
The INSPIRA ART100
The INSPIRA ART100 system utilizes a technique that circulated the patient’s blood, adding oxygen to the blood and removes carbon dioxide, with the enriched blood being circulated back to the patient, taking over the functionality of the heart and/or lungs in critical care patients undergoing life-saving procedures.
Designed in collaboration with leading U.S. clinicians, the INSPIRA ART100 cardiopulmonary bypass system combines cutting-edge technology with intuitive design to optimize patient care during crucial times.
The INSPIRA ART100 is planned to be integrated with the HYLA, a continuous blood monitoring technology designed to potentially detect real-time changes in patient condition. In November 2025, we announced that we completed the clinical study for our HYLA is undergoing clinical evaluations for development purposes at Sheba Hospital in patients undergoing open-heart procedures..
The delivered INSPIRA ART100 systems will be distributed to sales targets across hospitals in the U.S., with a view to collaborating with such hospital. We believe that the delivery of the INSPIRA ART100 in the U.S. market serves our goal is to introduce physicians and perfusionists to our technology and brand via initial deployments at leading hospitals.
The INSPIRA ART100 system’s design and advanced capabilities provide a comprehensive platform of efficiency, compatibility and performance, enabling medical technologies companies to refine and optimize the products for improved patient care. The system features advanced software that navigates the perfusionist through the setup process, provides alerts while offering potential troubleshooting solutions. The system has a compact design, with extended battery life to support intra patient transfer in hospitals and is has been uniquely designed to compatible with various disposable parts, allowing for flexible customization of tubing and oxygenators, which simplifies purchasing and inventory management.
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The INSPIRA ART100 has received FDA 510(k) regulatory clearance for use in an extracorporeal perfusion circuit to pump blood during short-duration cardiopulmonary bypass procedures lasting 6 hours or less.
In April 2024, we announced a program to explore the applicable use of the INSPIRA ART100 for an artificial womb for neonates in need of respiratory support.
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In April 2024, we announced that we had signed a collaboration term sheet with Beilinson Hospital for the evaluation of the INSPIRA ART100, under which Beilinson Hospital would provide us with access to the internally logged data and diagnostics from the use of it.
In January 2025, we announced that we were preparing for a potential ramp-up of the INSPIRA ART100 in light of the outbreak of human metapneumovirus in China.
In January 2025, we further announced that we had modified the INSPIRA ART100 to integrate a given hospital’s established procedures and safety practices and to include system-activated alarm troubleshooting uniquely designed to provide valuable direction when time is of the essence and user anxiety is running high. We also integrated a prominent screen with advanced software that displays information in an accessible and visible manner during complicated and challenging care situations.
In March 2025, we announced that we have successfully completed the installation, training program and operational readiness for its INSPIRA ART100 system for cardiopulmonary bypass procedures at one of New York’s premier hospitals.
In April 2025, we announced the successful completion of the first human treatment using our ART100 system in a critical life-support procedure. The procedure was successfully performed by expert physicians at Westchester Medical Center in New York State, marking the first real-world implementation of our innovative technology. During the life-support procedure, the INSPIRA ART100 effectively provided comprehensive heart and lung support by oxygenating and circulating the patient’s blood. Following the procedure, the patient was safely transitioned off the system, demonstrating its effective support.
In May 2025, we announced that ART100 has been approved by Israel’s largest healthcare provider to undergo a clinical validation by leading physicians who intend to use the innovative life-support and diagnostic device during organ transplant procedures. As part of this advancement, we deployed ART100 system at one of Israel’s renowned medical centers affiliated with the largest health care provider. Additionally, in May 2025, we announced a strategic shift to accelerate the commercialization of ART100 system, while maintaining the development and regulatory pathways of our portfolio of products.
In June 2025, we announced that we have scaled-up our production capabilities for ART100 system, in response to expected demand from a European governmental authority with which we were in advanced-stage procurement negotiations. Additionally, in June 2025, we announced that the ART100 system has been successfully integrated into real-world clinical workflows at leading tier-one U.S. hospitals over the past several months.
In September 2025, we announced that a top U.S. hospital, has expanded its clinical use of the INSPIRA™ ART100 system to lung transplantation procedures, one of the most demanding applications in advanced respiratory care.
In January 2026, we announced that the ART100 system has completed its full clinical evaluation and advanced to a budgeted procurement execution process at a leading U.S. academic medical center. The ART100 became our first system at this institution to complete a clinical evaluation and to transition from pilot use to standard clinical workflow, following the successful treatment of approximately 30 patients across multiple medical indications: life-saving procedures, surgeries and transplants. Based on consistent clinical performance and repeat utilization by medical staff, the ART100 systems have now been incorporated into that medical center’s routine workflow, with no remaining open clinical evaluation phase.
In February 2026, we announced that we secured official vendor approval from Clalit Health Services, the world's second-largest Health Maintenance Organization, enabling the immediate procurement and deployment of its INSPIRA ART100 medical system across Clalit's extensive network of hospitals and clinics.
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HYLA Blood Sensor
The HYLA is being designed to continuously test and monitor blood and key parameters, including for oxygen deficiencies in real-time without the need to take intermittent blood draws. The HYLA is designed to perform real-time analysis of blood gases for patients undergoing medical procedures or requiring more frequent patient monitoring. The HYLA is designed to enable the measurement and tracking of blood oxygen levels and other key indicators that may reflect sudden changes in medical conditions.
The HYLA was tested as part of the development strategy in a clinical evaluation study in a group of six patients undergoing open-heart procedures at Sheba Hospital in Israel. The HYLA is designed to measure and accumulate thousands of sampled blood parameter measurements during medical procedures, with the data being simultaneously validated against other types of blood tests and equipment currently in use.
The HYLA may expand our market offering across critical care applications and multiple market segments, designed for both integration and standalone use. The product is being developed as an integrated component of the INSPIRA ART100 and INSPIRA ART systems.
In developing the blood sensor line, we use in-house lab testing as well as hospital collaborations for the purpose of clinical research and development. This approach has enabled us to define the blood sensor’s disposable materials and methods. We also plan to offer a standalone version of the HYLA blood sensor.
In February 2025, we announced that we had integrated the new oxygenation indicator into the HYLA, designed to enable the continuous monitoring of tissue oxygenation and early hypoxia detection.
In September 2025, we presented HYLA blood sensor to the global medical community for the first time at the U.S. ELSO Annual Conference in Washington, D.C.
In November 2025, we announced the completion of the clinical study for HYLA toward regulatory submission and future commercialization. Based on the clinical trial results and ongoing lab tests, showing between 95% to 99% accuracy across measured parameters, we are soon entering the final validation and verification stage ahead of planned regulatory submission.
In February 2026, we announced the successful validation in our advanced blood labs of HYLA. In advanced bench testing, the system demonstrated 94.2% accuracy for the continuous optical measurement of Partial Pressure of Carbon Dioxide (pCO₂), a performance level that aligns with clinical needs.
VORTX Orbiting Blood Oxygenation Delivery System
The VORTX represents a groundbreaking advancement in blood oxygenation technology, having received the first U.S. patent approval for an orbiting blood oxygenation delivery system. This innovation is comprised of 16 claims found to be novel. The VORTX technology is designed to enrich small volumes of blood with oxygen while simultaneously removing carbon dioxide, achieving saturation levels of 95% or higher.
The VORTX aims to oxygenate blood without fiber membranes that exist in current blood oxygenators, known to cause harmful turbulence, friction, and sheer forces, which result in significant damage to blood components and cells. Unlike the natural laminar blood flow in blood vessels inside the body, in existing fiber oxygenators, the blood is “forced” to flow in a harmful turbulent flow through many layers of fibers while experiencing friction and sheer forces with the fiber walls. Additionally, since the fiber fabric is a significant resistor to blood flow, high-pressure differences between the oxygenator inlet and outlet are formed, resulting in significant damage to the various blood components, including, high hemolysis (the breakdown of red cells), damage to white blood cells, activation of the inflammatory system in the body, activation of the immune system, and blood clotting. In September 2024, we received an additional U.S. patent allowance for the VORTX. In January 2025, we unveiled the modular configuration for the VORTX.
In April 2025, we announced that the in-vivo testing of VORTX achieved above 99% gas exchange target at a defined flow rate.
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| ● | Dual Lumen Cannula |
The proprietary dual lumen cannula design is subject to a patent comprised of 16 novel and unique claims, offering a novel approach to intravascular access and manipulation. The key innovation lies in the cannula’s ability to intravascularly convert from a single-lumen to a dual-lumen configuration after initial insertion, all through the same incision point. This design eliminates the traditional need for multiple incisions when changing or adding cannulas, potentially reducing patient risk, complications and infection points.
Our cannula has numerous proprietary characteristics that makes it superior in comparison to existing commercial cannulas, such as small diameter 16-21Fr (depending on flow rate required) that allows the lumen to be injected directly into a patient’s jugular vein while the patient is awake and breathing spontaneously, short length that eliminates the need for positioning that requires fluoroscopy or other imaging and simplicity of cannulation and application. The cannula has the potential to as an essential tool in a wide range of medical settings a dual-lumen cannula is often used for the simultaneous venous drainage and reinfusion of blood during processes such as ECMO in ICUs. The cannula device may potentially allow for fast action and reduced risk, complications and additional infection points.
Disposables
We are also progressing in our plan to launch single-use disposables to be used during the blood oxygenation procedure, currently in development, for our INSPIRA ART system, with the design potentially suitable for use with the INSPIRA ART100. The disposables are intended to be compatible with various other life support machines, tapping into the disposable perfusion systems market. The disposables, anticipated to be submitted to the FDA for marketing clearance in 2026 for the disposable blood flow technology and in 2027 for the disposable blood oxygenation technology, are a single-use product designed to be used for efficient blood circulation, blood oxygenation and carbon dioxide removal. The disposables have the potential to become a recurring revenue model. We are focusing on making the disposables compatible with other medical devices such as certain types of cardio-pulmonary bypass machines.
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Liquid Biopsy Diagnostics
In January 2026, we outlined our strategic vision and proposed transaction framework for our planned expansion into liquid biopsy diagnostics, outlining a structured approach designed to preserve shareholder value while enabling future dividend distributions from our core respiratory and life-support technologies. This framework underpins a proposed acquisition of the Target, an advanced liquid biopsy platform alongside a concurrent equity investment. For more information on the proposed acquisition, see 5.A “Operating and Financial Review and Prospects.” In March 2026, we announced that we chose not to complete the proposed acquisition of the Target.
New Subsidiary
In March 2026, we announced the establishment of a wholly owned subsidiary as part of our corporate structure. We intend to transfer our existing medical business activities into the newly formed subsidiary.
Clinical Studies and Expected Regulatory Strategy
Our regulatory strategy is to submit certain key technologies and key components for 510(k) pathway clearance based on the assumption that we do not currently expect to require human trials for FDA clearance. This strategy both provides verification and validation testing as well as anticipated FDA clearance of key elements that may be integrated as important technologies in our INSPIR ART system, or other product candidates. Taking this approach is expected to potentially reduce risk certain factors in the planned pivotal clinical studies for the INSPIRA ART system with a view to submitting an application for regulatory clearance from the FDA Approval through an expected PMA or De Novo regulatory pathway.
In January 2022, we listed a component of our INSPIRA ART and INSPIRA ART100 systems on the FDA Class I 510(k) exempt list. The component is intended to reduce the potential complications associated with jugular vein cannula movement, occurring during a change of a patient’s posture in bed and/or during transportation.
In March 2023, we announced the first in-human study of a patient undergoing open-heart surgery in the HYLA research clinical study at Sheba Medical Center in Israel. The HYLA research clinical study is a first in-human study designed to compare parameters measured by the non-invasive HYLA sensor to a standard blood gas analyzer that requires blood draw from the patient. Continued data collection will further support the final product design and part of the development process.
In July 2023, we announced that we received International Organization for Standardization, or ISO, 13485:2016 Standard Certification, which is the international standard for quality management systems within the medical device industry, and a requirement for EU regulatory approval. The ISO certification encompasses key aspects, including design, development, manufacturing, distribution and sales of extracorporeal and blood monitoring devices and respiratory care devices.
In May 2024, we received 510(k) class II regulatory clearance from the FDA for the INSPIRA ART100 system. The INSPIRA ART100 System is FDA 510(k)-cleared for use in an extracorporeal perfusion circuit to pump blood during short-duration cardiopulmonary bypass procedures lasting 6 hours or less. The system has been deployed to the U.S. as part of a clinical evaluation agreement through our distributor, Glo-Med.
In September 2025, we announced pivotal results for HYLA blood sensor, achieving 97.35% accuracy in its latest performance testing phase. These results represent a significant advancement from the initial data obtained in a clinical study, as announced in March 2025.
In November 2025, we announced that we have completed the regulatory submission of ART100 system to the United Arab Emirates Ministry of Health and Prevention. As of March 25, 2026, we have been made aware that the submission by our representative in the United Arab Emirates failed to be delivered, and we are awaiting new submission process to be submitted in the upcoming weeks.
Milestones Achieved in 2025 and early 2026 include:
| ● | INSPIRA ART100 - First in-patient use in a hospital in the U.S. |
| ● | INSPIRA ART 100 - First reported revenue. | |
| ● | INSPIRA ART –patent grant for blood flow technology |
| ● | We showcased our technology at Arab Health 2025 in Dubai in January 2025. |
While we intend to execute strategic distribution agreements, there is no guarantee any sales will occur pursuant to those existing agreements, and agreements that may be executed in the future. The pre-conditional distribution agreements are for a period of up to seven years and subject to completion of development, and the required regulatory approvals or clearances.
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Targeted Milestones (2026-2027):
We are targeting strategic collaborations with leading hospitals and medical device companies as part of the company’s business strategy to develop the market with the INSPIRA ART100, HYLA Blood Sensor and INSPIRA ART Disposables (Kits compatible with the INSPIRA ART100) in preparation of the INSPIRA ART system being targeting to replace the need for mechanical ventilators.
| ● | HYLA stand alone device - planned FDA submission for regulatory clearance (second half of 2026) |
| ● | INSPIRA ART100 - Additional U.S. hospital deployments (first half of 2026) |
| ● | INSPIRA ART - blood flow disposable - planned FDA submission for clearance (second half of 2026). |
INSPIRA ART - Market Opportunity
Approximately 20 million patients annually are admitted to ICUs, requiring acute respiratory care. The respiratory care devices market size is expected to reach $16.09 billion in 2029. The major factors influencing this growth include the high prevalence of respiratory diseases, the rapid growth of the aging population, the high prevalence of smoking, rising urbanization and pollution levels, the increasing incidence of pre-term births and lifestyle changes.
Go To Market Strategy
Our go-to-market strategy is based upon providing affordable products, based on a razor-blade business model based on disposables and software licensing to maximize our market reach while enhancing affordability and accessibility to medical care worldwide. We focus on this effort comprehensively, understanding a multidisciplinary marketing and business approach is necessary to achieve our goals.
Our go-to-market strategy includes, but is not limited to:
| ● | Pursuing world-wide regulatory approvals: we plan to pursue regulatory approvals in North America, Europe, Asia, Central America, South America, and Africa. | |
| ● | Collaborating with leading medical centers and health organizations: we are working with leading medical centers and health organizations as part of our strategy toward reaching regional deployment of our products. This also includes collaborations with top ranked hospitals to expose our INSPIRA ART systems to physicians and the healthcare industry. | |
| ● | Identifying potential customer profiles: we will be targeting leading medical centers, group purchasing organizations and medical device companies with a need for updated or revolutionary life support solutions. We believe that due to many recalls within the perfusionist market, and a lack of innovation in the sector, we are identifying potential customers searching for a different experience and result. | |
| ● | Strategic partners: we have entered into agreements with medical device companies, manufacturers, distributors. We intend to target similar agreements with distributors in additional territories across the globe, including the U.S., Europe, and Asia. |
| ● | Investing in marketing and public relations to increase awareness of our solution: in order to drive market demand for the INSPIRA ART, we are introducing the INSPIRA ART100, to be followed by disposables and the HYLA Blood Sensor (also to be integrated with the INSPIRA ART100). We hope to introduce the industry, as we have in conferences such as the 2025 Annual Extracorporeal Life Support Organization conference, to the caliber of technology and devices that we plan to offer. To date, the INSPIRA ART 100 system has received FDA 510(k) clearance and the INSPIRA ART system is currently in development. The INSPITA ART has not been used or tested in humans. | |
| ● | Garnering appropriate reimbursement and insurance coverage: it is paramount for us to receive reimbursement and insurance coverage to enable hospitals and medical centers to provide treatment utilizing our products. With intensive care becoming increasingly expensive, the INSPIRA ART may provide treatment at significantly reduced cost and without compromising quality of care to patients. We are working on a health economics model as part of the reimbursement strategy. Our goal is to publish medical literature to provide the Centers for Medicare and Medicaid Services actual data, presented by us together with top-ranking hospitals. |
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Working on Collaborations
In December 2022, we entered into an exclusive OEM agreement with Terumo Cardiovascular. The agreement provides for the manufacture of a disposable flow mechanism that may be distributed with our INSPIRA ART systems.
In addition, in November 2023, we entered into a collaboration agreement with Ennocure, a pioneer in the development of bioelectronic wound dressing, for the development of a proprietary bio-electronic treatment to prevent associated bloodstream infections in ICU patients. The aim of the collaboration is to research the prevention of growth of bacteria that often results from cannula insertion and is associated with bloodstream infection (sepsis). Once developed, we plan to combine the bio-electronic novel physical stimulation technology, as a preemptive measure for potentially at-risk patients, providing a cost-competitive solution to reduce complications. It is estimated that 250,000 bloodstream infections related to intravenous lines occur worldwide each year, leading to prolonged hospital stays and increasing healthcare costs. In April 2024, we announced positive results from our collaborative development which showed a 75% reduction in bacterial growth four hours after the application of the treatment and a 100% reduction within 24 hours. The in vitro study was carried out at the Hebrew University of Jerusalem and involved testing bioelectric patches in an in vitro environment. As part of the in vitro study, bacteria were cultured and spread on agar in petri dishes. The bioelectric patch was then applied to the agar plate and activated for a pre-specified duration. Following the procedure, the agar plates were transferred to an incubation chamber for 24 hours and thereafter examined.
In January 2025, we announced our collaboration with Zriha Medical Ltd to establish a dedicated production line for a crucial component of our innovative respiratory support system.
In October 2025, we announced a strategic collaboration with Bites Learning Ltd., or Bites, a leader in AI-based digital training and performance enablement solutions. Through this collaboration, Bites’ advanced AI-powered learning and guidance platform was to be embedded as a built-in standard across our ecosystem, including future versions of the ART100 cardiopulmonary support system and the HYLA real-time blood sensor. In January 2026, we elected not to proceed with this collaboration.
Working to Establish Distribution Partners Around the World
We seek to enter into strategic distribution agreements internationally to collaborate with local distribution networks to form a platform for implementation of our go-to-market strategy. Distribution companies with which we have already entered into such agreements include Innovimed (covering all European countries), Bepex, WAAS Group (covering Spain and Portugal), Glo-Med (covering Texas, New Jersey, New York, Florida, North Carolina, South Carolina and Gulf States) and CIO MED GROUP (covering Central America). The agreements are for a period of three to seven years and are conditional on the completion of product development and receipt of regulatory approvals.
While we intend to execute strategic distribution agreements, there is no guarantee any sales will occur pursuant to those existing agreements, and agreements that may be executed in the future. The pre-conditional distribution agreements are for a period of up to seven years and subject to completion of development, and the required regulatory approvals or clearances.
In October 2021, we entered into an exclusive distribution agreement with WAAS Group, one of Spain’s leading distributors and technical service providers of medical equipment and supplies. According to the agreement, WAAS Group is committed to purchase a minimum of 1,040 INSPIRA ART systems and 35,360 disposable units for deployment at hospitals and medical centers within a seven-year period, subject to regulatory approval for the sale and marketing of the INSPIRA ART systems in Spain and Portugal.
In December 2021, we entered into an exclusive summary distribution agreement with Innovimed, a master distributor specializing in state-of-the-art medical solutions in Eastern Europe, Middle East and Africa. The agreement has an initial term of 7 years, subject to completion of product development and regulatory approval. The parties will collaborate on the marketing and deployment of the INSPIRA ART system. In order to maintain exclusivity in the territory, Innovimed has committed to purchase minimum orders of 1,552 INSPIRA ART systems and 59,040 disposable units for deployment at hospitals and medical centers, subject to regulatory approvals for the sale and marketing of the INSPIRA ART systems in Poland, Czech Republic and Slovakia. In August 2023, we entered into an agreement expansion with Innovimed to collaborate towards clinical trials for Inspira ART respiratory systems, which covers any European country.
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In January 2022, we entered into an exclusive summary distribution agreement with Glo-Med, a U.S company that aims to meet the continuously growing demand for innovative medical devices and related products, for distribution across six states in the U.S. (Texas, New Jersey, New York, Florida, North Carolina, and South Carolina). The summary distribution agreement will be followed by a more comprehensive agreement. The agreement entered with Glo-Med has an initial term of seven years, subject to the completion of product development and relevant regulatory approval. The parties will collaborate on the marketing and deployment of the INSPIRA ART. Pursuant to the agreement, and in order to maintain exclusivity in the territory, Glo-Med has committed to purchase a minimum order of 2,121 INSPIRA ART systems and 131,413 disposable units for deployment at hospitals and medical centers over a period of seven years, subject to regulatory approvals for the sale and marketing of the INSPIRA ART systems in the six states in the U.S. Pursuant to the agreement with Glo-med, Inspira shipped five systems to hospitals in the U.S., including a cardiothoracic surgery division at a leading hospital in New York.
In April 2022, we entered into a summary distribution agreement with Bepex that includes the potential future deployment of our INSPIRA ART systems, designed to prevent the need for invasive mechanical ventilation. Bepex is a leading Israeli medical technology company that imports, markets and services medical equipment for global medical device companies such as Hamilton (mechanical ventilators) and LivaNova (ECMO systems). As part of the collaboration with Bepex, the first systems are slated for deployment at the largest medical centers in Israel. The summary distribution agreement with Bepex is expected to be followed by a more comprehensive agreement. The agreement has an initial term of seven years, subject to the completion of product development and relevant regulatory approvals.
In July 2022, we entered into an exclusive summary distribution agreement with Glo-Med, for the distribution of the HYLA blood sensor device and disposable units across six states in the U.S. (Texas, New Jersey, New York, Florida, North Carlina and South Carolina). The summary distribution agreement will be followed by a more comprehensive agreement. The agreement has an initial term of three years, subject to completion of product development and regulatory approvals. The parties will collaborate on the marketing and deployment of the HYLA blood sensor. Pursuant to the agreement, and in order to maintain exclusivity in the territory, Glo-Med has committed to purchase a minimum order of 3,889 HYLA blood sensors and 264,873 disposable units for deployment at hospitals and medical centers, subject to regulatory approvals for the sale and marketing of the HYLA blood sensor device in the six states within the U.S.
In November 2022, we entered into an exclusive summary distribution agreement for the HYLA blood sensor with Innovimed. The summary distribution agreement would be followed by a more comprehensive definitive agreement. The agreement has an initial term of five years, subject to the completion of product development and the receipt of regulatory approvals. The parties will collaborate on the marketing and deployment of the HYLA blood sensor. In order to maintain exclusivity in the territory, Innovimed has committed to purchase a minimum order of 1,364 HYLA blood sensors and 128,511 disposable units for deployment in hospital units and operating theaters in Poland, Czech Republic and Slovakia.
In October 2023, we entered into an exclusive summary distribution agreement for the INSPIRA ART systems and disposable kits with CIO MED GROUP in Central America. The Agreement to potentially generate $28 million, mainly in recurring revenues from disposable kits over five years, subject to the receipt of regulatory approval. In addition to the INSPIRA ART100 system intended for patients undergoing CPB procedures, the Agreement also includes both the flagship INSPIRA ART systems and HYLA Blood Sensor Technology, as well as disposable kits to be used with these Inspira Technologies devices in the procedures.
In January 2024, we entered into a summary distribution agreement to enter Gulf States with Glo-Med for deployment of 531 INSPIRA ART systems. The agreement will potentially provide Inspira Technologies with $32.6 million over a 5-year period, subject to regulatory approvals. Under such Agreement, Glo-Med shall be designated as the Company’s distributor in Saudi Arabia, United Arab Emirates and Bahrain. We believe that Saudi Arabia’s dual strategy to invest $65 billion and further privatize its healthcare sector, or Vision 2030, signals that the Territory is a burgeoning market for medical innovation. The summary distribution agreement will be followed by a more comprehensive agreement. Under the Agreement, Glo-Med shall undertake the role of Territory wholesale distributor, involving the promotion, marketing and sale of the INSPIRA ART system, the INSPIRA ART system Disposable Kit, the INSPIRA ART100 System and the INSPIRA ART100 Disposable Kit, to approved customers in the Territory. Glo-Med shall be the exclusive Territory distributor provided that it meets the minimum purchase targets amounting to 531 INSPIRA ART systems and 8,794 disposable units from when the relevant regulatory approvals for the devices in the Territory are granted.
In June 2024, we announced that we had received the first ever purchase order for five INSPIRA ART100 systems in the U.S. from Glo-Med, which included an option for the additional purchase of 20 units. In December 2024, we announced that the units were shipped and delivered in fulfillment of the purchase order.
In October 2024, we entered into a distribution agreement with Glo-Med to use its distribution facility as a support center for the deployment of the INSPIRA ART100 in the U.S.
In April 2025, we announced that we have received payment from Glo-Med for a delivery of our INSPIRA™ ART100 systems.
In July 2025, we announced that we have secured a binding $22.5 million purchase order for ART100 system, representing a major commercial inflection point for us. The order was placed by a privately held company headquartered outside the U.S., in a global strategic hub, with an established track record and active commercial ties to both government entities and institutional healthcare customers. Additionally, in July 2025, we announced that we were engaged in high-level talks with a government health authority, located outside of the U.S., which are intended to advance the national integration of ART100 system as a foundational component of the national emergency infrastructure and to establish a global distribution framework. In these high-level talks, we achieved all key strategic objectives.
In August 2025, we announced that a national ministry of health in Africa placed a $27 million binding purchase order for ART100 systems. The purchase order, secured through our exclusive distribution partner, dedicated solely to the commercialization of our products, initiates an immediate nationwide deployment program.
In December 2025 and January 2026, we clarified that we have advanced to the final budgetary validation and fund allocation stage within the relevant governmental authorities’ procurement processes under our $22.5 million purchaser order and $27 million purchase order. We further clarified that we expect payment and revenue recognition relating to these purchase orders during 2026 fiscal cycle, aligned with the completion of the governmental budgetary cycle and subsequent deployment milestones.
In February 2026, we announced the receipt of official approval from the Medical Equipment Committee of Clalit Health Services, or Clalit, which enables the ART100 system for immediate procurement and operational use across Clalit’s extensive medical ecosystem.
In February 2026, we also announced the deployment and initiation of a structured commercial evaluation of the ART100 system at a new and additional leading U.S. academic medical center.
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While we intend to execute on strategic distribution agreements, there is no guarantee any sales will occur pursuant to those existing agreements, and agreements that may be executed in the future. The pre-conditional distribution agreements are for a period of up to seven year and subject to completion of development, and the required regulatory approvals or clearances.
Third-Party Reimbursement
As of March 24, 2026, we do not have any third-party reimbursement agreements. We aim to use existing CPT Codes.
Intellectual Property
We seek patent protection as well as other effective intellectual property rights for our products and technologies in the U.S. and internationally. Our policy is to pursue, maintain and defend intellectual property rights developed internally and to protect the technology, inventions and improvements that are commercially important to the development of our business.
Our intellectual property portfolio consists of eight patent families that include: seven granted patents, five in the USA and one in Japan and Israel each; one patent application allowed in Israel; five International Patent Applications (PCT), four of which are exhausted, and thirteen pending patent applications that include five U.S. utility and one US provisional patent applications, two European patent applications and additional national phase filings (two in the Republic of Korea, one in Israel, one in Japan and one in Brazil). Our portfolio also includes the following registered trademarks: (i) ‘INSPIRA’ text and logo in Israel and International Trademark designated in Australia, EU, China and United Kingdom; (ii) ‘INSPIRA ART’ registered in Israel and ‘ART” registered via International Trademark designated in Australia, EU, United Kingdom and Russia; and (iii) our slogan ‘INSPIRA. BREATHING EMPOWERED.’ registered in the U.S. and Israel and International Trademark designated in the EU and United Kingdom.
Extracorporeal oxygenation system (Initiation Module)
A novel automated self-priming module designed for the INSPIRA ART system, this unique innovative operating module further expands the INSPIRA ART system advancement to potentially ensure patient safety with a proprietary built-in self-automated priming module aimed to ensure an emboli-free connection to the patient’s vascular system, thereby potentially reducing risks of the formation of clots that reduces blood flow. Further innovative concepts include a patient oxygenation low-flow system. Two U.S. patents have been granted: (i) U.S. 11,793,919, which consists of nine claims and (ii) U.S. 12,453,807, consisting of sixteen claims, all deemed novel with inventive merit and practical applicability.
A blood-gas exchange device and methods of use - Orbiting blood oxygenation delivery system (VORTX)
This innovation has been granted U.S. Patent No. 11,938,257 with 16 claims found to be novel and is designed to oxygenate blood without fiber membranes, and we believe it is expected to revolutionize the medical landscape. The current fiber technologies used for blood oxygenation cause substantial damage to the patient’s blood cells. Unlike the natural laminar blood flow in blood vessels inside the body, in existing fiber oxygenators, the blood is “forced” to flow in a harmful turbulent flow through many layers of fibers while experiencing friction and shear forces within the fiber walls. Since the fiber fabric is a significant resistor to blood flow, high-pressure differences are formed and cause significant damage to the various blood components, including, high hemolysis, damage to white blood cells, activation of the inflammatory system in the body, activation of the immune system, and blood clotting.
Dual lumen cannula and methods of use
This innovative concept was granted patents in the U.S. (U.S. 11,541,159) and Japan (JP 7777598). and a patent application was recently allowed in Israel. Inspira’s convertible dual lumen cannula device uniquely intravascularly converts a single-lumen cannula into a dual lumen cannula after initial insertion, thus allowing for the same incision point to potentially have multiple uses. The convertible dual lumen cannula is designed to allow for switching from a single lumen to a dual lumen cannula, and vice versa, without the need for new incisions required when changing or adding additional cannulas. Inspira’s convertible dual lumen is designed to potentially allow for fast action and reduced risk, complications and additional infection points.
Cannula fixation device
The component is intended to reduce the potential complications associated with jugular vein cannula movement, occurring during a change of a patient’s posture in bed and/or during transportation. The component can also be potentially utilized in the treatment of thousands of patients being treated each year by through ECMO. This component is expected to allow the medical staff a safer mobilization for the awake cannulated patients within and between hospitals and medical centers. A patent was granted in Israel for this device.
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The following table comprises our technology patents:
| Application; Publication No. | Title | Effective Filing Date |
Status | |||
| IL 286271 | A Cannula Fixation Device | 10 Sep 2021 | GRANTED | |||
| PCT/IL2022/050902 | A Cannula Fixation Device | 18 Aug 2022 | EXHAUSTED | |||
| EP 22856981.0; 4185347 | A Cannula Fixation Device | 18 Aug 2022 | PENDING | |||
| US 17/931,134 | A Cannula Fixation Device | 11 Sep 2022 | PENDING | |||
| EP 21891360.6; 4199990 | Dual Lumen Cannula and Methods of Use | 10 Nov 2021 | PENDING | |||
| IL 302851 | Dual Lumen Cannula and Methods of Use | 10 Nov 2021 | ALLOWED | |||
| JP Patent No. 7777598 | Dual Lumen Cannula and Methods of Use | 10 Nov 2021 | GRANTED | |||
| KR 10-2023-7019401; 20230107622 | Dual Lumen Cannula and Methods of Use | 10 Nov 2021 | PENDING | |||
| US Pat. No. 11,541,159 | Dual Lumen Cannula and Methods of Use | 10 Nov 2021 | GRANTED | |||
| US 18/062,610; 2023/0095678 | Transformable Dual Lumen Cannula into a Single Lumen Cannula and Methods of Use | 10 Nov 2021 | PENDING | |||
| BR 112023010627-3 | Extracorporeal Oxygenation System for Low Flow Rates and Methods of Use | 1 Dec 2021 | PENDING | |||
| EP 21900219.3; 4228717 | Extracorporeal Oxygenation System for Low Flow Rates and Methods of Use | 1 Dec 2021 | PENDING | |||
| IL 303362 | Extracorporeal Oxygenation System for Low Flow Rates and Methods of Use | 1 Dec 2021 | PENDING | |||
| JP 2023533325; 2023552754 | Extracorporeal Oxygenation System for Low Flow Rates and Methods of Use | 1 Dec 2021 | PENDING | |||
| KR 10-2023-7022195; 20230118594 | Extracorporeal Oxygenation System for Low Flow Rates and Methods of Use | 1 Dec 2021 | PENDING | |||
| US Pat. No. 11,793,919 | Extracorporeal Oxygenation System for Low Flow Rates and Methods of Use | 1 Dec 2021 | GRANTED | |||
| US Pat. No. 12,453,807 | Extracorporeal Oxygenation System for Low Flow Rates and Methods of Use | 1 Dec 2021 | GRANTED | |||
| US Pat. No. 11,938,257 (18/235,515) | A Blood-Gas Exchange Device and Methods of Use | 18 Aug 2023 | GRANTED | |||
| US 18/896,656 | A Blood-Gas Exchange Device and Methods of Use | 18 Aug 2023 | PENDING | |||
| US 18/434,809 | Automated Monitoring of Extracorporeal Support Patient Care and Interactive User Interface Therefor | 7 Jan 2024 | PENDING | |||
| US Pat. No. 12,324,877 | A Blood-Gas Exchange Device and Methods of Use | 19 Jun 2024 | GRANTED | |||
| US Provisional 63/888/266 | SENSOR DEVICE FOR EXTRACORPOREAL TUBING | 26 Sep 2025 | FILED | |||
| PCT/IB2025/058472 Published WO 2026/042046 | REDUCING THE INCIDENCE OF INFECTIONS ASSOCIATED WITH TRANSDERMAL INSERTION SITES | 22 Aug 2025 | PENDING |
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We also rely on trade secrets, know-how, and continuing innovation to develop and maintain our competitive position. We cannot be certain that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents granted to us in the future will be commercially useful in protecting our technology.
Our success depends, in part, on an intellectual property portfolio that supports future revenue streams and erects barriers to our competitors. We are maintaining and building our patent portfolio through filing new patent applications, prosecuting existing applications, and licensing and acquiring new patents and patent applications.
Despite these measures, any of our intellectual property and proprietary rights could be challenged, invalidated, circumvented, infringed or misappropriated. Intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive one. For more information, see “Item 3.D. - Risk Factors-Risks Related to our Intellectual Property.”
Research and Development and Governmental Grants
We maintain an active internal research and development process, which also includes clinical activities and regulatory affairs. Our research and development team consists of 30 people as of December 31, 2025. We incurred approximately $7.5 million and $6.4 million in research and development and related expenses during the years ended December 31, 2025 and 2024, respectively. The decrease in research and development expenses is primarily attributable to decreases in salary and related expenses and IIA grant participation that was deducted from development expenses.
Our research and development efforts have been financed in part through grants in an aggregate amount of approximately $1,194,000 that we received from the IIA as of December 31, 2025. We received these grants for the development of a blood oxygenation system with the goal of providing life support through direct blood oxygenation and elevation of the oxygen saturation level while removing carbon dioxide. These grants have no repayment obligation, however, once we reach commercialization stage, we will be required to pay royalties for each grant at a rate of 3% of our revenues up to the total amount of grants received plus interest. Following the full payment of such royalties, there is no further liability for royalty payment. Nonetheless, the restrictions under the Innovation Law will continue to apply even after our company has repaid the full amount of royalty payable pursuant to the grants.
Production and Manufacturing Activities
Our INSPIRA ART and INSPIRA ART100 systems are comprised of a number of components. We are planning to sell an assembled product (system) as well as a disposable unit to be used per patient treatment for both the blood oxygenation and blood monitoring. The components of the assembled product and the disposable unit consist of both proprietary and off the shelf components. Proprietary components will be manufactured on our behalf at GMP approved production plant to adhere to regulatory requirements, whereas off the shelf components will be sourced by Inspira team. GMP sub-contractors will assemble proprietary and off the shelf components together to create our INSPIRA ART and or INSPIRA ART100 systems.
In December 2022, we entered into a strategic OEM agreement with Terumo Cardiovascular. The agreement provides for the manufacture of a flow mechanism that is intended to be integrated into our products for use in the extracorporeal circulation of the blood during the oxygenation process. This may also include integration into the INSPIRA ART and or INSPIRA ART100 systems.
In addition, we have entered into discussions relating to additional contracted manufacturing and distribution agreements with leading turnkey OEM vendors that provide end-to-end solutions. The outsourcing of the supply chain management, such as manufacturing, logistics, shipping and after-market support, reduces capital expenditure, lead times and costs, while providing us with flexibility and agility.
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In December 2022, we announced that our INSPIRA ART100 system is being contract manufactured by an end-to-end solution provider that offers New Product Introduction, NPI, services to mass production capabilities for leading medical electronic device companies. This includes full turn-key manufacturing, full system integration, including Printed Circuit Board, or PCB, manufacturing, assembly services, testing and packaging in facilities that meet GMP compliance. The INSPIRA ART100 system underwent verification and validation prior to its submission to the FDA. Having received FDA clearance, the INSPIRA ART100 system production line will be extended for low-rate initial production, which is an important operational stage in developing infrastructure to support serial manufacturing, quality control and shipping. Additional units are expected to be assembled for the targeted future first deployments of the INSPIRA ART100 systems in the U.S. and Israel.
Competition
The medical device industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. There are many medical device companies, biotechnology companies, public and private universities and research organizations actively engaged in the research and development of products that may be similar to our products.
The market participants in the ICU and the acute respiratory care space include Boston Scientific Corporation (NYSE: BSX), ResMed Inc., (NYSE: RMD), Masimo Corporation (Nasdaq: MASI), Becton, Dickinson and Company (NYSE: BDX), Chart Industries, Inc. (Nasdaq: GTLS), Philips Healthcare, Medtronic plc (NYSE: MDT), Fisher & Paykel Healthcare Corporation Limited, Drägerwerk AG & Co. KGaA, Drägerwerk AG, Hamilton Medical AG, Smiths Medical Inc. (acquired by ICU Medical Inc.), Siemens Healthineers AG ADR (Nasdaq: SMMNY), Baxter International (NYSE: BAX), Getinge AB (OTCMKTS: GNGBY), GE Healthcare, Terumo Corporation (TYO: 4543, Nikkei 225 Component), LivaNova PLC (Nasdaq: LIVN), Fresenius SE & Co. KGaA (OTCMKTS: FSNUY), Johnson & Johnson (NYSE: JNJ), Zoll Medical Corporation (TYO: 3407 ), Resuscitec GmbH, Spectrum Medical Limited, Abiomed, Inc. (Nasdaq: ABMD), Abbott Laboratories (NYSE: ABT), DataMed s.r.l, Chalice Medical Ltd., APMTD Global Limited, Eurosets s.r.l. and Braile Biomedica. These companies have either developed or acquired respiratory care devices and solutions, such as ventilators, ECMO devices and blood sensors.
The aforementioned companies have substantially greater brand recognition, R&D, and regulatory capabilities and financial, technical, manufacturing, marketing and human resources than we do and significantly greater experience and infrastructure in the research and development of medical devices, obtaining the FDA and other regulatory clearances of those devices and commercializing those devices around the world.
Government Regulation and Product Approval
Our products and our operations are subject to regulation by numerous worldwide regulatory bodies including the FDA and comparable international regulatory agencies.
Our products are subject to regulation as medical devices under the FDCA, as implemented and enforced by the FDA. The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, import, export, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.
In addition to U.S. regulations, we are subject to a variety of regulations in the EEA, governing clinical trials and the commercial sales and distribution of our products. Whether or not we have or are required to obtain FDA clearance or approval for a product, we will be required to obtain authorization before commencing clinical trials and to obtain marketing authorization or approval of our products under the comparable regulatory authorities of countries outside of the U.S. before we can commence clinical trials or commercialize our products in those countries. The approval process varies from country to country and the time may be longer or shorter than that required for FDA clearance or approval. Medical devices are generally subject to varying levels of regulatory control based on risk level of the device.
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FDA Premarket Clearance and Approval Requirements
Unless an exemption applies, each medical device commercially distributed in the U.S. requires FDA clearance of a 510(k) premarket notification, granting of a de novo request, or approval of an application for premarket approval, or PMA. Under the FDCA, medical devices are classified into one of three classes-Class I, Class II or Class III-depending on the degree of risk associated with each medical device and the extent of regulatory controls needed to ensure its safety and effectiveness. Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR, facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling. Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents. While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance.
The 510(k) Process
Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification demonstrating that the device is “substantially equivalent” to either a device that was legally marketed prior to May 28, 1976, the date upon which the Medical Device Amendments of 1976 were enacted, and for which PMA is not required, a device that has been reclassified from Class III to Class II or Class I, or another commercially available device that was cleared through the 510(k) process. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence.
After a 510(k) premarket notification is submitted, the FDA determines whether to accept it for substantive review. If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) notification. If it is accepted for filing, the FDA begins a substantive review. By statute, the FDA is required to complete its review of a 510(k) notification within 90 days of receiving the 510(k) notification. As a practical matter, clearance often takes longer, and clearance is never assured. Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process.
If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated under the FDCA as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements or can request a risk-based classification determination for the device in accordance with the de novo process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.
After a device receives 510(k) marketing clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, a de novo grant or PMA approval. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k) (or a PMA) in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination. Many minor modifications today are accomplished by a manufacturer documenting the change in an internal letter-to-file. The FDA can review these letters to file during an inspection. If the FDA disagrees with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified device until 510(k) clearance, de novo grant or PMA approval is obtained. In these circumstances, we may be subject to significant regulatory fines or penalties.
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De Novo Classification
Medical device types that the FDA has not previously classified as Class I, II or III are automatically classified under the FDCA into Class III regardless of the level of risk they pose. The Food and Drug Administration Modernization Act of 1997 established a route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure. This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application. Prior to the enactment of the Food and Drug Administration Safety and Innovation Act of 2012, or FDASIA, a medical device could be eligible for de novo classification only if the manufacturer first submitted a 510(k) premarket notification and received a determination from the FDA that the device was not substantially equivalent to a legally marketed predicate device. FDASIA streamlined the de novo classification pathway by permitting manufacturers to request de novo classification directly without first submitting a 510(k) premarket notification to the FDA and receiving a not substantially equivalent determination. Under FDASIA, the FDA is required to classify the device within 120 days following receipt of the de novo application. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. In addition, the FDA may reject the request if it identifies a legally marketed predicate device that would be appropriate for a 510(k) notification, determines that the device is not low to moderate risk, or that general controls would be inadequate to control the risks and special controls cannot be developed. After a device receives de novo classification, any modification that could significantly affect its safety or efficacy, or that would constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification, another de novo petition or even PMA approval.
Clinical Trials
Clinical trials are almost always required to support a PMA and are sometimes required to support a 510(k) submission. All clinical investigations of investigational devices to determine safety and effectiveness must be conducted in accordance with the FDA’s Investigational Device Exemption, or IDE, regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.
In addition, the study must be approved by, and conducted under the oversight of, an Institutional Review Board, or IRB. The IRB is responsible for the initial and continuing review of the study and may pose additional requirements for the conduct of the study. If an IDE application is allowed to go into effect by the FDA and the study approved by the reviewing IRB(s), human clinical trials may begin at a specific number of investigational sites with a specific number of subjects as set forth in the study protocol. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate review from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. Acceptance of an IDE application for review does not guarantee that the FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may not determine that the data derived from the trials support the safety and effectiveness of the device or warrant the continuation of clinical trials. An IDE supplement must be submitted to, and allowed to go into effect by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.
During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA regulations and must obtain patient informed consent, follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements. Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.
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Post-market Regulation
After a device is cleared or approved for marketing, numerous and extensive regulatory requirements may continue to apply. These include but are not limited to:
| ● | Annual and updated establishment registration and device listing with the FDA; |
| ● | QSR requirements, which require manufacturers to follow stringent design, testing, control, documentation, complaint handling and other quality assurance procedures during all aspects of the design and manufacturing process; |
| ● | Advertising and promotion requirements; |
| ● | Restrictions on sale, distribution or use of a device; |
| ● | Labeling and marketing regulations, which require that promotion is truthful, not misleading, and provides adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; |
| ● | The federal Physician Sunshine Act and various state and foreign laws on reporting remunerative relationships with health care customers; |
| ● | The federal Anti-Kickback Statute (and similar state laws) prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as Medicare or Medicaid. A person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; | |
| ● | The federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government. The government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statute; |
| ● | Clearance or approval of product modifications to legally marketed devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use; |
| ● | Medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; |
| ● | Correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; |
| ● | Complying with the federal law and regulations requiring Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; |
| ● | The FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations if there is a reasonable probability that the use of the device would cause a serious, adverse health consequence or death; and |
| ● | Post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device. |
The FDA has broad regulatory compliance and enforcement powers. If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:
| ● | Warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; |
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| ● | Recalls, withdrawals, or administrative detention or seizure of our products; |
| ● | Operating restrictions or partial suspension or total shutdown of production; |
| ● | Refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; |
| ● | Withdrawing 510(k) clearances or PMA approvals that have already been granted; |
| ● | Refusal to grant export or import approvals for our products; or |
| ● | Criminal prosecution. |
In the EU, we will be required to comply with the new Medical Device Regulation, or the MDR. The MDR was published in May 2017 with a 3-year transition period, which has been extended. The CE Mark required to sell medical devices in the EU is affixed following conformity assessment and either approval from the appointed independent Notified Body or through self-certification by the manufacturer for particular class I devices. The selected pathway to CE marking is based on product risk classification. CE Marking indicates conformity to the applicable General Safety and Performance Requirements for the MDR. The MDR change multiple aspects of the existing regulatory framework for CE marking, such as increased clinical evidence requirements and other new requirements, including Unique Device Identification as well as many other post-market obligations. MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment over the next few years to implement.
We are also required to comply with the regulations of every other country where we commercialize products before we can launch or maintain new products on the market. Many countries that previously did not have medical device regulations, or had minimal regulations, are now introducing them. For example, India is in the process of expanding its current regulations to include all medical device categories while many countries in the Middle East and Southeast Asia are introducing new regulations.
The FDA and other worldwide regulatory agencies and competent authorities actively monitor compliance to local laws and regulations through review and inspection of design and manufacturing practices, record-keeping, reporting of adverse events, labeling and promotional practices. The FDA can ban certain medical devices, detain or seize adulterated or misbranded medical devices, order repair, replacement or refund of these devices and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health. The FDA may also enjoin and restrain a company for certain violations of the FDCA and the Safe Medical Devices Act pertaining to medical devices or initiate action for criminal prosecution of such violations. Regulatory agencies and authorities in the countries where we do business can halt production in or distribution within their respective country or otherwise take action in accordance with local laws and regulations.
International sales of medical devices manufactured in the U.S. that are not approved by the FDA for use in the U.S., or that are banned or deviate from lawful performance standards, are subject to FDA export requirements. Additionally, exported devices are subject to the regulatory requirements of each country to which the device is exported. Some countries do not have medical device regulations, but in most foreign countries, medical devices are regulated. Frequently, regulatory approval may first be obtained in a foreign country prior to application in the U.S. due to differing regulatory requirements; however, other countries, such as China, for example, require approval in the country of origin first.
Most countries outside of the U.S. require that product approvals be recertified on a regular basis, generally every five years. The recertification process requires that we evaluate any device changes and any new regulations or standards relevant to the device and, where needed, conduct appropriate testing to document continued compliance. Where recertification applications are required, they must be approved in order to continue selling our products in those countries.
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Regulatory Clearances
In 2024, we received from the FDA 510(k) regulatory clearance for the INSPIRA ART100 system. We also received confirmation that the INSPIRA ART fixation device was placed on the FDA Class I 510(k) exempt list.
In 2024, we received AMAR certification for the INSPIRA ART100 system and for the INSPIRA ART.
Expected Regulatory Filings
To date, The INSPIRA ART has not been tested in humans and any future testing in humans will be subject to the request of the appropriate regulators, including the FDA.
The INSPIRA ART100 was approved for commercialization by the FDA for cardiopulmonary bypass procedures lasting less than 6 hours
We are taking a multi-step approach to the regulatory clearance process. In January 2022, we listed a component of the INSPIRA ART system and the INSPIRA ART100 system on the FDA Class I 510(k) exempt list. The component is intended to reduce the potential complications associated with jugular vein cannula movement, occurring during a change of a patient’s posture in bed and/or during transportation.
In 2026, we plan to apply for 510(k) regulatory clearance for the HYLA blood sensor and also apply for 510(k) regulatory clearance for our centrifugal pump.
As part of our strategy to bring our device to market and streamline reimbursement coding and clinical adoption of the INSPIRA ART system that offers a new intent of use, we will collaborate with top ranking hospitals to perform a human observational study focused on (pending approvals): (i) proving that the INSPIRA ART system can prevent patient deterioration resulting in the need for invasive mechanical ventilation; and (ii) assisting in weaning patients off mechanical ventilation.
| C. | Organizational Structure. |
We are an Israeli corporation based in Ra’anana, Israel and were incorporated in Israel in 2018 under the name Clearx Medical Ltd. On April 10, 2018, our name was changed to Insense Medical Ltd. and on July 30, 2020, our name was changed to our current name, Inspira Technologies Oxy B.H.N. Ltd. Our principal executive offices are located at 2 Ha-Tidhar St., Ra’anana, 4366504 Israel. Our telephone number in Israel is +972 996 644 88. Our website address is www.inspira-technologies.com. The information contained on our website or available through our website is not incorporated by reference into and should not be considered a part of this Annual Report, and the reference to our website in this Annual Report is an inactive textual reference only. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our filings with the SEC will also be available to the public through the SEC’s website at www.sec.gov.
Currently, we do not have any subsidiaries.
| D. | Property, Plant and Equipment. |
Our main business activities are conducted in Israel. Our offices, research and development and manufacturing facilities are located at Melisron (Millennium Building), 2 Ha-Tidhar St., Ra’anana 4366504, Israel, where we occupy approximately 670 square meters. Our lease ends in August 2027. Our monthly rent payment is approximately NIS 69,000 (approximately $20,000).
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
| A. | Operating Results. |
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this annual report on Form 20-F. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” elsewhere in this annual report on Form 20-F. Our discussion and analysis for the years ended December 31, 2024 and December 31, 2023 can be found in Item 5. “Operating and Financial Review and Prospects” of our Annual Report on Form 20-F for the fiscal year ended December 31, 2024, filed with the SEC on March 10, 2025.
Overview
Since our inception in 2018, we have incurred operating losses. Our operating loss for the years ended December 31, 2025 and 2024 were approximately $13.6 million and $11.3 million, respectively; and our net loss for the same periods were $13.2 million and $11 million. As of December 31, 2025, we had an accumulated deficit of $80 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future, and our losses may fluctuate significantly from year to year. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:
| ● | Continue clinical development of our products; | |
| ● | File new applications seeking regulatory approval for the products pursuant to FDA’s Section 510(K) or other regulatory pathway in the U.S.; | |
| ● | Continue to invest in the preclinical research and development of any future product candidates; |
| ● | Establish a commercial infrastructure to support the marketing, sale and distribution of the products if they receive regulatory approval; | |
| ● | Hire additional research and development and general and administrative personnel to support our operations; | |
| ● | Maintain, expand and protect our intellectual property portfolio; and | |
| ● | Continue to incur costs associated with operating as a public company. |
We have only one product candidate approved for sale while the other are still under development and we have not generated any significant revenue from product sales.
On July 16, 2021, we closed our IPO whereby we sold 2,909,091 Ordinary Shares and 3,345,455 tradable warrants (inclusive of 436,364 tradable warrants pursuant to the exercise of an overallotment option granted to the underwriters). The aggregate gross proceeds received by us from the IPO were $16 million, before underwriting discounts and other offering costs. Prior to our IPO, we financed our operations primarily through convertible debt, as well as grants from the IIA.
Current Outlook
We have financed our operations to date primarily through proceeds from sales of our Ordinary Shares, convertible notes and loans and from grants from the IIA. We have incurred losses and generated negative cash flows from operations since inception in 2018. Since inception, we have not generated significant revenues.
As of December 31, 2025, our cash and cash equivalents and cash deposits were $3.1 million.
We expect that our existing cash and cash equivalents as of December 31, 2025 will enable us to fund our operating expenses and capital expenditure requirements through the first quarter of 2026. We expect that we will require substantial additional capital to operate and to commercialize our products and we expect to seek additional funds to enable us to fund our operations for the next twelve months.
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Our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | the progress and costs of our research and development activities; | |
| ● | the costs of manufacturing our products; | |
| ● | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; | |
| ● | the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and | |
| ● | the magnitude of our general and administrative expenses. |
Liquidity or Going Concern
Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt and/or equity financings. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. This may raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to our product candidates.
Operating Expenses
Our current operating expenses consist of four components - cost of revenues, research and development expenses, general and administrative expenses and marketing expenses.
Revenues
To date, we have not generated any significant revenue.
Research and Development Expenses, net
Our research and development expenses consist primarily of salaries and related personnel expenses, share-based compensation expenses, materials costs consultants and other third parties who support the developments of our products and other related research and development expenses.
The following tables discloses the breakdown of research and development expenses:
| Year Ended December 31, | ||||||||||||
| U.S. dollars in thousands | 2025 | 2024 | Increase/Decrease | |||||||||
| Salary and related expenses | 4,461 | 4,079 | 382 | |||||||||
| Share-based compensation | 1,634 | 801 | 833 | |||||||||
| Materials and related expenses | 737 | 812 | (75 | ) | ||||||||
| Depreciation | 334 | 371 | (37 | ) | ||||||||
| Subcontractors | 150 | 340 | (190 | ) | ||||||||
| IIA participation | (100 | ) | (286 | ) | 1863 | |||||||
| Other | 280 | 206 | 74 | |||||||||
| Total | 7,496 | 6,323 | 1,173 | |||||||||
We expect that our research and development expenses will materially increase as we continue to develop our products and recruit additional research and development employees.
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General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related expenses, share based compensation, professional service fees for accounting and booking, legal fees, facilities, travel expenses and other general and administrative expenses.
The following tables discloses the breakdown of general and administrative expenses:
| Unaudited | Year Ended December 31, | |||||||||||
| U.S. dollars in thousands | 2025 | 2024 | Increase/Decrease | |||||||||
| Professional fees | 1,966 | 1,758 | 208 | |||||||||
| Share-based compensation | 1,747 | 716 | 1,031 | |||||||||
| Salary and related expenses | 1,079 | 808 | 271 | |||||||||
| Insurance expenses | 178 | 196 | (18 | ) | ||||||||
| Director fees | 175 | 239 | (64 | ) | ||||||||
| Office maintenance | 122 | 135 | (13 | ) | ||||||||
| Depreciation | 115 | 117 | (2 | ) | ||||||||
| Travel abroad | 82 | 104 | (22 | ) | ||||||||
| Others | 68 | 112 | (44 | ) | ||||||||
| Total | 5,532 | 4,185 | 1,347 | |||||||||
Comparison of the Years Ended December 31, 2025 and 2024
Results of Operations
The following tables summarizes our results of operations for the years ended December 31, 2025, and December 31, 2024:
| Year Ended December 31, | ||||||||||||
| U.S. dollars in thousands | 2025 | 2024 | Increase/Decrease | |||||||||
| Revenues | 289 | - | 289 | |||||||||
| Cost of revenues | 287 | - | 287 | |||||||||
| Gross profit | 2 | - | 2 | |||||||||
| Research and development expenses | 7,496 | 6,323 | 1,173 | |||||||||
| General and administrative expenses | 5,532 | 4,185 | 1,347 | |||||||||
| Sales and Marketing expenses | 588 | 754 | (166 | ) | ||||||||
| Other expenses | 9 | 5 | 4 | |||||||||
| Operating loss | 13,623 | 11,267 | 2,356 | |||||||||
| Interest Income from deposits | (64 | ) | (172 | ) | 108 | |||||||
| Financial expenses (income), net | (339 | ) | (42 | ) | (297 | ) | ||||||
| Net loss | 13,220 | 11,053 | 2,167 | |||||||||
| Loss attributable to holders of Ordinary Shares | 13,220 | 11,053 | 2,167 | |||||||||
Revenues
We recognized revenue for the first time since our inception, in the amount of $289,000 for the year ended December 31, 2025 compared to nil for the year ended December 31, 2024. Our revenues solely consist of sales of our INSPIRA ART100 systems and carts.
Cost of Revenues
Our cost of revenues consists primarily of the cost of the production of our products, including sub-contractors, raw materials, testing, quality assurance, shipping and handling costs to customers, royalties to the IIA, provisions for assurance, and direct overhead, such as salary and employee related expenses. The total cost of revenue for the year ended December 31, 2025, was $287,000.
Research and Development Expenses
Our research and development expenses for the year ended December 31, 2025, amounted to $7,496,000 an increase of $1,173,000, or 18.6%, compared to $6,323,000 for the year ended December 31, 2024. The increase was primarily attributable to the impact of exchange rate changes on salary and related expenses and from share-based compensation grants during 2025.
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General and administrative expenses
Our general and administrative expenses totaled $5,532,000 for year ended December 31, 2025, an increase of $1,347,000, or 32%, compared to $4,185,000 for the year ended December 31, 2024. The increase was primarily attributable to an increase in salary and share-based compensation expenses, mainly resulting from the acceleration of vesting of restricted share units in connection with the departure of our former president, as well as additional share-based compensation grants during 2025.
Sales and marketing expenses
Marketing expenses for the year ended December 31, 2025, amounted to $588,000 representing a decrease of $166,000, or 22%, compared to $754,000 for the year ended December 31, 2024. The decrease was primarily due to decrease in payroll expenses.
Operating loss
As a result of the foregoing, our operating loss for the year ended December 31, 2025, amounted to $13,623,000 representing a increase of $2,356,000, or 20.9%, compared to $11,267,000 for the year ended December 31, 2024.
Financial expenses (income)
Financial income consists of deposit interest, revaluation of financial liabilities presented at fair value and foreign currency changes reflections.
We recognized interest income of $64,000 from deposits and net financial income of $339,000. Net financial income was primarily attributable to the revaluation of financial liabilities and the recognition of a new liability related to the SEPA (as defined below) commitment fee.
Total net loss
As a result of the foregoing, our total net loss for the year ended December 31, 2025, amounted to $13,220,000 representing an increase of $2,167,000, or 19.6%, compared to a loss of $11,053,000 for the year ended December 31, 2024.
| B. | Liquidity and Capital Resources |
Overview
As of December 31, 2025, we had $3.15 million in cash, cash equivalents and cash deposits.
The table below presents our cash flows for the year ended December 31, 2025 and December 31, 2024:
| Year Ended December 31, | ||||||||||||
| U.S. dollars in thousands | 2025 | 2024 | Increase/Decrease | |||||||||
| Net cash used in operating activities | (9,861 | ) | (9,374 | ) | (487 | ) | ||||||
| Net cash provided by investing activities | 565 | 1,488 | (923 | ) | ||||||||
| Net cash provided by financing activities | 7,327 | 7,902 | (575 | ) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | 25 | 55 | (30 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | (1,969 | ) | 16 | (1,985 | ) | |||||||
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Operating Activities
Since our incorporation, we have had ongoing losses and incurred negative cash flows from operating activities. For example, in the year ended December 31, 2025, we had operating losses of $13,623,000. We have mainly financed our activities in the year ended December 31, 2025 through offerings of our securities. There are no assurances however, that we will be successful in obtaining the level of financing needed for our operations or that such financing will be available on terms acceptable to us.
Net cash used in operating activities of $9,861,000 during the year ended December 31, 2025 and net cash used in operating activities of $9,374,000 during the year ended December 31, 2024 was primarily used for payment of salaries and related personnel expenses, materials expenses, subcontractors, travel and office maintenance. In addition, cash flows from operating activities are impacted by changes in operating assets and liabilities, which include trade account payables and financial liabilities.
Investing Activities
Net cash used in investing activities of $565,000 during the year ended December 31, 2025 consisted of $103,000 used for purchasing property and equipment, and $668,000 representing the proceeds from sale of short-term deposits. Net cash used in investing activities of $1,488,000 during the year ended December 31, 2024 consisted of $164,000 used for purchasing property and equipment, and $1,652,000 representing the proceeds from sale of short-term deposits.
Financing Activities
Net cash provided by financing activities of $7,327,000 during the year ended December 31, 2025, consisted primarily of $1,759,000 from the issuance of ordinary shares, $4,646,000 from issuances pursuant to an at-the-market facility, and $912,000 from the exercise of warrants and pre-funded warrants, mainly from the exercise of ordinary warrants issued to Dawson James Securities, Inc.
Net cash provided by financing activities of $7,902,000 during the year ended December 31, 2024, consisted of the issuance of ordinary shares, pre-funded warrants and ordinary warrants.
We have an effective Form F-3 registration statement (File No. 333-289324), filed under the Securities Act of 1933, with the SEC using a “shelf” registration process. Under this shelf registration process, we may, from time to time, sell our Ordinary Shares and warrants to purchase Ordinary Shares, and units of two or more of such securities in one or more offerings up to a total dollar amount of $75,000,000.
On March 28, 2024, we entered into a purchase agreement with certain investors providing for the issuance, in a registered direct offering, of an aggregate of 1,339,285 of our Ordinary Shares at a price per share of $1.232. The Company raised approximately $1.65 million in proceeds from this registered direct offering.
On June 14, 2024, we entered into a purchase agreement with a single investor providing for the issuance, in a registered direct offering, of (i) 941,541 Ordinary Shares at a purchase price of $1.30 per share and (ii) pre-funded warrants to purchase up to 1,709,760 Ordinary Shares at a purchase price of $1.30, less $0.001 per pre-funded warrant. We received approximately $3.4 million in gross proceeds.
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On December 27, 2024, we entered into securities purchase agreements for private placement financing with certain accredited investors, pursuant to which the investors agreed to purchase (i) 3,950,343 of our Ordinary Shares at a purchase price of $0.70 per share, (ii) pre-funded warrants to purchase up to 658,372 ordinary shares at a purchase price of $0.70, less $0.001 per pre-funded warrant. In addition, the purchasers of such Ordinary Shares or pre-funded warrants received warrants to purchase up to 4,608,715 Ordinary Shares at an exercise price of $1.10 per share. We received approximately $3.2 million in gross proceeds. In addition, we entered into a placement agency agreement with Dawson James Securities, Inc., who served as placement agent in the offering, dated December 27, 2024, pursuant to which we agreed to pay the placement agent a cash placement fee equal to: (a) 8.0% of the gross proceeds received in the offering from certain investors introduced by the placement agent and 4.0% of the gross proceeds received by us from the exercise of warrants by such investors, (b) 4.0% of the gross proceeds received in the offering from certain investors introduced by us and 4.0% of the gross proceeds received by us from the exercise of warrants by such investors, and (c) 0% of the gross proceeds received in the offering from certain other investors and 0% of the gross proceeds received by us from the exercise of warrants by such investors. As of December 31, 2025, all the pre-funded warrants and warrants to purchase 855,714 Ordinary Shares were exercised.
On March 14, 2025, we entered into a sales agreement with A.G.P./Alliance Global Partners, or AGP, pursuant to which we were able to offer and sell, from time to time, through AGP, our Ordinary Shares. The Ordinary Shares were to be offered and sold pursuant to our Registration Statement on Form F-3 (File No. 333-266748), and a prospectus supplement to the Registration Statement, filed on March 14, 2025 with the SEC. Under the sales agreement, we sold approximately 5,485,000 of Ordinary Shares, and the gross proceeds were approximately $4,888,000 before deducting offering costs of approximately $272,000.
On December 12, 2025, we entered into a purchase agreement with YA II PN, Ltd., or YA, providing for the issuance, in a registered direct offering, of 1,565,217 Ordinary Shares at a purchase price of $1.15 per share. We received approximately $1.8 million in gross proceeds before deducting offering costs of approximately $50,000.
On December 12, 2025, we entered into a Standby Equity Purchase Agreement, or SEPA, with YA. Pursuant to the terms of the SEPA, YA committed to purchase up to $25 million, or the Commitment Amount, of Ordinary Shares at any time during the three-year period following the execution date of the SEPA. Pursuant to the terms of the SEPA, any Ordinary Shares sold to YA will be priced at 97% of the market price, which is defined as the lowest daily VWAP (as defined in the SEPA) of the Ordinary Shares during the three consecutive trading days commencing on the trading day of our delivery of an Advance Notice (as defined in the SEPA) to YA. Any sale of Ordinary Shares pursuant to the SEPA is subject to certain limitations, including that YA is not permitted to purchase any Ordinary Shares that would result in it owning more than 4.99% of our Ordinary Shares. Pursuant to the SEPA, we also agreed to pay YA a commitment fee, or the Commitment Fee, equal to 2.00% of the Commitment Amount, payable in two tranches in our Ordinary Shares at a price per share average of the daily volume weighted average prices of the Ordinary Shares during the three trading days immediately prior to payment due date also agreed to pay to YA a structuring fee in the amount of $25,000.
On January 5, 2026, we entered into a non-binding term sheet, or the Term Sheet, with the Target, to acquire the Target’s liquid biopsy business in exchange for 40% of our issued and outstanding share capital on a fully diluted basis. As a part of the acquisition, we will obtain a $15 million equity investment, or the Equity Investment, at our pre-money valuation of $180 million or at such valuation as may be expressly agreed by the parties in the negotiated definitive agreement to acquire Target’s liquid biopsy business, or the Purchase Agreement. The closings of the Equity Investment and the Purchase Agreement are intended to happen concurrently. Our existing shareholders as of a record date preceding the closing of the Purchase Agreement and the Equity Investment, or such other date agreed by the parties, shall receive contingent value rights to net proceeds from the sale of the current business assets and/or business activity, or the Legacy Assets, by us to a third party. We intend to use up to $12 million from the net proceeds of the Equity Investment to fund the ongoing operations of its Legacy Assets, unless and until we sell the Legacy Assets. If the funding of the Legacy Assets exceeds $5 million in the aggregate, the Target may be entitled to receive the amount exceeding such $5 million from any net proceeds of a sale of the Legacy Assets, including up to the entirety of the aggregate net proceeds received from the sale of the Legacy Assets (but in any case no more than such net proceeds), following a successful sale of the Legacy Assets. In March 2026, we announced that we will not pursue the transaction with the Target.
In connection with the Term Sheet, on January 5, 2026, we entered into a binding senior convertible debenture, or the Debenture, with the Target, whereby we agreed to lend the Target a principal amount of $1 million. The Debenture will bear interest at a 10% annual rate, provided, however, that in case of an Event of Default (as defined in the Debenture), the annual interest rate shall increase to 18%, retroactively as of the original issue date. The Target may prepay any portion of the principal amount of the Debenture without the need for our prior written consent. Any payment thereof (including any partial payment) shall first be made on account of outstanding interest.
The Debenture matures on the date that is 180 days from January 5, 2026, on or such earlier date where (i) the Purchase Agreement has not been entered into within 60 days from January 5, 2026, (ii) if there is a change in control of the Target (including, without limitations, changes in the composition of the Target’s board of directors where the majority of board members (excluding the external members) holding office on the date hereof, cease to hold office, then the date of such change in control, or the Maturity Date.
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Following the original issue date of the Debenture, but no later than the lapse of the Maturity Date, unless otherwise extended by our mutual consent and the Target, if the closing of the Equity Investment, Purchase Agreement and sale of the Legacy Assets, or the Transaction, shall have occurred, at the time of such closing, all amounts under the Debenture shall either, according to the discretion of Target (i) be offset from any consideration payable to Target by us in connection with the Asset Purchase Agreement, (ii) or alternatively, at Target’s sole discretion (provided that the interest portion shall be paid in cash to us), the Target shall repay the outstanding amounts under the Debenture. Subject to the consummation of the Purchase Agreement, we and Target may further agree to redeem the outstanding principal amount under the Debenture by issuing the most senior class of securities of the entity owning the Target’s liquid biopsy business at the closing of the Asset Purchase Agreement (insofar as the Asset Purchase Agreement is consummated by way of a spin-off or a similar transaction), at a price per share based on a pre-money valuation of $45 million of such entity, and the Target will concurrently make cash payment of any interest accrued thereof, to us.
The Target (and we, in case that the Debenture has not been fully discharged by the Maturity Date, or such earlier time in case of an Event of Default which is continuing), or each, as applicable, an Initiating Party, may, at any time prior to the full discharge of the Debenture, convert, in whole (unless otherwise agreed by us to convert only part of the outstanding principal amount), the outstanding principal amount (and/or accrued interest – if instructed by the Company) of the Debenture, into ordinary shares, NIS 0.001 par value per share, of the Target, at a conversion price of NIS 0.30 per share (or, if applicable, the then applicable minimum effective conversion price permitted by the Tel Aviv Stock Exchange, or the TASE; provided that, in no event shall such conversion price be less than the minimum effective share price permitted by the TASE regulations and bylaws. Any conversion under the Debenture shall be subject to the approval of the TASE for the registration of the shares to be issued as a result of such conversion.
We are subject to an ownership limitation cap of 19.99%, or the Ownership Limitation, and we shall not be entitled to convert any portion of the Debenture in excess of the Ownership Limitation (the number of Target’s ordinary shares to be converted shall not exceed 27,783,367 of the Target’s ordinary shares).
The Debenture contains certain prerequisites, such as corporate approval and TASE approval of the ordinary shares to be issued upon conversion of the Debenture, and customary representations, warranties and covenants of the Company and Target, including receipt of $5 million by us pursuant to the SEPA. The Debenture will be deemed issued at the signing, however, our obligation to pay $1 million is subject to the satisfaction of the prerequisites. On February 19, 2026, we and the Target entered into an amendment and addendum to the Debenture, or the Amendment. Pursuant to the Amendment: (i) the period of 45 days from the date of execution of the Debenture for the satisfaction of the certain prerequisites set forth in clauses 8(a) through 8(c) of the Debenture was extended by additional 30 days, to 75 days; and (ii) the prerequisite of a $5 million investment to be obtained by us set forth in clause 8(b) of the Debenture was amended and restated in such manner such that it shall be satisfied by the receipt of $5 million, following the date of the Amendment, from investors introduced to us by the Target pursuant to the requirements of the placement agent agreement, dated February 5, 2026, by an between us and A.G.P/ Alliance Global Partners (rather than pursuant to the SEPA). Except as set forth above, all other terms of the Debentures remain unchanged and in full force and effect. As of March 25, 2026, we have not received any proceeds under the SEPA, and therefore, the Debenture expired.
On February 5, 2026, we entered into a purchase agreement with a single institutional investor providing for the issuance, in a registered direct offering, of (i) 4,000,000 Ordinary Shares at a purchase price of $0.70 per share and (ii) pre-funded warrants to purchase up to 2,785,715 Ordinary Shares at a purchase price of $0.70, less $0.001 per pre-funded warrant. In a concurrent private placement, we also agreed to issue the investor ordinary warrants to purchase up to 6,785,715 Ordinary Shares. The ordinary warrants are exercisable six months after their issuance at an exercise price of $0.70 per Ordinary Share and will expire on the five year anniversary of their initial exercise date. In connection with the offering, we also entered into an agreement to amend existing warrants that were previously issued in December 2023 to the investor participating in the offering. Such existing warrants originally entitled the investor to purchase up to 3,031,250 Ordinary Shares, with an exercise price of $1.28 per share. Such existing warrants have been amended to reduce the exercise price to $0.70 per share, extend the expiration date from June 27, 2027 to February 5, 2031, revise the fundamental transaction provision in the warrants and revise the cashless exercise provision with respect to computing the valuation of the Ordinary Shares. We received approximately $4.7 million in gross proceeds, before deducting offering costs of approximately $460,000.
On February 17, 2026, we entered into a sales agreement with AGP pursuant to which we may offer and sell, from time to time, through the sales agent, our Ordinary Shares having an aggregate offering price of up to $2,015,985.
| 5.C | Research and development, patents and licenses, etc. |
For a description of our research and development programs and the amounts that we have incurred over the last two years pursuant to those programs, please see “Item 5. Operating and Financial Review and Prospects- A. Operating Results- Operating Expenses- Research and Development Expenses, net” and “Item 5. Operating and Financial Review and Prospects- A. Operating Results- Comparison of the years ended December 31, 2025 and 2024- Research and Development Expenses.”
| 5.D | Trend Information |
Not applicable.
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| E. | Critical Accounting Estimates |
We describe our significant accounting policies more fully in Note 2 to our financial statements for the year ended December 31, 2025. We believe that the accounting policies below are critical in order to fully understand and evaluate our financial condition and results of operations.
We prepare our financial statements in accordance with U.S. GAAP. At the time of the preparation of the financial statements, our management is required to use estimates, evaluations, and assumptions which affect the application of the accounting policy and the amounts reported for assets, obligations, and expenses. Any estimates and assumptions are continually reviewed. The changes to the accounting estimates are credited during the period in which the change to the estimate is made. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in relation with stock-based compensation expense, fair value financial liabilities, recognition, measurement, and disclosure of contingent liabilities, Interest rate used for lease liability measurement.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and Senior Management. |
The following table sets forth information regarding our executive officers, key employees and directors as of the date of this annual report on Form 20-F:
| Name | Age | Position | ||
| Dagi Ben-Noon | 49 | Chief Executive Officer, Director | ||
| Yafit Tehila | 44 | Chief Financial Officer | ||
| Avi Shabtai | 52 | Chief Operations Officer and VP of Research and Development | ||
| Daniella Yeheskely Hayon | 52 | Chief Technology Officer | ||
| Lior Amit (1) (2) (3) | 59 | Director | ||
| Tal Parnes (1) (2) (3) | 57 | Chairman of the Board of Directors | ||
| Sivan Matza (1) (2) (3) | 50 | Director |
| (1) | Member of the Compensation Committee |
| (2) | Member of the Audit Committee and Financial Statement Examination Committee |
| (3) | Independent Director (as defined under Nasdaq rules) |
Dagi Ben-Noon, Chief Executive Officer, Director
Mr. Dagi Ben-Noon has served as our Chief Executive Officer since June 2020 and as a director since March 2020. Prior to that, Mr. Ben-Noon served as our Chief Operations Officer from March 2018 to June 2020. Mr. Ben-Noon founded our company together with Dr. Udi Nussinovitch and Mr. Joe Hayon in February 2018. Mr. Ben-Noon has over 15 years of experience in product development from idea inception to illustration, design, manufacturing and product launch. Mr. Ben-Noon co-founded Nano Dimension Ltd. (Nasdaq: NNDN) and served as the company’s chief operating officer and director from July 2012 to October 2017. As Nano Dimension Ltd.’s chief operating officer, Mr. Ben-Noon was in charge of the company’s research and development, operations, production, quality and information technology. Mr. Ben-Noon has a BSc in Mechanical Engineering from the Ben-Gurion University of the Negev in Beer Sheva, Israel.
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Yafit Tehila, Chief Financial Officer
Ms. Yafit Tehila has served as our Chief Financial Officer since August 2022. Prior to becoming our CFO, Ms. Tehila served as our Vice President of Finance and Legal since February 2021. Ms. Tehila served as Director of Finance at Nano Dimension Ltd. (NASDAQ: NNDM) from November 2020 through February 2021 and Financial Controller from February 2016 through November 2020. Ms. Tehila served as Financial Controller at Migdal Capital Markets from August 2010 through November 2016. Ms. Tehila received has a B.A. in Accounting, Economics and business management from Tel Aviv University.
Avi Shabtai, Chief Operations Officer and Vice President of Research and Development
Mr. Avi Shabtai has served as our Chief Operations Officer since July 2020 and as our Vice President of Research and Development since June 2019. Mr. Shabtai’s expertise lies in engineering, testing, quality management, regulation, risk management and production across a product’s life cycle from concept to production. He has over 25 years of experience in management of high-tech companies, particularly in their research and development and operations departments, including roles of vice president of research and development and vice president of quality and engineering. From July 2015 to March 2018, Mr. Shabtai worked as vice president of research and development at Nano Dimension Ltd. (Nasdaq: NNDN). Prior to that, Mr. Shabtai worked as vice president of research and development at ZutaCore from April 2018 to May 2019. Mr. Shabtai is qualified as software quality engineer by the ALD College and the Israeli Standard Institute.
Daniella Yeheskely -Hayon, PhD, MBA, Chief Technology Officer.
Dr. Daniella Yeheskely-Hayon has served as our Chief Technology Officer since January 2022. Dr. Yeheskely-Hayon has comprehensive project management experience in biomedical engineering as well as in key roles within medical device companies. Since June 2016, Dr. Yeheskely-Hayon has served as the director of research and development and chief of operations at O2Cure Ltd., a medical device company that specializes in the development of long-term oxygenators and respiratory assist devices for hospitals. From October 2009 to May 2016, Dr. Yeheskely-Hayon served as a senior research associate at the Technion Department of Biomedical Engineering. Dr. Yeheskely-Hayon holds a PhD in Biology from the Technion Institute, Israel and an MBA from ONO academic college.
Tal Parnes, Director, Chairman of the Board of Directors
Mr. Tal Parnes has served as chairman of our board of directors since February 1, 2025, and has served on our board of directors since July 16, 2021. Mr. Parnes co-founded and served as a chief executive officer and president of Zuta-Core Ltd. from 2016 to 2020. Prior to that, Mr. Parnes co-founded and served as a chief executive officer of HQL Pharmaceuticals Ltd. from 2010 to 2015. Mr. Parnes also served as chief operating officer of Silynx Communications Inc. from 2007 to 2009, served as a vice president of operations of Wavion Inc. from 2005 to 2006 and vice president of operations of Atrica Ltd. from 2002 to 2004. Between 1999 to 2001, Mr. Parnes also served as a chief financial officer and business development director of Printlife Ltd. Mr. Parnes holds a B.A. in Economics and History from Tel Aviv University.
Lior Amit, Director
Mr. Lior Amit has served on our board of directors since August 1, 2021. Since 2014, Mr. Amit has served as a private financial advisor for both high net worth individuals and companies and serves as a director at Capital link , Nirplex and Ronimar LTD. Mr. Amit was the CFO of the BBR Saatchi & Saatchi advertising group in Israel from 1996 to 2013, helping to turn it into a leading local advertising company including advertising agencies, media operations and digital and content, growing from 40 employees to 250 employees. Mr. Amit holds a Master of Business Administration ((Finance and Insurance) and a B.A. in Economics and Accounting from the Tel Aviv University. Mr. Amit is a Certified Public accountant in Israel and holds an advisor license with the Israeli Securities Authority.
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Sivan Matza, Director
Mrs. Sivan Matza has served on our board of directors since October 2025. Mrs. Matza has been serving as a director at the board of directors of Grandby Hotels since December 2020 and as a consultant and director at the board of directors of Brevan Howard (Tel Aviv) Ltd. since January 2022. Prior to that, Mrs. Matza worked as executive committee member at Brevan Howard (Israel) Ltd. Mrs. Matza also worked a CPA in the financial division of Bank Leumi and senior audit manager at Kost Forer Gabbay & Kasierer, a Member of EY Global. Mrs. Matza holds an M.A. with specialization in Accounting from Bar-Ilan University in Ramat Gan, Israel, and a B.A. in Business Management (Accounting) from the College of Management in Rishon LeZion, Israel.
Scientific Advisory Board
We have a Scientific Advisory Board of several active physicians and experts in the fields of respiratory disease, pulmonary diseases, cardiac disease and laboratory animal science. The Scientific Advisory Board consults and assists us in the aforementioned fields by conducting clinical research and participating in pre-clinical studies. The members of our Scientific Advisory Board receive compensation in the form of cash payments or option grants. All members of the Scientific Advisory Board provided us with their consent to be named in this annual report on Form 20-F and any materials related hereto.
Dr. Avraham Abutbul, M.D., has held numerous positions at the Hadassah Medical Center in Jerusalem, Israel, since 2008. Currently, Dr. Abutbul has served a senior physician the Hadassah Medical Center’s Medical Intensive Care Unit and its Pulmonology Institute since 2017, in addition to leading the Hadassah Medical Center’s nationwide research of chronic obstructive pulmonary disease. Prior to his current roles, Dr. Abutbul completed fellowship at the Institute of Pulmonology in 2016 and the General Intensive Care Unit in 2014. Dr. Abutbul also completed residency at the Department of Internal Medicine in 2012. Dr. Abutbul is a lecturer at the Hebrew University of Jerusalem, Israel and at the Hadassah Medical School, Jerusalem, Israel. Dr. Abutbul received his B.Med.Sc. from the Ruth and Bruce Rappaport Faculty of Medicine in Haifa, Israel.
Professor Daniel Brodie is the Section Chief for Critical Care within the Division of Pulmonary, Allergy and Critical Care Medicine, the Director of the Adult ECMO Program and the Director of the Center for Acute Respiratory Failure at the Columbia University/New York-Presbyterian Hospital. Prof. Brodie is the President-elect of the Extracorporeal Life Support Organization (ELSO) and the chairman of the Executive Committee of the International ECMO Network (ECMONet), two leading international organizations spearheading scientific knowledge in the field of extracorporeal life support. He is currently on the Steering Committee of numerous ongoing and upcoming clinical trials in the field. In addition, Prof. Brodie serves as a member of the National Heart, Lung, and Blood Institute’s (NHLBI) Protocol Review Committee for the Prevention and Early Treatment of Acute Lung Injury (PETAL) Network. Prof. Brodie has served as a reviewer in influential scientific journals, including the New England Journal of medicine, Lancet and JAMA. Prof Brodie has authored more than 300 peer-reviewed publications and book chapters and has delivered nearly 400 invited lectures throughout the world.
Prof. Eddy Fan is an associate professor in the Interdepartmental Division of Critical Care Medicine and the Institute of Health Policy, Management and Evaluation at the University of Toronto and a staff intensivist at the University Health Network/Mount Sinai Hospital in Toronto, Ontario. Prof. Fan currently is the medical director of the extracorporeal life support program at the Toronto General Hospital. Dr. Fan received an undergraduate degree from the University of Toronto, his medical degree from the University of Western Ontario and a doctorate in clinical investigation from Johns Hopkins University. Among his most significant publications are: (1) “An Official American Thoracic Society/European Society of Intensive Care Medicine/Society of Critical Care Medicine Clinical Practice Guideline: Mechanical Ventilation in Adult Patients with Acute Respiratory Distress Syndrome” in the American Journal of Respiratory and Critical Care Medicine; (2) “Veno-venous extracorporeal membrane oxygenation for acute respiratory failure: a clinical review from an international group of experts.” in Intensive Care Medicine; and (3) Epidemiology, patterns of care, and mortality for patients with acute respiratory distress syndrome in intensive care units in 50 countries” published in JAMA.
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Dr. Orit Cohen Jacob is veterinary surgeon with a unique certified specialty in laboratory animal medicine. Dr. Jacob held numerous positions at the Israel Institute for Biological Research in Ness Ziona, Israel, for 16 years, while leading the establishment of the biggest pre-clinical animal facility and laboratories in Israel. At the Israel Institute for Biological Research, Dr. Jacob founded a GMP stable facility, for anti-serum production for the State of Israel. Dr. Jacob participated as a surgeon and advisor, in her field of expertise, in a wide variety of research studies, related to homeland security from 1999 to 2015. Dr. Jacob was a member of the national animal experimentation council of the ministry of health, and head of the national ethics committee for animal experimentations from 2013 to 2018. Currently, Dr. Jacob is the co-owner and chief executive officer of SeruMed GMP Ltd., which has been the sole manufacturer and provider of the anti-venom serum against viper and echis snakes to the Ministry of Health of Israel since 2016. Furthermore, Dr. Jacob is the owner of BioSphera Consulting Ltd., through which she has been providing knowledge to bio-tech companies in all aspects of pre-clinical research, facility establishment, GMP regulations, ethics and science since 2016.
Dr. Stefan Ledot is an expert in various clinical fields including critical care medicine, anesthesia, extracorporeal support and echocardiography. During his career, he has undertaken a large number of educational duties, including advanced cardiovascular life support (ACLS) instruction, critical care module for physiotherapists instruction, critical care module nursing school instruction, among others. Dr. Ledot is a highly appreciated speaker in the critical care space. Dr. Ledot completed his accreditation for transesophageal echocardiography (TOE) from the European Association of Cardiovascular Imaging and holds a European Diploma in Intensive Care. Dr. Ledot has served as a senior clinician in critical care and anesthetics at Royal Brompton & Harefield Hospitals in the United Kingdom and became the director of the ECMO service and critical care. The Royal Brompton ECMO service is one of the largest in Europe and has been recognized as a center of excellence.
Dr. Yael Lichter is Director of the Medical Intensive Care Unit at Tel Aviv Sourasky Medical Center, where she completed her residency training in Internal Medicine and Intensive Care. She also serves as Treasurer of the Israeli ECMO Society. Dr. Lichter served as a Captain in the IDF Medical Corps, as a field doctor in combat units. She completed her medical training at the Tel Aviv University the Sackler Faculty of Medicine.
Dr. Sharon Marx obtained a PhD in physical organic chemistry from the Hebrew University, Jerusalem in 1996. Since 1996, Dr. Marx has worked at the Israel Institute for Biological Research in the physical chemistry department. Dr. Marx was a fellow at the Israel Institute for Biological Researchand is currently serving as the physical chemistry department head. From 2008 to 2010, Dr. Marx was an Assistant Professor (on sabbatical) at the University of Pennsylvania and developed biocompatible fuel cells while there. Her research interests include sensor and biosensors development, chemical sensor networks, molecularly imprinted polymers, chemiresistors, sensors for gas phase (air pollution and toxic materials) and sensors for water quality.
Dr. Dekel Stavi, medical director, has considerable experience in leading Extracorporeal Life Support programs, and treating cardio and hemato-oncology patients in the ICU. Prior to joining Critical Care at the University of Toronto, he served as a senior intensive care physician at the Tel Aviv Sourasky Medical Center in Israel where he initiated its institutional ECMO program. Dr. Stavi’s notable publications include “Outcomes of prolonged mechanical ventilation in patients who underwent bedside percutaneous dilatation tracheostomy in intermediate care units - a single center study” and “Outcome and survival following tracheostomy in patients ≥ 85 years old.”
Dr. Dan Gorfil is a distinguished specialist in cardiac surgery and intensive care medicine. Dr. Gorfil is both the head of the Cardiothoracic Surgery Intensive Care Unit and the ECMO program at the Department of Cardiothoracic Surgery at Rabin Medical Center, Israel. Dr. Gorfil’s expertise is expected to significantly contribute to the deployment of the INSPIRA ART100.
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Family Relationships
There are no family relationships between any members of our executive management and our directors.
Arrangements for Election of Directors and Members of Management
There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or our directors were selected. See “Item 7.B. - Related Party Transactions” for additional information.
| B. | Compensation |
The following table presents all compensation paid by us to our five most highly compensated officers for the year ended December 31, 2025. The table does not include any amounts we paid to reimburse any of such persons for costs incurred in providing us with services during this period.
All amounts reported in the tables below reflect the cost to the Company, in U.S. dollars, for the year ended December 31, 2025.
Amounts paid in NIS are translated into U.S. dollars at the rate of NIS 3.453 = U.S. $1.00, based on the average representative rate of exchange between the NIS and the U.S. dollar as reported by the Bank of Israel during such period of time.
| Salary, bonuses and Related Benefits |
Pension, Retirement and Other Similar Benefits |
Share Based Compensation |
||||||||||
| Dagi Ben-Non, Chief Executive Officer | $ | 335,262 | $ | 23,775 | $ | 666,059 | ||||||
| Joe Hayon, President and Director(1) | $ | 445,144 | $ | 21,652 | $ | 1,012,067 | ||||||
| Yafit Tehila, Chief Financial Officer | $ | 223,086 | $ | 46,607 | $ | 421,378 | ||||||
| Avi Shabtai, Chief Operations Officer and VP of Research and Development | $ | 280,492 | $ | 63,810 | $ | 498,767 | ||||||
| Daniella Yeheskely-Hayon, Chief Technology Officer | $ | 215,958 | $ | 45,666 | $ | 408,146 | ||||||
| (1) | Mr. Hayon resigned as a President in May 2025 and stepped down from our board of directors in July 2025. |
For so long as we qualify as a foreign private issuer, we will not be required to comply with the proxy rules applicable to U.S. domestic companies regarding disclosure of the compensation of certain executive officers on an individual basis. Pursuant to the Companies Law, as a public company we are required to disclose the annual compensation of our five most highly compensated officers on an individual basis. This disclosure will not be as extensive as that required of a U.S. domestic issuer.
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Employment Agreements with Executive Officers
We have entered into written employment agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. In addition, we entered into indemnification agreements, with each executive officer and director pursuant to which we indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance.
For a description of the terms of our options and option plans, see “Item 6.E. Share Ownership-Equity Incentive Plan.”
Directors’ Service Contracts
Other than with respect to our directors that are also executive officers, we do not have written agreements with any director providing for benefits upon the termination of his employment with our company. In our first annual general meeting as a public company, which took place in December 2021, we instituted a yearly fixed fee in the amount of $40,000 for each of our currently serving directors who are not also executive officers (including the current Chairman of our board of directors) and amount of $120,000 for the former chairman of our board of directors. However, on February 20, 2025, the Company’s compensation committee and board of directors approved an increase in the yearly fixed fee of Mr. Tal Parnes, the Company’s chairman of the board of directors, to $80,000, and an increase to the yearly fixed fee of Mrs. Limor Rozen and Mr. Lior Amit, and generally to the Company’s non-executive directors, to $46,000, subject to the approval of the Company’s shareholders. On May 12, 2025, our shareholders approved the respective increases for Mr. Parnes, Mrs. Rozen and Mr. Amit. On October 15, 2025, Limor Rozen resigned from our board of directors. On October 21, 2025, Sivan Matza was appointed as a director and is also entitled to receive a year fixed fee of $46,000.
| C. | Board Practices. |
Introduction
Our board of directors consists of four members. We believe that Sivan Matza, Lior Amit, and Tal Parnes are “independent” for purposes of the Nasdaq rules. Our amended and restated articles of association provide that the number of board of directors’ members shall be set by the general meeting of the shareholders provided that it will consist of not less than three (3) and not more than twelve (12). Pursuant to the Companies Law, the management of our business is vested in our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and have individual responsibilities established by our board of directors. Pursuant to the Companies Law, our Chief Executive Officer is appointed by, and serves at the discretion of, our board of directors, subject to the employment agreement that we have entered into with him. All other executive officers are appointed by our Chief Executive Officer. According to the Companies Law, their terms of employment are subject to the approval of the board of directors’ compensation committee and of the board of directors (and in some cases are also subject to shareholders approval) and are subject to the terms of any applicable employment agreements that we may enter into with them.
Each director, except external directors, if applicable, that may be required to be appointed under the Companies Law under certain circumstances, will hold office until the next annual general meeting of our shareholders following his or her appointment, or until he or she resigns or unless he or she is removed by a majority vote of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and/or our amended and restated articles of association.
In addition, under certain circumstances, our amended and restated articles of association allow our board of directors to appoint directors to fill vacancies on our board of directors or in addition to the acting directors (subject to the limitation set forth in our articles of association on the number of directors), until the next annual general meeting or special general meeting in which directors term may be terminated. External directors, if applicable, may be elected for up to two additional three-year terms after their initial three-year term under the circumstances described below, with certain exceptions as described in “External Directors” below, and may be removed from office only under the limited circumstances set forth in the Companies Law.
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Under the Companies Law, any shareholder holding at least one percent of our outstanding voting power may suggest nominating a director in an Annual General Meeting of the shareholders. However, any such shareholder may make such a suggestion only if a written and timely notice of such shareholder’s intent to make such nomination has been given to our board of directors, in accordance with the provisions of our amended and restated articles of association and the Companies Law. Any such notice must include certain information, including the consent of the proposed director nominee to serve as our director if elected, and a declaration that the nominee signed declaring that he or she possesses the requisite skills and has the availability to carry out his or her duties. Additionally, the nominee must provide details of such skills, and demonstrate an absence of any limitation under the Companies Law that may prevent his or her election, and affirm that all of the required election-information is provided to us, pursuant to the Companies Law.
However, under the Companies Law regulations (exemptions applicable for Israeli companies whose shares are listed outside of Israel, 5760-2000 (the “Exemptions Regulations”), one or more shareholders may request the company’s board of directors to include an appointment of a candidate for a position on the board of directors or the termination of a board member, as an item on the agenda of a future general meeting (if the company sees fit), provided that the shareholder hold at least five percent (5%) of the voting rights of the company, instead of one percent (1%) as required in the past.
Under the Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year, at such time and place which shall be determined by our board of directors, that must be no later than 15 months after the date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to as special general meetings. Our board of directors may call special meetings whenever it sees fit and upon the request of: (a) any two of our directors or such number of directors equal to one quarter of the directors then at office; and/or (b) one or more shareholders holding, in the aggregate, (i) 5% or more of our outstanding issued shares and 1% of our outstanding voting power or (ii) 5% or more of our outstanding voting power, or the Non Exempted Holding. However, under the Exemptions Regulations, the board of directors of an Israeli company whose shares are listed outside of Israel, shall convene a special meeting at the request of: (i) one or more shareholders holding at least ten percent (10%) of the issued and outstanding share capital instead of five (5%) in the past, and at least one percent (1%) of the voting rights in the company, or (ii) one or more shareholders holding at least ten percent (10%) of the voting rights in the company, unless the applicable law incorporated in the country in which the Company is listed for trade, establishes a right to demand convening of such a meeting for those holding less than ten percent (10%) of the voting rights in the company (in which case, the Non Exempted Holding shall apply).
Under the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. In determining the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that the minimum number of directors of our company who are required to have accounting and financial expertise is one.
The board of directors must elect one director to serve as the chairman of the board of directors to preside at the meetings of the board of directors, and may also remove that director as chairman. Pursuant to the Companies Law, neither the chief executive officer nor any of his or her relatives is permitted to serve as the chairman of the board of directors, and a company may not vest the chairman or any of his or her relatives with the chief executive officer’s authorities. In addition, a person who reports, directly or indirectly, to the chief executive officer may not serve as the chairman of the board of directors; the chairman may not be vested with authorities of a person who reports, directly or indirectly, to the chief executive officer; and the chairman may not serve in any other position in the company or a controlled company, but he or she may serve as a director or chairman of a controlled company. However, the Companies Law permits a company’s shareholders to determine, for a period not exceeding three years from each such determination, that the chairman or his or her relative may serve as chief executive officer or be vested with the chief executive officer’s authorities, and that the chief executive officer or his or her relative may serve as chairman or be vested with the chairman’s authorities. Such determination of a company’s shareholders requires either: (1) the approval of at least a majority of the shares of those shareholders present and voting on the matter (other than controlling shareholders and those having a personal interest in the determination) (shares held by abstaining shareholders shall not be considered); or (2) that the total number of shares opposing such determination does not exceed 2% of the total voting power in the company. Currently, we have a separate chairman and chief executive officer.
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The board of directors may, subject to the provisions of the Companies Law, delegate some of its powers to committees of the board, and it may, from time to time, revoke such delegation or alter the composition of any such committees, subject to certain limitations. Unless otherwise expressly provided by the board of directors, the committees shall not be empowered to further delegate such powers. The composition and duties of our audit committee, financial statement examination committee and compensation committee are described below.
The board of directors oversees how management monitors compliance with our risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by us. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to our audit committee.
External Directors
Under the Companies Law, except as provided below, companies incorporated under the laws of the State of Israel that are publicly traded, including Israeli companies with shares listed on the Nasdaq, are required to appoint at least two external directors who meet the qualification requirements set forth in the Companies Law. The definitions of an external director under the Companies Law and independent director under Nasdaq rules are similar such that it would generally be expected that our two external directors will also comply with the independence requirement under Nasdaq rules.
Under regulations promulgated pursuant to the Companies Law, a company with no controlling shareholder whose shares are listed for trading on specified exchanges outside of Israel, including Nasdaq, may adopt exemptions from various corporate governance requirements of the Companies Law, so long as such company satisfies the requirements of applicable foreign country laws and regulations, including applicable stock exchange rules, that apply to companies organized in that country and relating to the appointment of independent directors and the composition of audit and compensation committees. Such exemptions include an exemption from the requirement to appoint external directors and the requirement that an external director be a member of certain committees, as well as exemption from limitations on directors’ compensation. We do not currently have a controlling shareholder and we use this exemption from the requirement described herein.
Independent Directors Under the Companies Law
An “independent director” under the Companies Law is either an external director or a director who meets the same non-affiliation criteria as an external director (except for (i) the requirement that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed outside of Israel) and (ii) the requirement for accounting and financial expertise or professional qualifications), as determined by the audit committee, and who has not served as a director of the company for more than nine consecutive years. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature of such director’s service.
According to the Exemptions Regulations, a director in a public company whose shares are listed for trading on specified exchanges outside of Israel, including on the Nasdaq Capital Market, who qualifies as an independent director under the relevant non-Israeli rules and who meets certain non-affiliation criteria, which are less stringent than those applicable to independent directors as set forth above, would be deemed an “independent” director pursuant to the Companies Law provided: (i) he or she has not served as a director for more than nine consecutive years; (ii) he or she has been approved as such by the audit committee; and (iii) his or her remuneration shall be in accordance with the Companies Law and the regulations promulgated thereunder. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature of such director’s service.
Furthermore, pursuant to these regulations, such company may reappoint a person as an independent director for additional terms, beyond nine years, which do not exceed three years each, if each of the audit committee and the board of directors determine, in that order, that in light of the independent director’s expertise and special contribution to the board of directors and its committees, the reappointment for an additional term is in the company’s best interest.
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Alternate Directors
Our amended and restated articles of association provide, as allowed by the Companies Law, that any director may, subject to the conditions set thereto including approval of the nominee by our board of directors, appoint a person as an alternate to act in his place, to remove the alternate and appoint another in his place and to appoint an alternate in place of an alternate whose office is vacated for any reason whatsoever. Under the Companies Law, a person who is not qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving as an alternate director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is not already serving as a member of such committee, and if the alternate director is to replace an external director, he or she is required to be an external director and to have either “financial and accounting expertise” or “professional expertise,” depending on the qualifications of the external director he or she is replacing. A person who does not have the requisite “financial and accounting experience” or the “professional expertise,” depending on the qualifications of the external director he or she is replacing, may not be appointed as an alternate director for an external director. A person who is not qualified to be appointed as an independent director, pursuant to the Companies Law, may not be appointed as an alternate director of an independent director qualified as such under the Companies Law. Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes until the appointing director ceases to be a director or terminates the appointment.
Committees of the Board of Directors
Our board of directors has established two standing statutory committees, the audit and financial statements examination committee and the compensation committee.
Audit Committee
Under the Companies Law, the board of directors of any public company must establish an audit committee. The audit committee must be comprised of at least three directors, including all of the external directors, if applicable, (one of whom must serve as chair of the committee). The audit committee may not include the chairman of the board; a director employed by the company or by a controlling shareholder of the company or by an entity controlled by a controlling shareholder; a controlling shareholder or a relative of a controlling shareholder; a director employed by or providing services on a regular basis to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder, or a director who derives most of his or her income from a controlling shareholder. In addition, a majority of the members of the audit committee of a publicly traded company must be independent directors under the Companies Law.
However, under the Exemptions Regulations, a company with no controlling shareholder might be exempted from certain obligations mentioned above.
Our audit committee is comprised of Lior Amit, Sivan Matza and Tal Parnes.
Under the Companies Law, our audit committee is responsible for, among other things:
| (i) | determining whether there are deficiencies in the business management practices of our company, and making recommendations to the board of directors to improve such practices; | |
| (ii) | determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest; (see “Item 6.C. Directors, Senior Management and Employees-Board Practices-Approval of Related Party Transactions under Israeli law”); |
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| (iii) | determining the approval process for transactions that are “non-negligible” (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee; | |
| (iv) | examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities; | |
| (v) | examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; | |
| (vi) | establishing procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and | |
| (vii) | where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto. |
Our audit committee may not conduct any discussions or approve any actions requiring its approval (see “Item 6.C. Directors, Senior Management and Employees-Board Practices-Approval of Related Party Transactions under Israeli law”); unless at the time of the approval a majority of the committee’s members are present, which majority consists of independent directors under the Companies Law.
Our board of directors has adopted an audit committee charter setting forth, among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq rules (in addition to the requirements for such committee under the Companies Law), including, among others, the following:
| ● | oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law; |
| ● | recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting; | |
| ● | recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and | |
| ● | reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities’ findings, receive reports regarding irregularities and legal compliance, acting according to “whistleblower policy” and recommend to our board of directors if so required. |
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Nasdaq Stock Market Requirements for Audit Committee
Under the Nasdaq rules, we are required to maintain an audit committee consisting of at least three members, all of whom are independent and are financially literate and one of whom has accounting or related financial management expertise.
As noted above, the members of our audit committee include Lior Amit, Tal Parnes and Sivan Matza. Mr. Amit serves as the chairman of our audit committee. All members of our audit committee meet the requirements for financial literacy, and are each “independent”, as both terms are defined under the Nasdaq rules. Our board of directors has determined that each member of our audit committee is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by the Nasdaq rules.
Under the Companies Law, our audit committee also carries out the duties of a financial statement examination committee. As such, the audit committee is responsible to discuss and provide recommendations to its board of directors (including the report of any deficiency found) with respect to the following issues: (i) estimations and assessments made in connection with the preparation of financial statements; (ii) internal controls related to the financial statements; (iii) completeness and propriety of the disclosure in the financial statements; (iv) the accounting policies adopted and the accounting treatments implemented in material matters of the company; and (v) value evaluations, including the assumptions and assessments on which evaluations are based and the supporting data in the financial statements. Our independent registered public accounting firm and our internal auditor are invited to attend all meetings of our financial statements examination committee.
Compensation Committee
Under the Companies Law, the board of directors of any public company must establish a compensation committee. The compensation committee must be comprised of at least three directors, including all of the external directors (if applicable), who if applicable must constitute a majority of the members of the compensation committee. Each compensation committee member that is not an external director must be a director whose compensation does not exceed an amount that may be paid to an external director. The compensation committee is subject to the same Companies Law restrictions as the audit committee as to: (a) who may not be a member of the committee; and (b) who may not be present during committee deliberations as described above.
However, under the Exemptions Regulations, a company with no controlling shareholder might be exempted from certain obligations mentioned above.
Our compensation committee, acting pursuant to a written charter, consists of Lior Amit, Sivan Matza and Tal Parnes. Tal Parnes serves as the chairman of our compensation committee. Our compensation committee complies with the provisions of the Companies Law, the regulations promulgated thereunder, and our amended and restated articles of association, on all aspects referring to its independence, authorities and practice. Our compensation committee follows home country practice as opposed to complying with the compensation committee membership and charter requirements prescribed under the Nasdaq rules.
Our compensation committee reviews and recommends to our board of directors (and in accordance with the provisions of our amended and restated compensation policy): with respect to our executive officers’ and directors’: (1) annual base compensation; (2) annual incentive bonus, including the specific goals and amounts; (3) equity compensation; (4) employment agreements, severance arrangements, and change in control agreements and provisions; (5) retirement grants and/or retirement bonuses; and (6) any other benefits, compensation, compensation policies or arrangements.
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The duties of the compensation committee include the recommendation to the company’s board of directors of a policy regarding the terms of engagement of office holders, to which we refer as a compensation policy. Every three years (or following five years from its initial public offering), such policy must be adopted by the company’s board of directors, after considering the recommendations of the compensation committee. The compensation policy is then brought for approval by our shareholders, which requires a special majority (see “Item 6.C. Directors, Senior Management and Employees-Board Practices-Approval of Related Party Transactions under Israeli law”). Under the Companies Law, and under certain conditions, the board of directors may adopt the compensation policy if it is not approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and the board of directors revisit the matter and determine that adopting the compensation policy is in our best interests.
On December 17, 2021, a general meeting of our shareholders approved the adoption of a compensation policy for our officers and directors for a period of five years, or the compensation policy.
The compensation policy serves as the basis for decisions concerning the financial terms of employment or engagement of executive officers and directors, including exemption, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation policy relates to certain factors, including advancement of our objectives, our business and long-term strategy and creation of appropriate incentives for executives. It also considers, among other things, our risk management, size and the nature of our operations. The compensation policy further considers the following additional factors:
| ● | the education, skills, expertise and accomplishments of the relevant director or executive; | |
| ● | the director’s or executive’s roles and responsibilities and prior compensation agreements with him or her; | |
| ● | the relationship between the cost of the terms of service of an office holder and the average median compensation of the other employees of the company (including those employed through manpower companies), including the impact of disparities in salary upon work relationships in our company; | |
| ● | the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and | |
| ● | as to severance compensation, the period of service of the director or executive, the terms of his or her compensation during such service period, our performance during that period of service, the person’s contribution towards the achievement of our goals and the maximization of our profits, and the circumstances under which the person is leaving the company. |
The compensation policy also includes the following principles:
| ● | with the exception of office holders who report directly to the chief executive officer, the link between variable compensation and long-term performance and measurable criteria; | |
| ● | the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation at the time of its grant; | |
| ● | the conditions under which a director or executive are required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements; | |
| ● | the minimum holding or vesting period for variable, equity-based compensation; and | |
| ● | maximum limits for severance compensation. |
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The compensation policy also considers appropriate incentives from a long-term perspective.
The compensation committee is responsible for: (1) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by the shareholders); and (2) duties related to the compensation policy and to the compensation of a company’s office holders, including:
| ● | recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); | |
| ● | recommending to the board of directors periodic updates to the compensation policy; | |
| ● | assessing implementation of the compensation policy; | |
| ● | administering the Company’s clawback policy; | |
| ● | determining whether the terms of compensation of certain office holders need not be brought to approval of the shareholders; and | |
| ● | determining whether to approve the terms of compensation of office holders that require the committee’s approval. |
Our compensation policy is designed to promote our long-term goals, work plan and policy, retain, motivate and incentivize our directors and executive officers, while considering the risks that our activities involve, our size, the nature and scope of our activities and the contribution of an officer to the achievement of our goals and maximization of profits, and align the interests of our directors and executive officers with our long-term performance. To that end, a portion of an executive officer compensation package is targeted to reflect our short and long-term goals, as well as the executive officer’s individual performance. On the other hand, our compensation policy includes measures designed to reduce the executive officer’s incentives to take excessive risks that may harm us in the long-term, such as limits on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of an executive officer and minimum vesting periods for equity-based compensation.
Our compensation policy also addresses our executive officer’s individual characteristics (such as his or her respective position, education, scope of responsibilities and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers, and considers the internal ratios between compensation of our executive officers and directors and other employees. For example, the compensation that may be granted to an executive officer may include base salary, annual bonuses, equity-based compensation, benefits and retirement and termination of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive officer’s base salary. In addition, our compensation policy provides for maximum permitted ratios between the total variable (cash bonuses and equity-based compensation) and non-variable (base salary) compensation components, in accordance with an officer’s respective position with the company.
An annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may be granted to subordinate officeholders may be based entirely on a discretionary evaluation. Our Chief Executive Officer will be entitled to recommend performance objectives to such executive officers, and such performance objectives will be approved by our compensation committee (and, if required by law, by our board of directors).
The performance measurable objectives of our chairman and Chief Executive Officer are determined annually by our compensation committee and board of directors. A less significant portion of the chairman’s and/or the Chief Executive Officer’s annual cash bonus may be based on a discretionary evaluation of the chairman’s or the Chief Executive Officer’s respective overall performance by the compensation committee and the board of directors based on quantitative and qualitative criteria.
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The equity-based compensation under our compensation policy for our executive officers (including members of our board of directors) is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the alignment between the executive officers’ interests with our long-term interests and those of our shareholders and to strengthen the retention and the motivation of executive officers in the long term. Our compensation policy provides for executive officer compensation in the form of share options or other equity-based awards, such as restricted shares and phantom options, in accordance with our equity incentive plan then in place. Share options granted to executive officers are subject to vesting periods in order to promote long-term retention of the awarded executive officers. The equity-based compensation is granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the executive officer.
In addition, our compensation policy contains compensation recovery provisions which allows us under certain conditions to recover bonuses paid in excess, enables our Chief Executive Officer to approve an immaterial change in the terms of employment of an executive officer (provided that the changes of the terms of employment are in accordance our compensation policy) and allows us to exempt, indemnify and insure our executive officers and directors subject to certain limitations set forth thereto.
Our compensation policy also provides for compensation to the members of our board of directors either: (i) in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time; or (ii) in accordance with the amounts determined in our compensation policy.
Nasdaq Requirements for Compensation Committee
Under the Nasdaq rules, we are required to maintain a compensation committee consisting of at least two members, each of whom are independent.
As noted above, the members of our compensation committee include Mr. Parnes, Mr. Amit, and Mrs. Matza, each of whom is “independent”, as such term is defined in under Nasdaq rules.
Internal Auditor
Under the Companies Law, the board of directors of an Israeli public company must appoint an internal auditor nominated by the audit committee. Our internal auditor Chaim Yechezkely, CPA (Isr) who has been serving as our internal auditor since October 2021, is a Certified Public Accountant.
The role of the internal auditor is to examine, among other things, whether a company’s actions comply with the law and proper business procedure. The audit committee is required to oversee the activities, and to assess the performance of the internal auditor as well as to review the internal auditor’s work plan. An internal auditor may not be an interested party or office holder, or a relative of any interested party or office holder, and may not be a member of the company’s independent accounting firm or its representative. The Companies Law defines an interested party as a holder of 5% or more of the outstanding shares or voting rights of a company, any person or entity that has the right to appoint at least one director or the general manager of the company or any person who serves as a director or as the general manager of a company. Our internal auditor is not an interested party in the Company and not our employee, but partner of a firm which specializes in internal auditing.
Remuneration of Directors
Under the Companies Law, remuneration of directors is subject to the approval of the compensation committee, thereafter by the board of directors and thereafter, unless exempted under the regulations promulgated under the Companies Law, by the general meeting of the shareholders. In case the remuneration of the directors is in accordance with regulations applicable to remuneration of the external directors then such remuneration shall be exempt from the approval of the general meeting. Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply. In our 2021 general meeting of shareholders, we instituted a yearly fixed fee in the amount of $40,000 for all of our currently serving non-executive directors, including the chairman of our board of directors. However, on February 20, 2025, the Company’s compensation committee and board of directors approved an increase in the yearly fixed fee of Mr. Tal Parnes, the Company’s chairman of the board of directors, to $80,000, and an increase to the yearly fixed fee of Mrs. Limor Rozen and Mr. Lior Amit, the Company’s non-executive directors, to $46,000, subject to the approval of the Company’s shareholders. On May 12, 2025, our shareholders approved the respective increases for Mr. Parnes, Mrs. Rozen and Mr. Amit. It shall be noted that Mrs. Rozen stepped down from our board of directors in October 2025.
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Fiduciary Duties of Office Holders
The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company.
The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care of an office holder includes a duty to use reasonable means to obtain:
| ● | information on the profitability of a given action brought for his approval or performed by him by virtue of his position; and | |
| ● | all other important information pertaining to these actions. |
The duty of loyalty of an office holder requires an office holder to act in good faith and for the benefit of the company, and includes a duty to:
| ● | refrain from any conflict of interest between the performance of his duties in the company and his performance of his other duties or personal affairs; | |
| ● | refrain from any action that is competitive with the company’s business; | |
| ● | refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and | |
| ● | disclose to the company any information or documents relating to the company’s affairs which the office holder has received due to his position as an office holder. |
Insurance
Under the Companies Law, a company may obtain insurance for any of its office holders against the following liabilities incurred due to acts he or she performed as an office holder, if and to the extent provided for in the company’s articles of association:
| ● | breach of his or her duty of care to the company or to another person, to the extent such a breach arises out of the negligent conduct of the office holder; |
| ● | a breach of his or her duty of loyalty to the company, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice the company’s interests; and | |
| ● | a financial liability imposed upon him or her in favor of another person. |
We currently have directors’ and officers’ liability insurance, providing coverage of $5 million for the benefit of our company and all of our directors and officers with additional excess coverage of $2.5 million for the benefit of the directors and officers, in respect of which we paid a twelve-month premium of approximately $155,000, which expires in July 2026.
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Indemnification
The Companies Law, and the Israeli Securities Law, 5728-1968, or the Securities Law, provide that a company may indemnify an office holder against the following liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:
| ● | a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder, including a settlement or arbitrator’s award approved by a court; |
| ● | reasonable litigation expenses, including attorneys’ fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction; | |
| ● | reasonable litigation expenses, including attorneys’ fees, expended by the office holder or imposed on him or her by a court (1) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (2) in a criminal proceedings of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent; and | |
| ● | expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees. An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law. |
The Companies Law also permits a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount or criterion:
| ● | to events that in the opinion of the board of directors can be foreseen based on the company’s activities at the time that the undertaking to indemnify is made; and | |
| ● | in amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances. |
We entered into indemnification agreements with all of our directors and with all members of our senior management. Each such indemnification agreement provides the office holder with indemnification permitted under applicable law and up to a certain amount, and to the extent that these liabilities are not covered by directors and officers insurance.
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Exemption
Under the Companies Law, an Israeli company may not exempt an office holder from liability for a breach of his or her duty of loyalty, but may exempt in advance an office holder from his or her liability to the company, in whole or in part, for damages caused to the company as a result of a breach of his or her duty of care (other than in relation to distributions), but only if a provision authorizing such exemption is included in its articles of association. Our amended and restated articles of association provide that we may exempt, in whole or in part, any office holder from liability to us for damages caused to the company as a result of a breach of his or her duty of care, but prohibit an exemption from liability arising from a company’s transaction in which our controlling shareholder or officer has a personal interest. Subject to the aforesaid limitations, under the indemnification agreements, we exempt and release our office holders from any and all liability to us related to any breach by them of their duty of care to us to the fullest extent permitted by law.
Limitations
The Companies Law provides that the Company may not exempt or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity or insurance only, but not exemption) the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) any act or omission committed with the intent to derive an illegal personal benefit; or (4) any fine, monetary sanction, penalty or forfeit levied against the office holder.
Under the Companies Law, exemption, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of (and, with respect to directors and the chief executive officer, by the shareholders). However, under regulations promulgated under the Companies Law, the insurance of office holders shall not require shareholders’ approval and may be approved by only the compensation committee (and, in case a controlling shareholder is an office holder, the board of directors as well), if the engagement terms are determined in accordance with the company’s compensation policy that was approved by the shareholders by the same special majority required to approve a compensation policy, provided that the insurance policy is on market terms and the insurance policy is not likely to materially impact the company’s profitability, assets or obligations.
Our amended and restated articles of association permit us to exempt (subject to the aforesaid limitation), indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Companies Law.
The foregoing descriptions summarize the material aspects and practices of our board of directors. For additional details, we also refer you to the full text of the Companies Law, as well as of our amended and restated articles of association, which is an exhibit to this annual report on Form 20-F.
There are no service contracts between us, on the one hand, and our directors in their capacity as directors, on the other hand, providing for benefits upon termination of service.
Approval of Related Party Transactions under Israeli Law
General
Under the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if:
| ● | the office holder acts in good faith and the act or its approval does not cause harm to the company; and | |
| ● | the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company’s approval of such matter. |
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Disclosure of Personal Interests of an Office Holder
The Companies Law requires that an office holder disclose to the company, promptly, and, in any event, not later than the board meeting at which the transaction is first discussed, any direct or indirect personal interest that he or she may have and all related material information known to him or her relating to any existing or proposed transaction by the company. If the transaction is an extraordinary transaction, the office holder must also disclose any personal interest held by:
| ● | the office holder’s relatives; or | |
| ● | any corporation in which the office holder or his or her relatives holds 5% or more of the shares or voting rights, serves as a director or general manager or has the right to appoint at least one director or the general manager. |
An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction is a transaction:
| ● | not in the ordinary course of business; | |
| ● | not on market terms; or | |
| ● | that is likely to have a material effect on the company’s profitability, assets or liabilities. |
The Companies Law does not specify to whom within us nor the manner in which required disclosures are to be made. We require our office holders to make such disclosures to our board of directors.
Under the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association provide otherwise and provided that the transaction is in the company’s interest. If the transaction is an extraordinary transaction in which an office holder has a personal interest, first the audit committee and then the board of directors, in that order, must approve the transaction. Under specific circumstances, shareholder approval may also be required. Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting unless the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present in order to present the transaction that is subject to approval. A director who has a personal interest in a transaction, which is considered at a meeting of the board of directors or the audit committee, may not be present at this meeting or vote on this matter, unless a majority of members of the board of directors or the audit committee, as the case may be, has a personal interest. If a majority of the board of directors has a personal interest, then shareholder approval is generally also required.
Disclosure of Personal Interests of a Controlling Shareholder
Under the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directly or indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, and transactions concerning the terms of engagement and compensation of a controlling shareholder or a controlling shareholder’s relative, whether as an office holder or an employee, require the approval of the audit committee or the compensation committee, as the case may be, the board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders’ meeting. In addition, the shareholder approval must fulfill one of the following requirements:
| ● | at least a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or | |
| ● | the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2% of the voting rights in the company. |
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In addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with a term of more than three years requires the aforementioned approval every three years; however, such transactions can be approved for a longer term, provided that the audit committee determines that such longer term is reasonable under the circumstances. In addition, under Companies Law regulations, subject to certain terms, such transactions can be extended or approved after three years only by the audit committee and the board of directors.
The Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the vote in question. Failure to so indicate will result in the invalidation of that shareholder’s vote.
The term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint 50% or more of the directors of the company or its general manager. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includes a shareholder who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company. For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated.
Approval of the Compensation of Directors and Executive Officers
The compensation of, or an undertaking to indemnify, insure or exempt, an office holder who is not a director requires the approval of our compensation committee, followed by the approval of the company’s board of directors, and, if such compensation arrangement or an undertaking to indemnify, insure or exempt is inconsistent with our compensation policy, or if the said office holder is the chief executive officer of the company (subject to a number of specific exceptions), then such arrangement is subject to the approval of our shareholders, subject to a special majority requirement.
Directors. Under the Companies Law, the compensation of our directors requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the general meeting of our shareholders. If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and board of directors, shareholder approval by a special majority will be required.
Executive officers other than the chief executive officer. The Companies Law requires the approval of the compensation of a public company’s executive officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and (iii) only if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders by a special majority. However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors reconvene and provide detailed reasons for their decision (including a discussion regarding the shareholders’ decision).
Chief executive officer. Under the Companies Law, the compensation of a public company’s chief executive officer is required to be approved by: (i) the company’s compensation committee; (ii) the company’s board of directors, and (iii) the company’s shareholders by a special majority. However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors reviewed and reapproved the terms of the compensation, considering that the shareholders did not approve the terms of compensation, and provides detailed reasons for their decision. In addition, the compensation committee may exempt the engagement terms of a candidate to serve as the chief executive officer from shareholders’ approval, if the compensation committee determines that the compensation arrangement is consistent with the company’s stated compensation policy, that the chief executive officer did not have a prior business relationship or affiliation with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would impede the company’s ability to attain the candidate to serve as the company’s chief executive officer (and provide detailed reasons for the latter).
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The approval of each of the compensation committee and the board of directors, with regard to the office holders and directors above, should be in accordance with the company’s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors may approve compensation terms of a chief executive officer that are inconsistent with the company’s compensation policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained by a special majority requirement.
Duties of Shareholders
Under the Companies Law, a shareholder has a duty to refrain from abusing his power in the company and to act in good faith and in an acceptable manner in exercising his rights and performing his obligations toward the company and other shareholders, including, among other things, in voting at general meetings of shareholders (and at shareholder class meetings) on the following matters:
| ● | amendment of the articles of association; | |
| ● | increase in the company’s authorized share capital; | |
| ● | merger; and | |
| ● | the approval of related party transactions and acts of office holders that require shareholder approval. |
A shareholder also has a general duty to refrain from oppressing other shareholders. The remedies generally available upon a breach of contract will also apply to a breach of the above-mentioned duties, and in the event of oppression of other shareholders, additional remedies are available to the injured shareholder.
In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or has another power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account.
| D. | Employees. |
On December 31, 2023, we had 37 full time employees (including our senior management team), five part-time employees, and three independent contractors. On December 31, 2024, we had 39 full-time employees, seven part-time employees and two independent contractors. On December 31, 2025, we had 34 full time employees (including our senior management team), three part-time employees, and three independent contractors in Israel.
As of December 31, 2025, we had four members of senior management who are full-time employees. In addition, we had 29 full-time employees in Israel, three part-time employees and one full-time employee in France.
None of our employees located in Israel are represented by labor unions or covered by collective bargaining agreements. However, in Israel, we are subject to certain Israeli labor laws, regulations and national labor court precedent rulings, as well as certain provisions of collective bargaining agreements applicable to us by virtue of extension orders issued in accordance with relevant labor laws by the Israeli and Industry of Economy and which apply such agreement provisions to our employees even though they are not part of a union that has signed a collective bargaining agreement.
All of our employment and consulting agreements include employees’ and consultants’ undertakings with respect to non-competition and assignment to us of intellectual property rights developed in the course of employment and confidentiality. The enforceability of such provisions is limited by Israeli law.
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| E. | Share Ownership. |
See “Item 7.A. Major Shareholders” below.
Equity Incentive Plan
Our 2019 Equity Incentive Plan, or the 2019 Plan, was adopted by our board of directors on December 2019 (although no options were granted until April 20, 2020) and amended on September 14, 2021. The 2019 Plan provides for the grant of options to our directors, employees, officers, consultants and service providers who are our employees, officers, directors or consultants, as well as those of our affiliated companies. In September 2021, our board of directors approved an amendment to the 2019 Plan to provide for the grant of restricted share units, or RSUs. As of March 22, 2026, the total number of Ordinary Shares reserved for the exercise of options under our 2019 Plan was 4,075,686. The shares subject to our 2019 Plan may be either authorized but unissued Ordinary Shares or reacquired Ordinary Shares, subject to applicable laws.
Our 2019 Plan is administered by the committee, consisting of our board of directors, regarding the granting of options and the terms of option grants, including exercise price, method of payment, vesting schedule, acceleration of vesting and the other matters necessary in the administration of this plan. Eligible employees, officers and directors, as well as those of our affiliated companies, would qualify for provisions of Section 102 of the Israeli Income Tax Ordinance of 1961 (New Version), or the Tax Ordinance. Section 102 of the Tax Ordinance allows employees, directors and officers who are not controlling shareholders and are considered Israeli residents to receive favorable tax treatment for compensation in the form of shares or options. Section 102 includes two alternatives for tax treatment involving the issuance of options or shares to a trustee for the benefit of the grantees and also includes an additional alternative for the issuance of options or shares directly to the grantee. Section 102(b)(2) of the Ordinance, the most favorable tax treatment for the grantee, permits the issuance to a trustee under the “capital gain track.” However, under this track we are not allowed to deduct an expense with respect to the issuance of the options or shares.
Our consultants and those of our affiliated companies and our employees, directors and/or officers and those of our affiliated companies who are controlling shareholders prior to and/or after the issuance of Ordinary Shares underlying the options may only be granted options under section 3(i) of the Tax Ordinance, which does not provide for similar tax benefits. In addition, the committee may, in its sole discretion, grant restricted shares to our service providers, subject to terms and conditions of our 2019 Plan and the applicable restricted shares agreement between the service provider and us.
As a default, our 2019 Plan provides that upon termination of a service provider’s engagement for any reason, other than in the event of death, disability or cause, all unvested options will terminate and the underlying Ordinary Shares will revert to our 2019 Plan, and all vested options will generally be exercisable for 90 days following such termination, subject to the terms of the 2019 Plan and the governing option agreement. Notwithstanding the foregoing, in the event the engagement is terminated for cause (including, inter alia, due to dishonesty toward us or our affiliate, substantial malfeasance or nonfeasance of duty and conduct substantially prejudicial to our or our affiliate’s business; or any substantial breach by the optionee of his or her service agreement) all options granted to such service provider, whether vested or unvested, will not be exercisable and will terminate on the date of the termination of his service agreement. If a service provider’s engagement with us is terminated six months following any exercise, payment or delivery pursuant to an option or restricted share, the service provider shall pay to us the amount of any gain realized or payment received as a result of the rescinded exercise, payment or delivery. Upon termination of a service agreement due to death or disability, all the options vested at the time of termination and within 60 days after the date of such termination, will generally be exercisable for 12 months, or such other period as determined by the plan administrator, subject to the terms of the 2019 Plan and the governing option agreement.
If we are party to a merger, acquisition, reorganization or consolidation in which we are not the surviving entity or the sale, transfer, exchange or other disposition of all or substantially all of our shares or assets, outstanding options, RSUs and shares acquired under the 2019 Plan will be subject to the agreement of merger or consolidation, which will provide for one or more of the following: (i) the assumption of such options by the surviving corporation or its parent, (ii) the substitution by the surviving corporation or its parent of new options, or (iii) in the event that the successor entity neither assumes nor substitutes all outstanding options, then the option shall terminate as of the date of a merger, acquisition, reorganization or consolidation in which we are not the surviving entity or the sale, transfer, exchange or other disposition of all or substantially all of our shares or assets.
| F. | Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation. |
Not Applicable.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | Major Shareholders. |
The following table sets forth information regarding beneficial ownership of our Ordinary Shares as of March 22, 2026 by:
| ● | each person, or group of affiliated persons, known to us to be the beneficial owner of 5% or more of our outstanding Ordinary Shares; | |
| ● | each of our directors and executive officers; and | |
| ● | all of our directors and executive officers as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to Ordinary Shares. Ordinary Shares issuable under share options or warrants that are exercisable within 60 days after March 22, 2026.
Except as indicated in footnotes to this table, we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown to be beneficially owned by them, based on information provided to us by such shareholders. Unless otherwise noted below, each beneficial owner’s address is: c/o Inspira Technologies Oxy B.H.N. Ltd., 2 Ha-Tidhar St., Ra’anana, 4366504 Israel.
| No. of Shares Beneficially Owned | Percentage Owned | |||||||
| Holders of 5% or more of our voting securities: | ||||||||
| Joe Ronen Hayon (1) | 3,204,010 | 7.4 | % | |||||
| Directors and Officers: | ||||||||
| Dagi Ben-Noon (2) * | 2,297,730 | 5.25 | % | |||||
| Avi Shabtai (3) | 820,368 | 1.88 | % | |||||
| Yafit Tehila (4) | 432,498 | 0.99 | % | |||||
| Daniella Yeheskely Hayon (5) | 314,999 | 0.72 | % | |||||
| Tal Parnes (6) * | 124,400 | 0.29 | % | |||||
| Sivan Matza (7) * | - | - | % | |||||
| Lior Amit (8)* | 36,665 | 0.08 | % | |||||
| All Executive Officers and Directors and holder of 5% or more of our voting securities, as a group (7 persons) | 7,230,670 | 16.61 | % | |||||
| * | Indicates director of the Company. |
| (1) | The beneficial ownership is based on the information provided in a Schedule 13G/A, filed on February 17, 2026, and includes (i) 655,623 Ordinary Shares; (ii) 2,491,228 ordinary shares vested pursuant to issued and outstanding RSUs, (iii) 57,159 ordinary shares issuable upon the exercise of vested options. Joe Ronen Hayon’s address is Derech Klil Hahoresh 14, Gesher Haziv Israel, 22815. |
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| (2) | No. of shares beneficially owned consists of 326,739 Ordinary Shares, (ii) 1,773,832 Ordinary Shares vested pursuant to issued and outstanding RSUs, (iii) 57,159 Ordinary Shares issuable upon the exercise of options within 60 days at an exercise price of NIS 0.37 (approximately $0.12) per share and (iv) 140,000 Ordinary Shares vested within 60 days pursuant to issued and outstanding RSUs. Mr. Ben-Noon’s options expire on April 20, 2030. |
| (3) | Includes (i) 683,712 Ordinary Shares vested pursuant to issued and outstanding RSUs, (ii) options to purchase 95,239 Ordinary Shares that are exercisable within 60 days, at an exercise price of NIS 0.37 (approximately $0.12) per share, and (iii) 41,417 Ordinary Shares vested within 60 days pursuant to issued and outstanding RSUs. Mr. Shabtai’s options expire on April 20, 2030. |
| (4) | Includes (i) 393,060 Ordinary Shares vested pursuant to issued and outstanding RSUs, (ii) options to purchase 13,605 Ordinary Shares that are exercisable within 60 days, at an exercise price of NIS 0.37 (approximately $0.12) per share and (iii) 25,833 Ordinary Shares vested within 60 days pursuant to issued and outstanding RSUs. Ms. Tehila’s options expire on March 16, 2031. |
| (5) | Includes (i) 293,332 Ordinary Shares vested pursuant to issued and outstanding RSUs and (ii) 21,667 Ordinary Shares vested within 60 days pursuant to issued and outstanding RSUs. |
| (6) | Includes (i) 99,998 Ordinary Shares vested pursuant to issued and outstanding RSUs, (ii) options to purchase 9,402 Ordinary Shares that are exercisable within 60 days, at an exercise price of NIS 0.37 (approximately $0.12) per share and (iii) 15,000 Ordinary Shares vested within 60 days pursuant to issued and outstanding RSUs. Mr. Parnes’s options expire on April 20, 2030. |
| (7) | Ms. Matza holds 30,000 Ordinary Shares issuable from outstanding RSUs, which will not vest within 60 days. |
| (8) | Includes (i) 31,665 Ordinary Shares vested pursuant to issued and outstanding RSUs (ii) 5,000 Ordinary Shares vested within 60 days pursuant to issued and outstanding RSUs. |
Changes in Percentage Ownership by Major Shareholders
During the year ended December 31, 2025, there was a decrease in the beneficial ownership of Joe Hayon from 7.66% to 7.4% and a decrease in the beneficial ownership of Dagi Ben Noon from 6.49% to 5.25%.
During the year ended December 31, 2024, there was a decrease in the beneficial ownership of Joe Hayon from 10.02% to 7.66% and a decrease in the beneficial ownership of Dagi Ben Noon from 8.15% to 6.49%. As of December 31, 2024, Armistice Capital, LLC is no longer a beneficial owner of 5% or more of the outstanding share capital of the Company.
During the year ended December 31, 2023, there was: (i) an increase in the beneficial ownership of Armistice Capital, LLC to 9.89%, (ii) a decrease in the beneficial ownership of Joe Hayon from 11.86% to 10.02%, and (iii) a decrease in the beneficial ownership of Dagi Ben Noon from 11.86% to 8.15%.
Record Holders
As of March 24, 2026, there were 23 shareholders of record of our Ordinary Shares, which were located in Israel. We are not controlled by another corporation, by any foreign government or by any natural or legal persons except as set forth herein, and there are no arrangements known to us which would result in a change in control of our company at a subsequent date.
| B. | Related Party Transactions. |
See “Item 6.B. Compensation” for compensation to our directors and officers.
Employment and Service Agreements
We have entered into written employment agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance. Some members of our senior management are eligible for bonuses each year. The bonuses are payable upon meeting objectives and targets that are set by our Chief Executive Officer and approved annually by our board of directors that also set the bonus targets for our Chief Executive Officer.
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On November 2, 2021, our board of directors approved and recommended to the shareholders of the Company to approve, the adoption of a compensation policy for a period of five (5) years, which was approved by our shareholders in a meeting that took place on December 17, 2021.
Options/RSUs
Since our inception, we have granted options to purchase our Ordinary Shares and RSUs to our officers and certain of our directors. Such option agreements may contain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe our option plans under “Item 6.E. Directors, Senior Management and Employees-Share Ownership-Equity Incentive Plan.” If the relationship between us and an executive officer or a director is terminated, except for cause (as defined in the various option plan agreements), options that are vested will generally remain exercisable for three months after such termination.
Shareholders Loans
When we considered pursuing an initial public offering on the ASX, we focused on an intravenous oxygenation device. As the development of this product did not progress as planned, we progressed with developing our INSPIRA ART product ahead of plans, reducing the time to market by approximately two years, and decided to pursue an initial public offering on Nasdaq rather than the ASX. On November 27, 2020, we entered into an agreement, or the Termination Agreement, with IML, the Founders and Newburyport to terminate the IPO Deed, the Deed of Variation and the 2019 CLA, or the Previous Agreements. Pursuant to the Termination Agreement, we agreed to convert the loan amount and the interest accrued under the 2019 CLA as of November 27, 2020, into 676,061 of our Ordinary Shares, at price per share of AUD 5.15 (approximately $3.45) or AUD 5.88 (approximately $3.91), and to issue to Newburyport or its affiliates 80,273 of our Ordinary Shares as promoter shares, and options to purchase 28,572 of our Ordinary Shares, to Daniel Goldstein, who promoted our contract with IML, at an exercise price of NIS 0.37 (approximately $0.12 per share). We also issued 169,016 warrants to IML, exercisable upon our IPO on the Nasdaq Capital Market. IML’s warrants are exercisable for three years. IML purchased its shares and distributed its holdings of our shares as a dividend to its shareholders following our IPO on the Nasdaq Capital Market. Each party to the Termination Agreement agreed to release each other party to the Termination Agreement from all the claims related to the IPO Deed, Deed of Variation and CLA. In addition, we agreed to hire Newburyport and Peter Marks, another affiliate of IML, as our business developers, to identify, introduce and promote us to potential investors, and to pay cash commission in the amount of 7% from the net proceeds received from an investment consummated within 12 months of our introduction to the investor by Newburyport or Peter Marks. As of November 28, 2021, we have paid Newburyport and Peter Marks AUD 403,000 (approximately $321,000) each, as cash commission for investor introductions.
| C. | Interests of Experts and Counsel. |
Not applicable.
ITEM 8. FINANCIAL INFORMATION.
| A. | Statements and Other Financial Information. |
See “Item 18. Financial Statements.”
Legal Proceedings
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. We are not currently party to, and our property is not the subject of, any material legal proceedings.
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On March 4, 2022, Exchange filed a complaint in the Federal Court for the Southern District of New York against us and our Chief Financial Officer, Joe Hayon, in connection with a contract between the parties pursuant to which Exchange provided certain consultancy services to us in preparation for our IPO. The precise damages sought are unclear, however Exchange is seeking approximately $250,000 plus 75,000 Ordinary Shares or the cash equivalent. On July 1, 2022, we filed a motion to dismiss for failure to state a claim upon relief can be granted based on the language of the written contract between the parties.
On March 8, 2023, the court issued an order granting our motion in part and denying it in part. Specifically, the court dismissed all claims against Joe Hayon and he is no longer a party in the action. The court also dismissed the breach of contract action (Count I) to the extent it was based improper termination or frustration. The Court also dismissed Count IV (Quantum Merit on the written agreement), Count VI (Breach of Implied Covenant of Good Faith) and Count VII (Fraud in the Inducement). The court allowed Count 1 (breach of written agreement based on alleged anticipatory repudiation), Count II (breach of alleged oral agreement), Count III (Promissory Estoppel to the extent based on alleged oral agreement) and Count V (Quantum Meruit based on alleged oral agreement) to survive the pleading or early dismissal stage. We will continue to defend ourselves vigorously with respect to this matter. In July 2023, following a confidential settlement agreement reached between the parties, this matter was voluntarily dismissed.
On December 12, 2021, we terminated our employment agreement with Dr. Udi Nussinovitch, who is one of our founders and who served as our Chief Scientific Officer since March 2018. On February 24, 2022, we sued Mr. Nussinovitch for breach good faith and his fiduciary duties as a shareholder and former officer of the Company. On November 9, 2022, Mr. Nussinovitch filed a statement of claim against us, as well as a statement of claim with the regional labor court in Tel Aviv on November 8, 2022. Mr. Nussinovitch alleged certain deficiencies in our Extraordinary General Meeting of Shareholders held on Friday, December 17, 2021, resulting from his status as a minority shareholder. In addition, with respect to the labor dispute, Mr. Nussinovitch is seeking renumeration and the issuance of Ordinary Shares. On July 19, 2023, a partial hearing about the labor dispute was held, in which the parties were required by the court to file their positions on a stay of the proceeding pending the decision on the case initiated by Mr. Nussinovitch in the District Court. On January 21, 2024, a partial hearing about the civil case was held. During the hearing, the court suggested the parties consider the possibility of resolving the case through an out-of-court arrangement or mediation. The parties agreed to a mediation process which did not succeed. On January 7, 2025, Mr. Nussinovitch filed a motion to amend his Statement of Claim, requesting to modify the requested relief. Instead of the original remedies sought, Mr. Nussinovitch now requests that the Company or Mr. Ben Noon and Mr. Hayon purchase all of his rights and shares in the Company at their average value from the date of the Company's IPO until the date of the general meeting held on December 17, 2021. On January 13, 2025, a pretrial hearing was held. The court denied Mr. Nussinovitch’s motion to amend and instructed him to notify whether he wishes to withdraw his original claim or maintain it. On May 7, 2025, the court issued its decision on the motion to dismiss. The judge ruled that the claim would be partially dismissed and that the continuation of the proceedings would be contingent upon payment of court fees. The court ordered the dismissal of remedies that Mr. Nussinovitch’s himself had clarified were no longer relevant and further determined that the declaratory remedies would remain in the claim and ruled that Mr. Nussinuvich must pay court fees in connection with the operative remedy regarding Mr. Nussinovich’s entitlement to receive the benefits granted to the controlling shareholders and the allocation of restricted shares. On June 26, 2025, Mr. Nussinovich submitted a notice to the court detailing the calculation of the claim value in relation to the operative remedies. On December 8, 2025, Mr. Nussinovich filed witness statements on his behalf. We believe that it is not probable that a payment will be required to settle this matter.
Dividends
We have never declared or paid any cash dividends on our Ordinary Shares and do not anticipate paying any cash dividends in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.
The Companies Law imposes further restrictions on our ability to declare and pay dividends. Under the Companies Law, we may declare and pay dividends only if, upon the determination of our board of directors, there is no reasonable concern that the distribution will prevent us from being able to meet the terms of our existing and foreseeable obligations as they become due. Under the Companies Law, the distribution amount is further limited to the greater of retained earnings or earnings generated over the two most recent years legally available for distribution according to our then last reviewed or audited financial statements, provided that the end of the period to which the financial statements relate is not more than six months prior to the date of distribution. In the event that we do not meet such earnings criteria, we may seek the approval of a court in order to distribute a dividend. The court may approve our request if it is convinced that there is no reasonable concern that the payment of a dividend will prevent us from satisfying our existing and foreseeable obligations as they become due.
Payment of dividends may be subject to Israeli withholding taxes. See “Item 10.E. Taxation”, for additional information.
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| B. | Significant Changes. |
No significant change, other than as otherwise described in this annual report on Form 20-F, has occurred in our operations since the date of our financial statements included in this annual report on Form 20-F.
ITEM 9. THE OFFER AND LISTING
| A. | Offer and Listing Details. |
Since July 16, 2021, our Ordinary Shares and Warrants have been traded on the Nasdaq Capital Market under the symbols “IINN” and “IINNW”, respectively.
| B. | Plan of Distribution. |
Not applicable.
| C. | Markets. |
Our Ordinary Shares and Warrants trade on the Nasdaq Capital Market.
| D. | Selling Shareholders. |
Not applicable.
| E. | Dilution. |
Not applicable.
| F. | Expenses of the Issue. |
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
| A. | Share Capital. |
Not applicable.
| B. | Memorandum and Articles of Association. |
A copy of our amended and restated articles of association is attached as Exhibit 1.1 to this annual report on Form 20-F. The information called for by this Item is set forth in Exhibit 2(d) to this annual report on Form 20-F and is incorporated by reference into this annual report on Form 20-F.
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| C. | Material Contracts. |
We have not entered into any material contract within the two years prior to the date of this Annual Report, other than contracts entered into in the ordinary course of business, as otherwise described herein in “Item 4.A. History and Development of the Company” above, “Item 4.B. Business Overview” above, “Item 6.C Board Practices - Indemnification,” “Item 6.E Share Ownership - Equity Incentive Plan,” “Item 7.A. Major Shareholders,” or “Item 7.B. Related Party Transactions,” above, or as otherwise described below:
| ● | Securities Purchase Agreement by and between the Company and certain signatories thereto, dated March 28, 2024. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Securities Purchase Agreement by and between the Company and certain signatories thereto, dated June 14, 2024. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Securities Purchase Agreement by and between the Company and certain signatories thereto, dated December 24, 2024. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Sales Agreement by and between the Company and A.G.P./Alliance Global Partners, dated March 14, 2025. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Securities Purchase Agreement by and between the Company and certain signatories thereto, dated December 12, 2025. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Standby Equity Purchase Agreement by and between the Company and YA II PN, LTD., dated December 12, 2025. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Senior Convertible Debenture by and between the Company and Bio-View Ltd., dated January 5, 2026. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Securities Purchase Agreement by and between the Company and the signatory thereto, dated February 5, 2026. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. | |
| ● | Sales Agreement by and between the Company and A.G.P./Alliance Global Partners, dated February 17, 2026. See Item 5.A “Operating and Financial Review and Prospects” for more information about this document. |
| D. | Exchange Controls. |
There are currently no Israeli currency control restrictions on payments of dividends or other distributions with respect to our securities or the proceeds from the sale of the shares, except for the obligation of Israeli residents to file reports with the Bank of Israel regarding certain transactions. However, legislation remains in effect pursuant to which currency controls can be imposed by administrative action at any time.
The ownership or voting of our securities by non-residents of Israel, except with respect to citizens of countries that are in a state of war with Israel, is not restricted in any way by our memorandum of association or amended and restated articles of association or by the laws of the State of Israel.
| E. | Taxation. |
The following is a description of the material Israeli income tax consequences of the ownership of our securities. The following also contains a description of material relevant provisions of the current Israeli income tax structure applicable to companies in Israel, with reference to its effect on us. To the extent that the discussion is based on new tax legislation which has not been subject to judicial or administrative interpretation, there can be no assurance that the tax authorities will accept the views expressed in the discussion in question. The discussion is not intended, and should not be taken, as legal or professional tax advice and is not exhaustive of all possible tax considerations.
The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our securities. Shareholders should consult their own tax advisors concerning the tax consequences of their particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.
General Corporate Tax Structure in Israel
Israeli companies are generally subject to corporate tax. As of January 2016, the corporate tax rate was 25%. As of January 1, 2017, the corporate tax rate was reduced to 24% and as of January 1, 2018, the corporate tax rate is 23%. However, the effective tax rate payable by a company that derives income from a Preferred Enterprise (as discussed below) may be considerably less. Capital gains derived by an Israeli company are generally subject to the prevailing corporate tax rate.
Capital gains derived by an Israeli resident company are subject to tax at the prevailing corporate tax rate. Under Israeli tax legislation, a corporation will be considered as an “Israeli resident company” if it meets one of the following: (i) it was incorporated in Israel; or (ii) the control and management of its business are exercised in Israel.
Law for the Encouragement of Industry (Taxes), 5729-1969
The Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the Industry Encouragement Law, provides several tax benefits for “Industrial Companies.”
The Industry Encouragement Law defines an “Industrial Company” as an Israeli resident-company, of which 90% or more of its income in any tax year, other than income from defense loans, is derived from an “Industrial Enterprise” owned by it. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial production.
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The following corporate tax benefits, among others, are available to Industrial Companies:
| ● | amortization of the cost of purchased a patent, rights to use a patent, and know-how, which are used for the development or advancement of the company, over an eight-year period, commencing on the year in which such rights were first exercised; |
| ● | under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and |
| ● | expenses related to a public offering are deductible in equal amounts over three years. |
Eligibility for benefits under the Industry Encouragement Law is not contingent upon approval of any governmental authority.
Tax Benefits and Grants for Research and Development
Under the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and related regulations, or the Research Law, research and development programs which meet specified criteria and are approved by the IIA are eligible for grants of up to 50% of the project’s expenditure, as determined by the research committee, in exchange for the payment of royalties from the revenues generated from the sale of products and related services developed, in whole or in part pursuant to, or as a result of, a research and development program funded by the IIA. The royalties are generally at a range of 3.0% to 5.0% of revenues until the entire IIA grant is repaid, together with an annual interest. As of January 1, 2024, annual interest on IIA grants approved by the IIA prior to January 1, 2024, but which are outstanding thereafter, will be calculated at a rate based on the 12-month secured overnight financing rate, or SOFR, or at an alternative rate published by the Bank of Israel plus 0.71513%; and, for grants approved on or following January 1, 2024 the annual interest will be the higher of (i) the 12 month SOFR, plus 1%, or (ii) a fixed annual interest rate of 4%.
The terms of the Research Law also require that the manufacture of products developed with government grants be performed in Israel. The transfer of manufacturing activity outside Israel may be subject to the prior approval of the IIA. Under the regulations of the Research Law, assuming we receive approval from the Chief Scientist to manufacture our IIA-funded products outside Israel, we may be required to pay increased royalties. The increase in royalties depends upon the manufacturing volume that is performed outside of Israel as follows:
| Manufacturing Volume Outside of Israel | Royalties to the Chief Scientist as a Percentage of Grant | |||
| Up to 50% | 120 | % | ||
| Between 50% and 90% | 150 | % | ||
| 90% and more | 300 | % | ||
If the manufacturing is performed outside of Israel by us, the rate of royalties payable by us on revenues from the sale of products manufactured outside of Israel will increase by 1% over the regular rates. If the manufacturing is performed outside of Israel by a third party, the rate of royalties payable by us on those revenues will be equal to the ratio obtained by dividing the amount of the grants received from the IIA and our total investment in the project that was funded by these grants. The transfer of no more than 10% of the manufacturing capacity in the aggregate outside of Israel is exempt under the Research Law from obtaining the prior approval of the IIA. A company requesting funds from the IIA also has the option of declaring in its IIA grant application an intention to perform part of its manufacturing outside Israel, thus avoiding the need to obtain additional approval. On January 6, 2011, the Research Law was amended to clarify that the potential increased royalties specified in the table above will apply even in those cases where the IIA approval for transfer of manufacturing outside of Israel is not required, namely when the volume of the transferred manufacturing capacity is less than 10% of total capacity or when the company received an advance approval to manufacture abroad in the framework of its IIA grant application. For applications to manufacture abroad submitted to the IIA after October 25, 2023, the maximum increased liability is up to 150% of the IIA grants, plus interest accrued thereon, instead of 300%.
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The know-how developed within the framework of the Chief Scientist plan may not be transferred to third parties outside Israel without the prior approval of a governmental committee charted under the Research Law. The approval, however, is not required for the export of any products developed using grants received from the Chief Scientist. The IIA approval to transfer know-how created, in whole or in part, in connection with an IIA-funded project to third party outside Israel where the transferring company remains an operating Israeli entity is subject to payment of a redemption fee to the IIA calculated according to a formula provided under the Research Law that is based, in general, on the ratio between the aggregate IIA grants to the company’s aggregate investments in the project that was funded by these IIA grants, multiplied by the transaction consideration. The transfer of such know-how to a party outside Israel where the transferring company ceases to exist as an Israeli entity is subject to a redemption fee formula that is based, in general, on the ratio between the aggregate IIA grants to the total financial investments in the company, multiplied by the transaction consideration. According to the January 2011 amendment, the redemption fee in case of transfer of know-how to a party outside Israel will be based on the ratio between the aggregate IIA grants received by the company and the company’s aggregate R&D expenses, multiplied by the transaction consideration. According to regulations promulgated following the 2011 amendment, the maximum amount payable to the IIA in case of transfer of know how outside Israel shall not exceed 6 times the value of the grants received plus interest, and in the event that the receiver of the grants ceases to be an Israeli corporation such payment shall not exceed six times the value of the grants received plus interest, with a possibility to reduce such payment to up to three times the value of the grants received plus interest if the R&D activity remains in Israel for a period of three years after payment to the IIA and maintain at least 75% of the research and development employees the Company had for the six months before the know-how was transferred, subject to additional conditions specified in the regulations.
Transfer of know-how within Israel is subject to an undertaking of the recipient Israeli entity to comply with the provisions of the Research Law and related regulations, including the restrictions on the transfer of know-how and the obligation to pay royalties, as further described in the Research Law and related regulations.
These restrictions may impair our ability to outsource manufacturing, engage in change of control transactions or otherwise transfer our know-how outside Israel and may require us to obtain the approval of the IIA for certain actions and transactions and pay additional royalties to the IIA. In particular, any change of control and any change of ownership of our securities that would make a non-Israeli citizen or resident an “interested party,” as defined in the Research Law, requires a prior written notice to the IIA in addition to any payment that may be required of us for transfer of manufacturing or know-how outside Israel. If we fail to comply with the Research Law, we may be subject to criminal charges or to mandatory repayment of grants received by us (together with interest and penalties).
Tax Benefits for Research and Development
Israeli tax law allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, for the year in which they are incurred. Expenditures are deemed related to scientific research and development projects, if:
| ● | The expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
| ● | The research and development must be for the promotion of the company; and |
| ● | The research and development is carried out by or on behalf of the company seeking such tax deduction. |
The amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific research and development projects. No deduction under these research and development deduction rules is allowed if such deduction is related to an expense invested in an asset depreciable under the general depreciation rules of the income Tax Ordinance, 1961. Expenditures not so approved are deductible in equal amounts over three years.
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From time to time, we may apply the Office of the Chief Scientist for approval to allow a tax deduction for all research and development expenses during the year incurred. There can be no assurance that such application will be accepted.
Law for the Encouragement of Capital Investments, 5719-1959
The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible assets).
Tax Benefits
The Investment Law grants tax benefits for income generated by a “Preferred Company” through its “Preferred Enterprise” (as such terms are defined in the Investment Law) The definition of a Preferred Company includes a company incorporated in Israel that is not fully owned by a governmental entity, and that has, among other things, Preferred Enterprise status and is controlled and managed from Israel. A Preferred Company is entitled to a reduced corporate tax rate of 16% with respect to its income derived by its Preferred Enterprise, unless the Preferred Enterprise is located in a specified development zone, in which case the rate will be 7.5%.
Dividends paid out of income attributed to a Preferred Enterprise are generally subject to withholding tax at source at the rate of 20% or such lower rate as may be provided in an applicable tax treaty. However, if such dividends are paid to an Israeli company, no tax is required to be withheld.
Taxation of our Shareholders
Capital Gains Taxes Applicable to Non-Israeli Resident Shareholders. A non-Israeli resident who derives capital gains from the sale of shares in an Israeli resident company will be exempt from Israeli tax so long as the shares were not held through a permanent establishment that the non-resident maintains in Israel. However, non-Israeli corporations will not be entitled to the foregoing exemption if Israeli residents: (i) have a controlling interest of 25% or more in such non-Israeli corporation or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.
Additionally, a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under Convention Between the Government of the U.S. and the Government of the State of Israel with respect to Taxes on Income, as amended, or the U.S.-Israel Tax Treaty, the sale, exchange or other disposition of shares by a shareholder who is a U.S. resident (for purposes of the treaty) holding the shares as a capital asset and is entitled to claim the benefits afforded to such a resident by the U.S.-Israel Tax Treaty, or a Treaty U.S. Resident, is generally exempt from Israeli capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising from the such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period preceding the disposition, subject to certain conditions; or (v) such Treaty U.S. Resident is an individual and was present in Israel for 183 days or more during the relevant taxable year.
In some instances where our shareholders may be liable for Israeli tax on the sale of their securities, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale.
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Taxation of Non-Israeli Shareholders on Receipt of Dividends. Non-Israeli residents are generally subject to Israeli income tax on the receipt of dividends paid on our securities at the rate of 25% (before a surtax at a rate of up to 5% on income above a certain threshold), which tax will be withheld at source, unless relief is provided in a treaty between Israel and the shareholder’s country of residence. With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30% (before a surtax at a rate of up to 5% on income above a certain threshold). A “substantial shareholder” is generally a person who alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means of control” generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. However, a distribution of dividends to non-Israeli residents is subject to withholding tax at source at a rate of 20% if the dividend is distributed from income attributed to a Preferred Enterprise, unless a reduced tax rate is provided under an applicable tax treaty. For example, under the U.S.-Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our securities who is a Treaty U.S. Resident is 25%. However, generally, the maximum rate of withholding tax on dividends, not generated by a Preferred Enterprise, that are paid to a U.S. corporation holding 10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. Notwithstanding the foregoing, dividends distributed from income attributed to a Preferred Enterprise are not entitled to such reduction under the tax treaty but are subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation, provided that the condition related to our gross income for the previous year (as set forth in the previous sentence) is met. If the dividend is attributable partly to income derived from a Preferred Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. We cannot assure you that we will designate the profits that we may distribute in a way that will reduce shareholders’ tax liability.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
THE FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSIDERED TO BE, LEGAL OR TAX ADVICE. EACH U.S. HOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND SALE OF ORDINARY SHARES INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.
Subject to the limitations described in the next two paragraphs, the following discussion summarizes the material U.S. federal income tax consequences to a “U.S. Holder” arising from the purchase, ownership and sale of the Ordinary Shares, the Warrants, and the Ordinary Shares issued or issuable upon exercise of the Warrants, collectively, the “securities”. For this purpose, a “U.S. Holder” is a holder of securities that is: (1) an individual citizen or resident of the U.S, including an alien individual who is a lawful permanent resident of the U.S. or meets the substantial presence residency test under U.S. federal income tax laws; (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) or a partnership (other than a partnership that is not treated as a U.S. person under any applicable U.S. Treasury regulations) created or organized under the laws of the U.S. or the District of Columbia or any political subdivision thereof; (3) an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of source; (4) a trust if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust; or (5) a trust that has a valid election in effect to be treated as a U.S. person to the extent provided in U.S. Treasury regulations.
This summary is for general information purposes only and does not purport to be a comprehensive description of all of the U.S. federal income tax considerations that may be relevant to a decision to purchase our securities. This summary generally considers only U.S. Holders that will own our securities as capital assets. Except to the limited extent discussed below, this summary does not consider the U.S. federal tax consequences to a person that is not a U.S. Holder, nor does it describe the rules applicable to determine a taxpayer’s status as a U.S. Holder. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, or the Code, final, temporary and proposed U.S. Treasury regulations promulgated thereunder, administrative and judicial interpretations thereof, and the U.S./Israel Income Tax Treaty, all as in effect as of the date hereof and all of which are subject to change, possibly on a retroactive basis, and all of which are open to differing interpretations. We will not seek a ruling from the IRS with regard to the U.S. federal income tax treatment of an investment in our securities by U.S. Holders and, therefore, can provide no assurances that the IRS will agree with the conclusions set forth below.
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This discussion does not address all of the aspects of U.S. federal income taxation that may be relevant to a particular U.S. holder based on such holder’s particular circumstances and in particular does not discuss any estate, gift, generation-skipping transfer, state, local, excise or foreign tax considerations. In addition, this discussion does not address the U.S. federal income tax treatment of a U.S. Holder who is: (1) a bank, life insurance company, regulated investment company, or other financial institution or “financial services entity;” (2) a broker or dealer in securities or foreign currency; (3) a person who acquired our securities in connection with employment or other performance of services; (4) a U.S. Holder that is subject to the U.S. alternative minimum tax; (5) a U.S. Holder that holds our securities as a hedge or as part of a hedging, straddle, conversion or constructive sale transaction or other risk-reduction transaction for U.S. federal income tax purposes; (6) a tax-exempt entity; (7) real estate investment trusts or grantor trusts; (8) a U.S. Holder that expatriates out of the U.S. or a former long-term resident of the U.S.; or (9) a person having a functional currency other than the U.S. dollar. This discussion does not address the U.S. federal income tax treatment of a U.S. Holder that owns, directly or constructively, at any time, securities representing 10% or more of our voting power. Additionally, the U.S. federal income tax treatment of partnerships (or other pass-through entities) or persons who hold securities through a partnership or other pass-through entity are not addressed.
Each prospective investor is advised to consult his or her own tax adviser for the specific tax consequences to that investor of purchasing, holding or disposing of our securities, including the effects of applicable state, local, foreign or other tax laws and possible changes in the tax laws.
Exercise or Expiry of Warrants
No gain or loss will be realized on the exercise of a Warrant. When a Warrant is exercised, the U.S. Holder’s cost of the common share acquired thereby will be equal to the U.S. Holder’s adjusted cost basis of the Warrant plus the exercise price paid for the common share. The expiry of an unexercised Warrant will generally give rise to a capital loss equal to the adjusted cost basis to the U.S. Holder of the expired Warrant. The holding period of the common share acquired thru the exercise of a Warrant includes the holding period of the Warrant.
Taxation of Dividends Paid on Ordinary Shares
We do not intend to pay dividends in the foreseeable future. In the event that we do pay dividends, and subject to the discussion under the heading “Passive Foreign Investment Companies” below and the discussion of “qualified dividend income” below, a U.S. Holder, other than certain U.S. Holders that are U.S. corporations, will be required to include in gross income as ordinary income the amount of any distribution paid on securities (including the amount of any Israeli tax withheld on the date of the distribution), to the extent that such distribution does not exceed our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. The amount of a distribution which exceeds our earnings and profits will be treated first as a non-taxable return of capital, reducing the U.S. Holder’s tax basis for the securities to the extent thereof, and then capital gain. We do not expect to maintain calculations of our earnings and profits under U.S. federal income tax principles and, therefore, U.S. Holders should expect that the entire amount of any distribution generally will be reported as dividend income.
In general, preferential tax rates for “qualified dividend income” and long-term capital gains are applicable for U.S. Holders that are individuals, estates or trusts. For this purpose, “qualified dividend income” means, inter alia, dividends received from a “qualified foreign corporation.” A “qualified foreign corporation” is a corporation that is entitled to the benefits of a comprehensive tax treaty with the U.S. which includes an exchange of information program. The IRS has stated that the Israel/U.S. Tax Treaty satisfies this requirement and we believe we are eligible for the benefits of that treaty.
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In addition, our dividends will be qualified dividend income if our securities are readily tradable on the Nasdaq Capital Market or another established securities market in the U.S. Dividends will not qualify for the preferential rate if we are treated, in the year the dividend is paid or in the prior year, as a PFIC, as described below under “Passive Foreign Investment Companies.” A U.S. Holder will not be entitled to the preferential rate: (1) if the U.S. Holder has not held our securities for at least 61 days of the 121 day period beginning on the date which is 60 days before the ex-dividend date, or (2) to the extent the U.S. Holder is under an obligation to make related payments on substantially similar property. Any days during which the U.S. Holder has diminished its risk of loss on our securities are not counted towards meeting the 61-day holding period. Finally, U.S. Holders who elect to treat the dividend income as “investment income” pursuant to Code section 163(d)(4) will not be eligible for the preferential rate of taxation.
The amount of a distribution with respect to our securities will be measured by the amount of the fair market value of any property distributed, and for U.S. federal income tax purposes, the amount of any Israeli taxes withheld therefrom. Cash distributions paid by us in NIS will be included in the income of U.S. Holders at a U.S. dollar amount based upon the spot rate of exchange in effect on the date the dividend is includible in the income of the U.S. Holder, and U.S. Holders will have a tax basis in such NIS for U.S. federal income tax purposes equal to such U.S. dollar value. If the U.S. Holder subsequently converts the NIS into U.S. dollars or otherwise disposes of them, any subsequent gain or loss in respect of such NIS arising from exchange rate fluctuations will be U.S. source ordinary exchange gain or loss.
Taxation of the Disposition of Securities
Except as provided under the PFIC rules described below under “Passive Foreign Investment Companies,” upon the sale, exchange or other disposition of our securities, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between such U.S. Holder’s tax basis for the securities in U.S. dollars and the amount realized on the disposition in U.S. dollar (or its U.S. dollar equivalent determined by reference to the spot rate of exchange on the date of disposition, if the amount realized is denominated in a foreign currency). The gain or loss realized on the sale, exchange or other disposition of securities will be long-term capital gain or loss if the U.S. Holder has a holding period of more than one year at the time of the disposition. Individuals who recognize long-term capital gains may be taxed on such gains at reduced rates of tax. The deduction of capital losses is subject to various limitations.
Passive Foreign Investment Companies
Special U.S. federal income tax laws apply to U.S. taxpayers who own shares of a corporation that is a PFIC. We will be treated as a PFIC for U.S. federal income tax purposes for any taxable year that either:
| ● | 75% or more of our gross income (including our pro rata share of gross income for any company, in which we are considered to own 25% or more of the shares by value), in a taxable year is passive; or | |
| ● | At least 50% of our assets, averaged over the year and generally determined based upon fair market value (including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value) are held for the production of, or produce, passive income. |
For this purpose, passive income generally consists of dividends, interest, rents, royalties, annuities and income from certain commodities transactions and from notional principal contracts. Cash is treated as generating passive income.
We believe that we will not be a PFIC for the current taxable year, although we have not determined whether we will be a PFIC in the foreseeable future. The tests for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of our securities. Accordingly, there can be no assurance that we currently are not or will not become a PFIC.
If we currently are or become a PFIC, each U.S. Holder who has not elected to mark the shares to market (as discussed below), would, upon receipt of certain distributions by us and upon disposition of our securities at a gain: (1) have such distribution or gain allocated ratably over the U.S. Holder’s holding period for the securities, as the case may be; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, when shares of a PFIC are acquired by reason of death from a decedent that was a U.S. Holder, the tax basis of such shares would not receive a step-up to fair market value as of the date of the decedent’s death, but instead would be equal to the decedent’s basis if lower, unless all gain were recognized by the decedent. Indirect investments in a PFIC may also be subject to these special U.S. federal income tax rules.
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The PFIC rules described above would not apply to a U.S. Holder who makes a QEF election for all taxable years that such U.S. Holder has held the securities while we are a PFIC, provided that we comply with specified reporting requirements. Instead, each U.S. Holder who has made such a QEF election is required for each taxable year that we are a PFIC to include in income such U.S. Holder’s pro rata share of our ordinary earnings as ordinary income and such U.S. Holder’s pro rata share of our net capital gains as long-term capital gain, regardless of whether we make any distributions of such earnings or gain. In general, a QEF election is effective only if we make available certain required information. The QEF election is made on a shareholder-by-shareholder basis and generally may be revoked only with the consent of the IRS. We do not intend to notify U.S. Holders if we believe we will be treated as a PFIC for any tax year. In addition, we do not intend to furnish U.S. Holders annually with information needed in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our Subsidiaries are a PFIC. Therefore, the QEF election will not be available with respect to our securities.
In addition, the PFIC rules described above would not apply if we were a PFIC and a U.S. Holder made a mark-to-market election. A U.S. Holder of our securities which are regularly traded on a qualifying exchange, including the Nasdaq Capital Market, can elect to mark the securities to market annually, recognizing as ordinary income or loss each year an amount equal to the difference as of the close of the taxable year between the fair market value of the securities and the U.S. Holder’s adjusted tax basis in the securities. Losses are allowed only to the extent of net mark-to-market gain previously included income by the U.S. Holder under the election for prior taxable years.
U.S. Holders who hold our securities during a period when we are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC. U.S. Holders are strongly urged to consult their tax advisors about the PFIC rules.
Tax on Net Investment Income
U.S. Holders who are individuals, estates or trusts will generally be required to pay a 3.8% Medicare tax on their net investment income (including dividends on and gains from the sale or other disposition of our securities), or in the case of estates and trusts on their net investment income that is not distributed to beneficiaries of the estate or trust. In each case, the 3.8% Medicare tax applies only to the extent the U.S. Holder’s total adjusted income exceeds applicable thresholds.
Information Reporting and Withholding
A U.S. Holder may be subject to backup withholding at a rate of 24% with respect to cash dividends and proceeds from a disposition of securities. In general, backup withholding will apply only if a U.S. Holder fails to comply with specified identification procedures. Backup withholding will not apply with respect to payments made to designated exempt recipients, such as corporations and tax-exempt organizations. Backup withholding is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, provided that the required information is timely furnished to the IRS.
A U.S. Holder with interests in “specified foreign financial assets” (including, among other assets, our securities, unless such securities are held on such U.S. Holder’s behalf through a financial institution) may be required to file an information report with the IRS if the aggregate value of all such assets exceeds $50,000 on the last day of the taxable year or $75,000 at any time during the taxable year (or such higher dollar amount as may be prescribed by applicable IRS guidance); and may be required to file a Report of Foreign Bank and Financial Accounts, or FBAR, if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. You should consult your own tax advisor as to the possible obligation to file such information report.
| F. | Dividends and Paying Agents. |
Not applicable.
| G. | Statement by Experts. |
Not applicable.
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| H. | Documents on Display. |
We are subject to the information reporting requirements of the Exchange Act, applicable to foreign private issuers and under those requirements file reports with the SEC. The SEC maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through the SEC’s website at www.sec.gov.
As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our principal shareholders and until March 18, 2026, our officers and directors, are exempt from the reporting provisions contained in Section 16 of the Exchange Act. Further, our officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act. However, we file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and may submit to the SEC, on a Form 6-K, unaudited quarterly financial information.
We maintain a corporate website www.inspira-technologies.com. Information contained on, or that can be accessed through, our website and the other websites referenced above do not constitute a part of this annual report on Form 20-F. We have included these website addresses in this annual report on Form 20-F solely as inactive textual references.
| I. | Subsidiary Information. |
Not applicable.
| J. | Annual Report to Security Holders |
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the ordinary course of our operations, we are exposed to certain market risks, primarily changes in foreign currency exchange rates and interest rates.
Quantitative and Qualitative Disclosure About Market Risk
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our current investment policy is to invest available cash in bank deposits with banks that have a credit rating of at least A-minus. Accordingly, a substantial majority of our equivalents is held in deposits that bear interest. Given the current low rates of interest we receive, we will not be adversely affected if such rates are reduced. Our market risk exposure is primarily a result of NIS/U.S. dollar exchange rates, which is discussed in detail in the following paragraph.
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Foreign Currency Exchange Risk
We operate primarily in Israel, and approximately 80% of our expenses are denominated in NIS. We are therefore exposed to market risk, which represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We are subject to fluctuations in foreign currency rates in connection with these arrangements.
We currently partially hedge our foreign currency exchange rate risk to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.
Interest Rate Risk
We do not anticipate undertaking any significant long-term borrowings. At present, our investments consist primarily of cash and cash equivalents, and short-term deposits. The primary objective of our investment activities is to preserve principal while maximizing the income that we receive from our investments without significantly increasing risk and loss. Our investments may be exposed to market risk due to fluctuation in interest rates, which may affect our interest income and the fair market value of our investments, if any.
Impact of Inflation and Currency Fluctuations
Inflation generally affects us by increasing our NIS-denominated expenses, including salaries and benefits, as well as facility rental costs and payment to local suppliers. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the year ended December 31, 2025.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
| A. | Debt Securities. |
Not applicable.
| B. | Warrants and rights. |
Not applicable.
| C. | Other Securities. |
Not applicable.
| D. | American Depositary Shares. |
Not applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
In July 2021, we completed our IPO of Ordinary Shares and warrants pursuant to Registration Statement on Form F-1, as amended (Registration No. 333-253920), whereby we sold 2,909,091 Ordinary Shares and 3,345,455 tradable warrants (inclusive of 436,364 tradable warrants pursuant to the exercise of an overallotment option granted to the underwriters). All these Ordinary Shares and warrants were sold at a combined price of $5.50 per unit, yielding an aggregate net proceeds received by us from the IPO were $14 million, after underwriting discounts and other offering costs. We continue to use the proceeds from the exercise of warrants related to this offering, as described in the final prospectus filed with the SEC on July 15, 2021, under File Nos. 333-253920 and 333-279276.
ITEM 15. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2025, or the Evaluation Date. Based on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be included in periodic filings under the Exchange Act and that such information is accumulated and communicated to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission as of the end of the period covered by this report. Based on that evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2025 at providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
(c) Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting due to an exemption for EGCs provided in the JOBS Act.
(d) Changes in Internal Control over Financial Reporting
During the year ended December 31, 2025, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that each member of our audit committee is an audit committee financial expert, as defined under the rules under the Exchange Act, and is independent in accordance with applicable Exchange Act rules and Nasdaq rules.
ITEM 16B. CODE OF ETHICS
We have adopted a written code of ethics that applies to our officers and employees, including our principal executive officer, principal financial officer, principal controller and persons performing similar functions as well as our directors. Our Code of Business Conduct and Ethics is posted on our website at www.icecure-medical.com. Information contained on, or that can be accessed through, our website does not constitute a part of this annual report on Form 20-F and is not incorporated by reference herein. If we make any amendment to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of the code, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations of the SEC including the instructions to Item 16B of Form 20-F. We have not granted any waivers under our Code of Business Conduct and Ethics.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Ziv Haft., Certified Public Accountants, Isr., BDO member firm, an independent registered public accounting firm, has served as our principal independent registered public accounting firm for each of the two years ended December 31, 2024 and 2025.
The following table provides information regarding fees paid by us to Ziv Haft and/or other BDO member firms for all services, including audit services, for the years ended December 31, 2024 and 2025.
| Year Ended December 31, (in thousands) |
||||||||
| 2025 | 2024 | |||||||
| Audit fees (1) | $ | 146 | $ | 129.5 | ||||
| Review of registration statements | $ | 33.5 | $ | 16.5 | ||||
| Total | $ | 179.5 | $ | 146 | ||||
| (1) | Includes professional services rendered in connection with the audit of our annual financial statements and review of our interim financial statements. |
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Pre-Approval of Auditors’ Compensation
Our audit committee has a pre-approval policy for the engagement of our independent registered public accounting firm to perform certain audit and non-audit services. Pursuant to this policy, which is designed to assure that such engagements do not impair the independence of our auditors, the audit committee pre-approves annually a catalog of specific audit and non-audit services in the categories of audit services, audit-related services and tax services that may be performed by our independent registered public accounting firm. If a type of service, that is to be provided by our auditors, has not received such general pre-approval, it will require specific pre-approval by our audit committee. The policy prohibits retention of the independent registered public accounting firm to perform the prohibited non-audit functions defined in applicable SEC rules.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Under Nasdaq rules, we may elect to follow certain corporate governance practices permitted under the Companies Law in lieu of compliance with corresponding corporate governance requirements otherwise imposed by the Nasdaq rules for U.S. domestic issuers.
In accordance with Israeli law and practice and subject to the exemption set forth in Rule 5615 of the Nasdaq rules, we have elected to follow the provisions of the Companies Law, rather than the Nasdaq rules, with respect to the following requirements:
| ● | Quorum. While the Nasdaq rules require that the quorum for purposes of any meeting of the holders of a listed company’s ordinary voting stock, as specified in the company’s bylaws, be no less than 33 1/3% of the company’s outstanding ordinary voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our amended and restated articles of association provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting. However, the quorum set forth in our amended and restated articles of association with respect to an adjourned meeting consists of at least one shareholder present in person or by proxy. |
| ● | Nomination of our directors. With the exception of directors elected by our board of directors and external directors (if applicable), our directors are generally elected by an annual meeting of our shareholders for a term of office that expires on the annual general meeting following their election or re-election. The nominations for directors, which are presented to our shareholders by our board of directors, are generally made by the board of directors itself, in accordance with the provisions of our amended and restated articles of association and the Companies Law. Nominations need not be made by a nominating committee of our board of directors consisting solely of independent directors, as required under the Nasdaq rules. |
| ● | Compensation of officers. Israeli law and our amended and restated articles of association do not require that the independent members of our board of directors (or a compensation committee composed solely of independent members of our board of directors) determine an executive officer’s compensation, as is generally required under the Nasdaq rules with respect to the chief executive officer and all other executive officers. Instead, compensation of executive officers is determined and approved by our compensation committee and our board of directors, and in certain circumstances by our shareholders, either in consistency with our office holder compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations stated in the Companies Law. See “Item 6.C. Directors, Senior Management and Employees-Board Practices-Approval of Related Party Transactions under Israeli law” for additional information. |
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| ● | Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporation actions in accordance with Nasdaq Listing Rule 5635. In particular, under this Nasdaq rule, shareholder approval is generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of equity compensation arrangements (although under the provisions of the Companies Law there is no requirement for shareholder approval for the adoption/amendment of the equity compensation plan); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among other things: (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required, (ii) extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval, and (iii) terms of employment or other engagement of the controlling shareholder of us or such controlling shareholder’s relative, which require special approval. In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies. |
| ● | Approval of Related Party Transactions. All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transaction as set forth in the Companies Law, which requires the approval of the audit committee, or the compensation committee, as the case may be, the board of directors and shareholders, as may be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our board of directors as required under the Nasdaq rules. See “Item 6.C. Directors, Senior Management and Employees-Board Practices-Approval of Related Party Transactions under Israeli law” for additional information. | |
| ● | Annual Shareholders Meeting. As opposed to the Nasdaq Listing Rule 5620(a), which mandates that a listed company hold its annual shareholders meeting within one year of the company’s fiscal year-end, we are required, under the Companies Law, to hold an annual shareholders’ meeting each calendar year and within 15 months of the last annual shareholders meeting. | |
| ● | Distribution of periodic reports to shareholders; proxy solicitation. As opposed to the Nasdaq rules, which require listed issuers to make such reports available to shareholders in one of a number of specific manners, Israeli law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. In addition to making such reports available on a public website, we currently make our audited financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC’s proxy solicitation rules. |
Shareholder approval is generally required for officer compensation in the event (i) approval by our Board of Directors and our compensation committee is not consistent with our office holder compensation policy, or (ii) compensation required to be approved is that of our chief executive officer or an executive officer who is also the controlling shareholder of our company (including an affiliate thereof). Such shareholder approval shall require a majority vote of the shares present and voting at a shareholders meeting, provided either (i) such majority includes a majority of the shares held by non-controlling shareholders who do not otherwise have a personal interest in the compensation arrangement that are voted at the meeting, excluding for such purpose any abstentions disinterested majority, or (ii) the total shares held by non-controlling and disinterested shareholders voted against the arrangement does not exceed 2% of the voting rights in our company.
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Additionally, approval of the compensation of an executive officer who is also a director requires a simple majority vote of the shares present and voting at a shareholders meeting, if consistent with our office holder compensation policy. Our compensation committee and board of directors may, in special circumstances, approve the compensation of an executive officer (other than a director, a chief executive officer or a controlling shareholder) or approve the compensation policy despite shareholders’ objection, based on specified arguments and taking shareholders’ objection into account. Our compensation committee may further exempt an engagement with a nominee for the position of chief executive officer, who meets the non-affiliation requirements set forth for an external director, from requiring shareholder approval, if such engagement is consistent with our office holder compensation policy and our compensation committee determines based on specified arguments that presentation of such engagement to shareholder approval is likely to prevent such engagement. To the extent that any such transaction with a controlling shareholder is for a period exceeding three years, approval is required once every three years.
A director or executive officer may not be present when the board of directors of a company discusses or votes upon a transaction in which he or she has a personal interest, except in case of ordinary transactions, unless the chairman of the board of directors determines that he or she should be present to present the transaction that is subject to approval.
| ● | Independent directors. Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present, which Nasdaq rules otherwise require. |
| ● | Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporation actions in accordance with Nasdaq Listing Rule 5635. In particular, under this Nasdaq rule, shareholder approval is generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of equity compensation arrangements (although under the provisions of the Companies Law there is no requirement for shareholder approval for the adoption/amendment of the equity compensation plan); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) below a specified minimum price. By contrast, under the Companies Law, shareholder approval is required for, among other things: (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required, subject to applicable relief, (ii) extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval, and (iii) terms of employment or other engagement of the controlling shareholder of us or such controlling shareholder’s relative, which require special approval. In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies. |
| ● | Approval of Related Party Transactions. All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transaction as set forth in the Companies Law, which requires the approval of the audit committee, or the compensation committee, as the case may be, the board of directors and shareholders, as may be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our board of directors as required under the Nasdaq rules. |
| ● | Annual Shareholders Meeting. As opposed to the Nasdaq Listing Rule 5620(a), which mandates that a listed company hold its annual shareholders meeting within one year of the company’s fiscal year-end, we are required, under the Companies Law, to hold an annual shareholders’ meeting each calendar year and within 15 months of the last annual shareholders meeting. |
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ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES.
We have
This policy prohibits, among other things, insider trading and certain speculative transactions in our securities (including short sales, buying put and selling call options and other hedging or derivative transactions in our securities) and establishes a regular blackout period schedule during which directors, senior management, employees, and other covered persons may not trade in our securities, as well as certain pre-clearance procedures that directors and officers of the Company, the Company’s subsidiaries and/or affiliates must observe prior to effecting any transaction in our securities.
We believe that the policy is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and listing standards applicable to us. A copy of the policy is filed as Exhibit 11.1 to this Form 20-F.
ITEM 16K. CYBERSECURITY.
The Company has developed
and maintained a cybersecurity risk management strategy, consisting of cybersecurity policies, procedures, compliance and awareness programs
to mitigate risk and to ensure compliance with security, availability and confidentiality trust principles.
The level of each identified risk is determined by considering the impact of the risk itself and the likelihood of the risk materializing and high scoring risks are actioned upon. Risks are analyzed to determine whether the risk meets company risk acceptance criteria to be accepted or whether a mitigation plan will be applied. Mitigation plans include both the individual or department responsible for the plan and may include budget considerations.
Governance
Risk Management and Strategy
As part of the critical elements of our overall risk management approach, our cybersecurity program is focused on the following key areas:
| ● | Collaborative Approach: The Company has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. |
| ● | Technical Safeguards: The Company deploys technical safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. |
| ● | Incident Response and Recovery Planning: The Company has established and maintains comprehensive incident response and recovery plans that fully address the Company’s response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis. |
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PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements and related information pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The financial statements and the related notes required by this Item are included in this annual report on Form 20-F beginning on page F-1.
ITEM 19. EXHIBITS
| * | Filed herewith. |
| % | Furnished herewith. |
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on Form 20-F filed on its behalf.
| INSPIRA TECHNOLOGIES OXY B.H.N. LTD. | ||
| Date: March 26, 2026 | By: | /s/ Dagi Ben-Noon |
| Dagi Ben-Noon | ||
| Chief Executive Officer | ||
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INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
TABLE OF CONTENTS
______________________
________________
____________
The amounts are stated in thousands of U.S. dollars
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Shareholders of Inspira Technologies Oxy B.H.N. Ltd.
Ha-Tidhar Street 2, Ra’anana, Israel
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Inspira Technologies Oxy B.H.N. Ltd. (the “Company”) as of December 31, 2025 and 2024, the related statements of comprehensive loss, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively, the “Financial Statements”). In our opinion, the Financial Statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Going Concern
The accompanying Financial Statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1.3 to these Financial Statements, the Company is at its deployment stage with respect to the INSPIRA ART100, and is in development stage with its other technologies, therefore, it has suffered recurring losses and negative cash flows from operations since inception. As of December 31, 2025, the Company had incurred accumulated losses of $80 million. The Company’s operations have been funded substantially through issuance of shares and warrants. Considering the above, the Company’s dependency on external funding for its operations raises a substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are described in Note 1.3 The Financial Statements do not include any adjustments that might result from the outcome of these uncertainties.
Basis for Opinion
These Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these Financial Statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Financial Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Financial Statements. We believe that our audits provide a reasonable basis for our opinion.
| We have served as the Company’s auditors since 2018. | BDO Member Firm /s/ |
| March 25, 2026 | Certified Public Accountants (Isr.) |
F-2
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
BALANCE SHEETS
(US dollars in thousands)
| December 31, | December 31, | |||||||||
| Note | 2025 | 2024 | ||||||||
| ASSETS | ||||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | 3 | |||||||||
| Deposits | 4 | |||||||||
| Other current assets | 5 | |||||||||
| Inventory | 6 | |||||||||
| Total current assets | ||||||||||
| Non-Current Assets: | ||||||||||
| Right of use assets, net | 10 | |||||||||
| Property, plant and equipment, net | 7 | |||||||||
| Total non-current assets | ||||||||||
| Total Assets | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Trade accounts payables | ||||||||||
| Other accounts payables | 8 | |||||||||
| Lease liabilities | 10 | |||||||||
| Financial liabilities at fair value | 11 | |||||||||
| Total current liabilities | ||||||||||
| Non-Current Liabilities: | ||||||||||
| Lease liabilities | 10 | |||||||||
| Total non- current liabilities | ||||||||||
| COMMITMENTS AND CONTINGENCIES | 9 | |||||||||
| Shareholders’ Equity: | ||||||||||
| Ordinary shares, Authorized Issued and outstanding | ||||||||||
| Share capital and additional paid in capital | 12 | |||||||||
| Accumulated losses | ( | ) | ( | ) | ||||||
| Total Shareholders’ Equity | ||||||||||
| Total liabilities and Shareholders’ Equity | ||||||||||
These Financial Statements were authorized by the Board of Directors on March 25, 2026.
The accompanying notes are an integral part of the Financial Statements.
F-3
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
STATEMENTS OF COMPREHENSIVE LOSS
(US dollars in thousands except for loss per share)
| Year ended December 31, | ||||||||||||||
| Note | 2025 | 2024 | 2023 | |||||||||||
| Revenues | 13 | |||||||||||||
| Cost of revenues | 14 | |||||||||||||
| Gross Profit | ||||||||||||||
| Research and development expenses | 15 | |||||||||||||
| General and administrative expenses | 16 | |||||||||||||
| Sales and marketing expenses | 17 | |||||||||||||
| Other expenses | ||||||||||||||
| Operating loss | ||||||||||||||
| Interest income from deposits | ( | ) | ( | ) | ( | ) | ||||||||
| Finance expenses (income), net | 18 | ( | ) | ( | ) | ( | ) | |||||||
| Loss before tax | ||||||||||||||
| Taxes on income | 19 | |||||||||||||
| Total comprehensive and net loss | ||||||||||||||
| Net loss per ordinary share, basic and diluted | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average number of ordinary shares outstanding basic and diluted | ||||||||||||||
The accompanying notes are an integral part of the Financial Statements.
F-4
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(US dollars in thousands)
For the year ended December 31, 2025:
| Ordinary Share Capital | ||||||||||||||||
| Number of shares | Share capital and Additional Paid in Capital | Accumulated deficit | Total | |||||||||||||
| Balance as of January 1, 2025: | ( | ) | ||||||||||||||
| Changes during the period: | ||||||||||||||||
| Issuance of ordinary shares, net | - | |||||||||||||||
| Issuance of ordinary shares (pursuant to an at-the-market facility) | - | |||||||||||||||
| Exercise of options | - | |||||||||||||||
| Exercise of December 2024 warrants and pre-funded warrants into ordinary shares, net | - | |||||||||||||||
| Restricted share unit (“RSU”) vesting | - | |||||||||||||||
| Issuance of ordinary shares- advisor fees | - | |||||||||||||||
| Issuance of ordinary shares- commitment fees | - | |||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Comprehensive and net loss | - | ( | ) | ( | ) | |||||||||||
| Balance as of December 31, 2025 | ( | ) | ||||||||||||||
F-5
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(US dollars in thousands)
For the year ended December 31, 2024:
| Ordinary Share Capital | ||||||||||||||||
| Number of shares | Share capital and Additional Paid in Capital | Accumulated deficit | Total | |||||||||||||
| Balance as of January 1, 2024: | ( | ) | ||||||||||||||
| Changes during the period: | ||||||||||||||||
| Issuance of ordinary shares, private warrants and pre- funded warrants, net | ||||||||||||||||
| Exercise of options | ||||||||||||||||
| Exercise of June 2024 pre-funded warrants into ordinary shares | ||||||||||||||||
| RSU vesting | - | |||||||||||||||
| Issuance of ordinary shares- advisor fees | ||||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Comprehensive and net loss | - | ( | ) | ( | ) | |||||||||||
| Balance as of December 31, 2024 | ( | ) | ||||||||||||||
The accompanying notes are an integral part of the Financial Statements.
F-6
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(US dollars in thousands)
For the year ended December 31, 2023:
| Ordinary Share Capital | ||||||||||||||||
| Number of shares | Share capital and Additional Paid in Capital | Accumulated deficit | Total | |||||||||||||
| Balance as of January 1, 2023: | ( | ) | ||||||||||||||
| Changes during the period: | ||||||||||||||||
| Issuance of ordinary shares and private warrants, net | ||||||||||||||||
| Issuance of placement agent warrants (Note 11.3) | - | |||||||||||||||
| Issuance of ordinary shares (pursuant to an at-the-market facility) | ||||||||||||||||
| Exercise of share-based payments | ||||||||||||||||
| RSU vesting | - | |||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Comprehensive and net loss | - | ( | ) | ( | ) | |||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||
The accompanying notes are an integral part of the Financial Statements.
F-7
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
STATEMENTS OF CASH FLOW
(US dollars in thousands)
| Year ended December 31 | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
| Depreciation | ||||||||||||
| Capital loss | ||||||||||||
| Share based compensation expenses | ||||||||||||
| Share based compensation – placement agent warrants | ||||||||||||
| Evaluation of financial liability at fair value | ( | ) | ( | ) | ||||||||
| Expiration of financial liability | ( | ) | ||||||||||
| Issuance cost | ||||||||||||
| Issuance of ordinary shares - advisor fees | ||||||||||||
| Prepayments of lease liabilities | ( | ) | ( | ) | ||||||||
| Decrease (increase) in right of use assets, net | ( | ) | ||||||||||
| Decrease (increase) in other current assets | ( | ) | ||||||||||
| (Decrease) increase in trade accounts payables | ( | ) | ( | ) | ||||||||
| (Decrease) increase in other accounts payable | ( | ) | ( | ) | ||||||||
| (Increase) decrease in inventory | ( | ) | ( | ) | ||||||||
| Unrealized foreign exchange (gain) loss | ( | ) | ( | ) | ||||||||
| Financial expenses due to commitment fee – Standby Equity Purchase Agreement (SEPA) | ||||||||||||
| Issuance of ordinary shares - commitment fee (SEPA) | ||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchase of property, plant, and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Change in deposits, net | ||||||||||||
| Net cash provided by investing activities | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Issuance of ordinary shares, pre-funded warrants and ordinary warrants, net | ||||||||||||
| Exercise of options | ||||||||||||
| Exercise of warrants and pre-funded warrants, net | ||||||||||||
| Issuance of ordinary shares (issuances pursuant to an at-the-market facility), net | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | ( | ) | ( | ) | ||||||||
| Cash, cash equivalents and restricted cash at the beginning of the period | ||||||||||||
| Cash, cash equivalents and restricted cash at the end of the period | ||||||||||||
The accompanying notes are an integral part of the Financial Statements.
F-8
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
STATEMENTS OF CASH FLOW
(US dollars in thousands)
APPENDIX A - RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the balance sheet that sum to the total of the same such amounts shown in the statement of cash flows.
| Year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash and cash equivalents | ||||||||||||
| Restricted cash | ||||||||||||
| Total cash, cash equivalents and restricted cash shown in the statement of cash flows | ||||||||||||
APPENDIX B – NON-CASH TRANSACTIONS:
| Year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Other receivable in connection to December private placement | ||||||||||||
| Accrued issuance expenses | ( | ) | ( | ) | ||||||||
| Financial liability- placement agent fee (Note 10-A) | ( | ) | ||||||||||
| Share based compensation- placement agent warrants against additional paid in capital (Note 11) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | ( | ) | |||||||
APPENDIX C - AMOUNT PAID DURING THE PERIOD:
| Year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Interest paid | ||||||||||||
The accompanying notes are an integral part of the Financial Statements
F-9
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 1 - GENERAL:
| 1. | Inspira Technologies Oxy B.H.N. Ltd (the “Company”) was incorporated in Israel and commenced its operations on February 27, 2018. The Company operates in the medical technology industry in the field of respiratory support technology engaged in the research, development, manufacturing related activities, and go-to-market activities of proprietary products and technologies. The Company is developing the following products: |
| ● | The INSPIRA ART (Augmented Respiratory Technology), which is a respiratory support technology targeted toward utilizing blood monitoring and direct blood oxygenation to boost patient saturation levels within minutes while the patient is awake. The aim is to provide an alternative to invasive mechanical ventilation, associated with high risks, complications, high costs and high mortality rates. |
| ● | The HYLA blood sensor, which is a non-invasive optical blood sensor designed to perform real-time and continuous blood parameter measurements, potentially reducing the need for intermittent blood samples from patients. |
| ● | The INSPIRA ART100 System, an advanced form of life support system, better known by the medical industry as a cardiopulmonary bypass system, has been designed for use in procedures requiring cardiopulmonary bypass for six hours or less. |
The Company’s INSPIRA ART100 system received U.S. Food and Drug Administration (“FDA”) 510(k) regulatory clearance for cardiopulmonary bypass procedures and Israeli Medical Equipment Division certification for extra-corporeal membrane oxygenation and cardiopulmonary bypass procedures. The Company’s other products, including the INSPIRA ART and HYLA™ blood sensor, have not yet been tested or used in humans and have not been approved by any regulatory entity.
| 2. | On March 14, 2025, the Company entered into a sales agreement pursuant to which the Company could offer and sell, from time to time, through the sales agent, ordinary shares, no par value, of the Company (“Ordinary Shares”) pursuant to an at-the-market facility (the “March 2025 ATM”), having an aggregate offering price of up to $ |
| 3. | The accompanying financial statements (the “Financial Statements”) have been prepared assuming that the Company will continue as a going concern. To date, the Company is at the deployment stage with respect to the INSPIRA ART100, and is in development stage with its other technologies. Therefore, the Company has suffered recurring losses from operations and negative cash flows from operations since inception. As of December 31, 2025, the Company had incurred accumulated losses of $ |
F-10
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 1 - GENERAL (CONT.):
| 4. | Our offices are located in Ra’anana, Israel. On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Following the October 7, 2023 attacks by Hamas terrorists in Israel’s southern border, Israel declared war against Hamas and since then, Israel has been involved in military conflicts with Hamas, Hezbollah, a terrorist organization based in Lebanon, and Iran, both directly and through proxies like the Houthi movement in Yemen and armed groups in Iraq and other terrorist organizations. Additionally, following the fall of the Assad regime in Syria, Israel has conducted limited military operations targeting the Syrian army, Iranian military assets and infrastructure linked to Hezbollah and other Iran-supported groups. |
On June 13, 2025, Israel launched a strike against Iran, aimed to disrupt Iran’s capacity to coordinate or launch hostilities against Israel. Iran has retaliated in response, firing missiles and drones at Israeli military and civilian infrastructure. More recently, in February 2026, hostilities between Israel and Iran escalated again.
In late February 2026, Israel, together with the United States, conducted a major joint military campaign of air and missile strikes against targets in Iran, which triggered a broad Iranian response and contributed to significant regional instability. The situation remains highly fluid, and we are unable to predict when, or on what terms, this escalation will be resolved.
Although certain ceasefire agreements have been reached with Hamas, and the level of hostilities has since decreased, the situation remains volatile, with the potential for escalation into a broader regional conflict involving additional terrorist organizations and possibly other countries, including as a result of instability arising from developments in Syria.
Other regional hostilities, since October 7, 2023, concurrently became more pronounced. This includes and has included a northern front war igniting between Israel and Hezbollah, which as of February 24, 2025 we are under a ceasefire, hostilities between Israel and Iran, which have included Iranian strikes against Israel in April 2024 and October 2024, and subsequent retaliation by Israel to both instances, and a continued conflict between Israel and the Houthi Movement in Yemen.
Currently, one of our employees is serving in military reserve duty. In addition, due to the ongoing security situation, we may experience occasional delays in the shipment of inventory. However, as of the date of these Financial Statements, these events have no material impact on the Company’s operations.
| 5. | These Financial Statements were authorized by the Board of Directors on March 25, 2026 |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
The accompanying Financial Statements have been prepared in conformity with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). The significant accounting policies followed in the preparation of the Financial Statements are as follows:
A. Use of estimates:
The preparation of Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of expenses during the reporting period.
F-11
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.):
Items subject to such estimates and assumptions include:
| ● | stock-based compensation expense; |
| ● | fair value financial liabilities; |
| ● | recognition, measurement, and disclosure of contingent liabilities; |
| ● | Interest rate used for lease liability measurement. |
As of the date of issuance of the Financial Statements, the Company is not aware of any material specific events or circumstances that would require it to update its estimates, judgments, or to revise the carrying values of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the Financial Statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s Financial Statements.
B. Foreign Currency
The currency of the primary economic environment in which the operations of the Company are conducted is the U.S. dollar (“USD”). The Company’s funding and expected revenues are mostly in USD. Thus, the functional currency of the Company is in USD.
Transactions and balances originally denominated in USD are presented at their original amounts. Balances in non-USD currencies are translated into USD using historical and current exchange rates for non-monetary and monetary balances, respectively. For non-USD transactions and other items in the statements of income (indicated below), the following exchange rates are used: (i) for transactions – exchange rates at transaction dates or average exchange rates; and (ii) for other items (derived from non-monetary balance sheet items such as depreciation and amortization) – historical exchange rates. Currency transaction gains and losses are presented in financial expenses (income), net as appropriate. The functional currency of the Company is USD.
C. Property, Plant, and Equipment
Property and equipment are stated at cost. Depreciation is computed based on the straight-line method, over the estimated useful life of the assets.
Annual rates of depreciation are as follows:
| % | ||||
| Computers | ||||
| Research and development equipment | ||||
| Furniture and office equipment | ||||
| Leasehold Improvements | ||||
D. Inventory
Inventories are stated at the lower of cost or net realizable value. Inventory write-offs are provided to cover risks arising from slow-moving items, technological obsolescence, excess inventories, discontinued products, and for market prices lower than cost, if any.
The Company periodically evaluates the quantities on hand relative to historical and projected sales volume (which is determined based on an assumption of future demand and market conditions) and the age of the inventory. At the point of the loss recognition, a new lower cost basis for that inventory has been established.
Cost is determined for all types of inventory using the moving average cost method plus indirect costs.
F-12
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.):
E. Leases
The Company implemented Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) using the modified retrospective approach for all lease arrangements as of such date. The Company leases office space and vehicles under operating leases.
Arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term.
The lease liability was measured at the present
value of the remaining lease payments, discounted using the Company’s incremental borrowing rate. The Incremental Borrowing Rate
applied was
For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.
F. Revenue recognition
The Company’s revenues are measured according to Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are measured according to the amount of consideration that the Company expects to be entitled to receive in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
Revenue from product sales is recognized when control of the goods transferred to the customer, which is generally upon shipment, unless contractual terms indicate otherwise.
The Company applies the five-step model under ASC 606:
| (i) | identify the contract with a customer; |
| (ii) | identify the performance obligations in the contract; |
| (iii) | determine the transaction price; |
| (iv) | allocate the transaction price to the performance obligations; and |
| (v) | recognize revenue when (or as) performance obligations are satisfied. |
Standard product warranties that provide assurance that the product complies with agreed specifications do not represent a separate performance obligation and are accounted for under ASC 460.
Determining whether the Company acts as a principal or as an agent in the purchase and sale of machines requires significant judgment. While none of the evaluated factors are independently determinative, after analyzing the guidance under ASC 606 for principal versus agent considerations, the Company concluded that it is acting as an agent in these transactions. As such, revenues are presented on a net basis. This conclusion is based on the contractual relationships involved and the manner in which business is conducted, indicating that the Company does not control the machines before they are transferred to the end customer. In addition, the Company does not bear significant inventory or credit risk.
F-13
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.):
Furthermore, the Company accounts for variable consideration related to discounts and rights of return in accordance with ASC 606. Given the Company's role as an agent, it does not bear the primary obligation for machine performance or the ultimate risk of product returns. Accordingly, the Company recognizes net revenue only to the extent that it is probable that a significant reversal of cumulative revenue will not occur. Estimates for returns and discounts will be recognized as a reduction of the net commission at the time of sale, once the Company has established sales and sufficient historical data to provide a basis for such estimates.
G. Cost of revenues
Cost of revenues consists of products purchased from sub-contractors, raw materials, shipping and handling costs to customers, salary, employee-related expenses, depreciation, royalties to the Israeli Innovation Authority (“IIA”), provision for assurance and overhead expenses.
Cost of revenues are expensed commensurate with the recognition of the respective revenues.
H. Research and Development Costs.
Research and development expenses consist primarily of payroll, payroll related expenses, subcontractors, and materials. Costs are expensed as incurred.
I. Government Grants
The Company receives royalty-bearing grants from the IIA for approved research and development projects Under Israeli law, royalties on the revenues derived from products and services developed using such grants, are payable to the Israeli Government.
The grants are linked to the exchange rate of the dollar to the New Israeli Shekel and bear interest of the Secured Overnight Financing Rate (“SOFR”) per year (SOFR is a benchmark interest rate which replaced LIBOR).
The amounts of grants received and recorded into
income should be disclosed for each period presented. The research and development grants are presented in the statement of operations
as an offset to related research and development expenses. Companies are required to pay royalties in connection with such grants at
specified rates, up to the total dollar-linked amount of such grants. research and development (“R&D”). As of December
31, 2025, the Company generated sales in the amount of $
No liability was recorded in these Financial Statements.
J. Finance Income and Expenses.
Finance income is composed of interest on deposits and revaluation of financial liabilities at fair value, while finance expenses are composed of the revaluation of certain financial liabilities at fair value, bank charges and net currency exchange rates differences.
K. Current Taxes
The current tax liability is measured using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date as well as adjustments required in connection with the tax liability in respect of previous years. The Company has no tax liability due to its carry forward losses.
F-14
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.):
L. Share-Based Compensation.
Share-based compensation expenses related to employees, directors and subcontractors’ options or restricted share units (“RSU”) which recognized based on their fair value, which is based on the fair value of the underlying Ordinary Shares as to the de-minimis exercise price using the graded vesting method.
The Company recognizes compensation expense for grants of share-based awards to its employees based on the estimated fair value on the grant date. Compensation cost for awards is recognized over the requisite service period, which approximates the vesting period. Share-based compensation is included in research and development, selling and marketing and general and administrative expenses. Forfeitures of equity grants are recognized as incurred.
All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued.
M. Warrants and Pre-Funded Warrants
The Company issues warrants and pre-funded warrants as part of its financing activities or compensation arrangements. Warrants are derivative financial instruments that entitle the holder to purchase a specified number of the Company’s Ordinary Shares at a predetermined exercise price. Warrants and pre-funded warrants issued by the Company may have various terms, including expiration dates, exercise prices, and conditions.
The Company classifies warrants as either equity or liabilities upon issuance, based on specific terms and conditions and in accordance with Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging. Warrants and pre-funded warrants are classified as equity if they meet the criteria for equity classification outlined in ASC 815-40. Otherwise, warrants are classified as liabilities.
N. Severance
Israeli labor law generally requires payment
of severance pay upon dismissal of an employee or upon termination of employment in certain other circumstances. The Company’s
pension and severance pay liabilities are covered mainly by insurance policies. Pursuant to section 14 of the Israeli Severance Compensation
Act, 1963 (“Section 14”), the Company’s employees are entitled to monthly deposits, at a rate of
O. Basic and Diluted Loss Per Share
Basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of Ordinary Shares and pre-funded warrants outstanding during the financial year, adjusted for Ordinary Shares and pre-funded warrants issued during the year, if applicable.
P. Fair Value Measurements
The Company measures and discloses fair value in accordance with the Financial Accounting Standards Board (“FASB”), ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
F-15
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.):
Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Level 3 inputs are considered as the lowest priority within the fair value hierarchy.
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
The fair value of cash is based on its demand value, which is equal to its carrying value. Additionally, the carrying value of all other short-term monetary assets and liabilities are estimated to be equal to their fair value due to the short-term nature of these instruments.
Equity Line Financing Arrangements- The Company may enter into
standby equity purchase agreements or similar equity line financing arrangements with third-party investors. For example, on December
12, 2025, the Company entered into the Standby Equity Purchase Agreement (“SEPA”) with Yorkville pursuant to which the Company
has the right to sell to Yorkville up to $
The Company evaluates these arrangements under ASC 480, “Distinguishing Liabilities from Equity”, and ASC 815, “Derivatives and Hedging,” (“ASC 815”) to determine whether any component of the arrangement should be classified as a liability or as a derivative instrument.
To the extent that the Company maintains the discretion to initiate drawdowns and settlement occurs through the issuance of the Company’s Ordinary Shares in exchange for cash, the issuance of shares under the agreement is accounted for as an equity transaction. Proceeds received upon the issuance of shares are recorded within stockholders’ equity, typically as Ordinary Shares and additional paid-in capital.
Shares issued to the investor as commitment shares at the inception of the agreement are generally accounted for as equity issuance costs associated with establishing the equity facility. The fair value of the commitment shares on the grant date is recognized as a reduction to additional paid-in capital, consistent with the accounting for costs incurred in connection with raising equity capital.
When shares are issued in connection with drawdowns under the facility, the Company records the gross proceeds received as an increase to stockholders’ equity. Any issuance costs directly attributable to the specific drawdown are recorded as a reduction to additional paid-in capital.
The Company also evaluates whether any features embedded within the arrangement meet the definition of a freestanding or embedded derivative under ASC 815. If such features do not qualify for equity classification, they are recognized as derivative instruments and measured at fair value, with subsequent changes in fair value recognized in the statement of operations.
As of the December 31, 2025, the Company has not sold any Ordinary Shares pursuant to the SEPA, and therefore all issuance expenses were recorded as financial expenses.
F-16
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.):
Q. Concentration of Credit Risk
The Company maintains certain cash balances in a well-known Israeli banks and U.S based banks.
Part of the Company’s operating expenses are denominated in New Israeli Shekel (“NIS”), and therefore, subject to foreign currency risk.
R. Cash and Cash Equivalent
Cash equivalents are highly liquid investments that are readily convertible into cash, typically with an original maturity of three months or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash.
Restricted cash consists of funds that are contractually restricted to bank guarantee due to rental agreements. The Company has presented restricted cash separately from cash and cash equivalents in the balance sheets.
Bank deposits with maturities of more than three
months, but less than one year, and which are not restricted are included in short-term deposits. Such deposits are stated at cost which
approximates market value. As of December 31, 2025, the Company had no short-term deposits, and as of December 31, 2024 the Company had
short-term deposits in the amounts of $
S. Segment Information
The Company has a single operating and reportable segment. The Company’s chief operating decision maker (“CODM”), who is the Chief Executive Officer, evaluates the performance of its business based on financial data consistent with the presentation in the accompanying Financial Statements for the purposes of making operating decisions, assessing financial performance, and allocating resources.
T. New accounting Pronouncements
Accounting Standards Issued and Not Yet Adopted in 2025
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the consolidated financial statements to provide enhanced transparency into the expense captions presented on the face of the statement of income and comprehensive income. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its related disclosures.
In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”). This new guidance is intended to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20 for (a) convertible debt instruments with cash conversion features and (b) debt instruments that are not currently convertible. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. The Company does not plan to early adopt this standard. The Company is currently evaluating the effect of adoption of this standard on its consolidated financial statements and disclosures.
F-17
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.):
In November 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides comprehensive guidance on the recognition, measurement, and presentation of government grants. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its accounting for government assistance arrangements.
Newly issued and recently adopted accounting pronouncements:
Emerging growth company:
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups (“JOBS”) Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as to those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU will be effective for fiscal years beginning after December 15, 2025, and allows adoption on a prospective basis, with a retrospective option.
NOTE 3 - CASH AND CASH EQUIVALENT:
The Company's cash and cash equivalents are primarily held in U.S. Dollars and New Israeli Shekels (NIS), in current accounts and short-term deposits with leading banking institutions in Israel and the United States.
As of December 31, 2025, the Company had cash
and cash equivalents in amount of $
As of December 31, 2024,
the Company had Cash and cash equivalents in amount of $
NOTE 4 - DEPOSITS:
The Company’s deposits consist of short-term bank deposits with maturities of more than three months but less than one year. The deposits bear annual interest. Interest earned is recorded as finance income, net in the statement of operations during the years for which the Company held short-term deposits.
As of December 31, 2025, the Company had no deposits.
As of December 31, 2024, the Company had a deposit
in NIS at Bank Leumi in the amount of $
F-18
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 5 - OTHER CURRENT ASSETS:
| December 31, 2025 | December 31, 2024 | |||||||
| Prepaid expenses | ||||||||
| Institutions | ||||||||
| Restricted Cash | ||||||||
| Others | ||||||||
| Total | ||||||||
NOTE 6 - INVENTORY
| December 31, 2025 | December 31, 2024 | |||||||
| Finished goods | ||||||||
| Raw materials | ||||||||
| Work in progress | ||||||||
| Total | ||||||||
NOTE 7 - PROPERTY AND EQUIPMENT, NET:
For the year ended December 31, 2025:
| Computers | Leasehold improvements | R&D equipment | Furniture and office equipment | Total | ||||||||||||||||
| Cost | ||||||||||||||||||||
| At January 1, 2025 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||
| Accumulated depreciation | ||||||||||||||||||||
| At January 1, 2025 | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||
| Net book value: | ||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||
For the year ended December 31, 2024:
| Computers | Leasehold improvements | R&D equipment | Furniture and office equipment | Total | ||||||||||||||||
| Cost | ||||||||||||||||||||
| At January 1, 2024 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||
| Accumulated depreciation | ||||||||||||||||||||
| At January 1, 2024 | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||
| Net book value: | ||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||
F-19
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 8 - OTHER ACCOUNTS PAYABLE:
| December 31, 2025 | December 31, 2024 | |||||||
| Accrued expenses | ||||||||
| Employees’ salaries and related liabilities | ||||||||
| Related parties | ||||||||
| Other | ||||||||
| Total | ||||||||
NOTE 9 - COMMITMENTS AND CONTINGENCIES
A. Royalties to the IIA:
In September 2019, the IIA approved a grant to
the Company for the development of intravenous blood oxygenation system for an aggregate budget of NIS
In October 2023, the IIA approved a grant to support another development
project of the Company at an aggregate budget of NIS
The program is for the period beginning January
2024 through March 2025, and as of December 31, 2025, the Company received total funds in the amount of NIS
According to the agreements with the IIA, the
Company will pay royalties of
During 2025 the Company generated revenues in
the amount of approximately $
The Company has obligations regarding know-how, technology, or products, not to transfer the information, rights thereon and production rights which derive from the research and development without the IIA Research Committee approval.
B. Legal Claims
In the normal course of business, various legal claims and other contingent matters may arise. Management believes that any liability that may arise from such matters would not have a material adverse effect on the Company’s results of operations or financial condition as of and for the years ended December 31, 2025, and 2024.
F-20
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 9 - COMMITMENTS AND CONTINGENCIES (CONT.):
On December 12, 2021, the Company terminated its employment agreement with Dr. Udi Nussinovitch, one of its founders who served as the Company’s Chief Scientific Officer since March 2018. On February 24, 2022, the Company sued Mr. Nussinovitch for breach good faith and his fiduciary duties as a shareholder and former officer of the Company. On November 9, 2022, Mr. Nussinovitch filed a Statement of Claim against the Company, as well as a Statement of Claim with the regional labor court in Tel Aviv, Israel on November 8, 2022. Mr. Nussinovitch alleged certain deficiencies in the Company’s Extraordinary General Meeting of Shareholders held on Friday, December 17, 2021, resulting from his status as a minority shareholder. In addition, with respect to the labor dispute, Mr. Nussinovitch is seeking renumeration and the issuance of Ordinary Shares.
On July 19, 2023, a partial hearing about the labor dispute was held, in which the parties were required by the court to file their positions on a stay of the proceeding pending the decision on the case initiated by Mr. Nussinovitch in the District Court. On January 21, 2024, a partial hearing about the civil case was held. During the hearing, the court suggested the parties consider the possibility of resolving the case through an out-of-court arrangement or mediation. The parties agreed to a mediation process which did not succeed. On January 7, 2025, Mr. Nussinovitch filed a motion to amend his Statement of Claim, requesting to modify the requested relief. Instead of the original remedies sought, Mr. Nussinovitch now requests that the Company or Mr. Ben Noon and Mr. Hayon purchase all of his rights and shares in the Company at their average value from the date of the Company’s initial public offering until the date of the general meeting held on December 17, 2021. On January 13, 2025, a pretrial hearing was held. The court denied Mr. Nussinovitch’s motion to amend and instructed him to notify whether he wishes to withdraw his original claim or maintain it.,
On March 14, 2025, Mr. Nussinovitch informed the court that he would proceed with the original claim, despite the court’s instruction to address the Company’s motion to dismiss and explain how the case could continue after he had stated it was moot. On May 7, 2025, the court partially granted the motion to dismiss, ruling that continuation of the case is subject to payment of court fees. Claims deemed no longer relevant by Mr. Nussinovitch were dismissed, including requests to nullify past resolutions, reverse his removal from the board, challenge director independence, invalidate certain decisions, and appoint an auditor. The court allowed certain declaratory claims to proceed, including allegations of breach of duties, minority oppression, and wrongful removal from the board. The remaining operative claim—entitlement to benefits granted to controlling shareholders—also requires payment of court fees. A preliminary hearing was held on September 8, 2025, setting deadlines for witness statements. On September 18, 2025, Mr. Nussinovitch agreed to dismiss claims against the directors of the Company. On December 8, 2025, he submitted his witness statements.
The Company believes that it is not probable that a payment will be required to settle this matter.
Accordingly, in accordance with ASC 450, no provision has been recorded in the financial statements
NOTE 10 - LEASE LIABILITIES
Lease Commitments – Operating Leases:
In September 2021, the Company entered into a
lease agreement for its facilities in Ra’anana, Israel. The lease agreement is for a period of 69 months commencing September 1,
2021, and the Company began to pay lease and related expenses after completing 3 months of lease. The Company has the option to shorten
the period and terminates the lease agreement after completing 45 months of rent by paying an amount of NIS
F-21
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 10 - LEASE LIABILITIES (CONT.):
On April 27, 2025, the Company signed a new lease
agreement replacing the prior lease agreement for a new period of 60 months starting at the date of the facility acceptance by the Company.
According to the new lease agreement, the Company has the option to shorten the period and terminate the lease agreement after completing
48 months of rent by paying an amount of NIS
The Company has various operating leases for
vehicles that expire through 2028. The Company leases vehicles for approximately three-year periods from multiple different leasing companies
and from time to time increases or decreases the number of leased vehicles according to its current needs. The leased vehicles are used
by the Company’s headquarters staff and other employees whose employment agreements include an obligation to the Company to provide
a vehicle. The agreements with the leasing companies include termination options, allowing for early cancellation by paying a penalty
of
The total expenses related to the leases were
$
The right-of-use asset and lease liability are initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate based on the information available at the date of determining the present value of the lease payments.
The Company’s incremental borrowing rate is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased asset is located.
The Company has various operating leases for
vehicles that expire through 2028.
December 31, 2025 | December 31, 2024 | |||||||
| Operating lease liabilities, current | ||||||||
| Operating lease liabilities long-term | ||||||||
| Total operating lease liabilities | ||||||||
| Weighted average of remaining lease term | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
F-22
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 10 - LEASE LIABILITIES (CONT.):
Lease payments for the Company’s right-of-use assets over the remaining lease periods as of December 31, 2025, are as follows:
| Year ended December 31, | U.S. dollars in thousands | |||
| 2026 | ||||
| 2027 | ||||
| Total undiscounted lease payment | ||||
| Less: Interest (*) | ( | ) | ||
| Present value of lease liabilities | ||||
| (*) |
NOTE 11 - FINACIAL LIABILITIES AT FAIR VALUE:
December 31, 2025 | December 31, 2024 | |||||||
| Financial liability (A) | ||||||||
| Private warrants (B) | ||||||||
| Total | ||||||||
A Financial Liability
| 1. | The Company agreed to pay fees of |
| 2. | The Company agreed to pay a commitment fee in the amount of $ |
The financial liability as of December
31, 2025, and 2024 is $
B Private warrants
On December 26, 2023, the Company entered into
a certain securities purchase agreement (Note 11.3), pursuant to which it issued unregistered warrants, to purchase up to an aggregate
of
F-23
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 11 - FINACIAL LIABILITIES AT FAIR VALUE (CONT.):
The Private Warrants include cashless exercise mechanism, according to the terms specified in the agreement.
The Private Warrants may create obligation to transfer cash to the investors at fundamental transactions within the Black Scholes option pricing framework.
Therefore, the Company accounts for the Private Warrants as financial liability instruments that are measured at fair value and recognized financial expenses or income through profit and loss.
The company measured fair value by using Black-Scholes option pricing model;
The key inputs that were used in the Private Warrants fair value as of December 31, 2024, were:
| ● | risk-free interest rate |
| ● | expected volatility |
| ● | expected dividend yield of
|
| ● | expected term of warrants – |
The key inputs that were used in the Private Warrants fair value as of December 31, 2025, were:
| ● | risk-free interest rate |
| ● | expected volatility |
| ● | expected dividend yield of
|
| ● | expected term of warrants –
|
The fair value of the Private Warrants as of
December 31, 2025 and 2024 was $
C. Standby Equity Purchase Agreement
On December 12, 2025, the Company entered into the SEPA with Yorkville pursuant to which the Company has the right to sell to Yorkville up to of Ordinary Shares, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. The Company also entered into a Registration Rights Agreement with Yorkville pursuant to which it will register the resale of Ordinary Shares issued to Yorkville pursuant to the SEPA. Sales of Ordinary Shares to Yorkville under the SEPA, and the timing of any such sales, are at the Company’s option, and the Company is under no obligation to sell Ordinary Shares to Yorkville under the SEPA.
Each advance (each, an “Advance”)
the Company requests in writing to Yorkville under the SEPA (notice of such request, an “Advance Notice”) may be for a number
of Ordinary Shares. The Ordinary Shares purchased pursuant to an Advance delivered by the Company will be purchased at a price equal
to
F-24
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 11 - FINACIAL LIABILITIES AT FAIR VALUE (CONT.):
The SEPA will automatically terminate on December 12, 2028. The Company has the right to terminate the SEPA at no cost or penalty upon five trading days’ prior written notice to Yorkville, provided that there are no outstanding Advance Notices for which Ordinary Shares need to be issued and the Company has paid all amounts owed to Yorkville. The Company and Yorkville may also agree to terminate the SEPA by mutual written consent.
Any purchase under an Advance would be subject
to certain limitations, including that
In connection with
the execution of the SEPA,
NOTE 12 - SHAREHOLDERS’ EQUITY:
A. Share capital:
| Number of shares as of December 31, 2025 | Number of shares as of December 31, 2024 | |||||||||||||||
| Authorized | Issued and outstanding | Authorized | Issued and outstanding | |||||||||||||
| Ordinary shares | ||||||||||||||||
| 1. | On April 4, 2023, the Company entered into a sales agreement (the “Roth Sales Agreement”) with Roth Capital Partners, LLC, as sales agent, pursuant to which the Company could offer and sell, from time to time, through the sales agent, Ordinary Shares pursuant to an at-the-market facility (“Roth ATM”). In 2023, the Company sold |
| 2. | On December 26, 2023, the Company entered into a securities purchase agreement with an institutional investor in a registered direct offering , pursuant to which the Company issued (i) |
The Company concluded that the pre-funded warrants are not within the scope of ASC480. Further, applying ASC 815-40, the Company concluded that the pre-funded warrants are indexed to the Company’s own stock and meet the conditions for equity classification, and thus should be presented within equity.
As for the Private Warrants, the Company concluded that they should be classified as a liability under ASC 815-40, as they are not indexed to the Company’s own stock.
F-25
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 12 - SHAREHOLDERS’ EQUITY (CONT.):
The pre-funded warrants were exercised
on the same day and the day after the transaction in full in an exercise price of $
The aggregate proceeds received by
the Company from the December 2023 offering were approximately $
The Company issued the placement agent
in the December 2023 offering a number of warrants equal to a total of
The Placement Agent Warrants were substantially
on the same terms as the Private Warrants issued to the investor in the offering, except an exercise price of $
Those cash and non-cash issuance costs were accounted proportionally to issuance expenses and decrease of additional paid in capital, according to the ratio of the liability versus equity in the December 2023 offering.
| 3. | During the year ended December 31, 2023, the Company issued an aggregate amount of |
| 4. | On April 1, 2024, the Company completed offering, whereby the Company sold |
| 5. | On May 20, 2024, the Company issued warrant to purchase |
| 6. | On June 14, 2024, the Company completed an offering, whereby the Company sold: (i) |
Net proceeds received by the Company
from the 2024 June Offering were approximately $
The Company also received $
The Company concluded that the pre-funded warrants are not within the scope of ASC 480. Further, applying ASC 815-40, the Company concluded that the June Pre-Funded Warrants are indexed to the Company’s own stock and meet the conditions for equity classification, and thus should be presented within equity.
F-26
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 12 - SHAREHOLDERS’ EQUITY (CONT.):
The Company issued the placement agent
in this offering warrants equal to a total of
The Company accounting treatment for
the placement agent warrants as equity-classified instruments (as part of additional paid in capital), based on an assessment of ASC
718. The fair value of the placement agent warrants at the issuance date was $
The cash and non-cash issuance costs were recorded against additional paid in capital, due to the classification of the Ordinary Shares and the pre-funded warrants as equity instrument.
| 7. | On June 30, 2024, the Company issued |
| 8. | On December 27, 2024, the Company completed private placement, whereby the Company sold (i) |
The Company concluded that the private warrants and pre-funded warrants are not within the scope of ASC 480. Further, applying ASC 815-40, the Company concluded that the private warrants and pre-funded warrants are indexed to the Company’s own stock and meet the conditions for equity classification, and thus should be presented within equity.
The gross proceeds received by the
Company from the private offering were approximately $
The cash and non-cash issuance costs were recorded against additional paid in capital.
| 9. | During the year ended December
31, 2024, the Company issued an aggregate amount of |
F-27
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 12 - SHAREHOLDERS’ EQUITY (CONT.):
| 10. | On March 14, 2025, the Company entered into a sales agreement
with A.G.P./Alliance Global Partners, as sales agent, pursuant to which the Company could offer and sell, from time to time, through
the sales agent, Ordinary Shares pursuant to the March 2025 ATM, having an aggregate offering price of up to $ |
| 11. | On August 8, 2025, the Company issued |
| 12. | On December 12, 2025, the Company completed its 2025 December
Offering, whereby the Company sold |
| 13. | On December 17, the Company issued |
| 14. | During the year ended December 31, 2025, the Company issued
an aggregate amount of |
B. Warrants reserves -Composition and movements:
| 1. |
| Number of Warrants | Weighted-average exercise price | Weighted average remaining contractual term (in years) | ||||||||||
| Balance as of December 31, 2024 | ||||||||||||
| Issued | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Expired | ( | ) | ||||||||||
| Balance as of December 31, 2025 | ||||||||||||
F-28
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 12 - SHAREHOLDERS’ EQUITY (CONT.):
| 2. |
| Exercise Price | Warrants as of December 31, | Expiration date | ||||||
| Balance as of December 31, 2025 | ||||||||
C. Loss per share:
Loss per share has been calculated using the weighted average number of Ordinary Shares and pre-funded warrants in issue during the relevant financial periods, the weighted average number of equity shares in issue and profit for the period as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Loss for the period | ||||||||||||
| Total number of Ordinary Shares | ||||||||||||
| Weighted average number of Ordinary Shares and pre-funded warrants | ||||||||||||
| Basic and diluted loss per share | ( | ) | ( | ) | ( | ) | ||||||
NOTE 13 - REVENUES:
As of December 31, 2025, the Company has only one stream of revenue from sales of the INSPIRA ART100 systems and carts to a distributor in the U.S, therefore the company has one segment at this stage.
NOTE 14 - COST OF REVENUES:
| Year ended December 31, 2025 | ||||
| Materials and subcontractors | ||||
| Payroll and related | ||||
| Warranty | ||||
| Royalties to IIA | ||||
| Total | ||||
F-29
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 15 - RESEARCH AND DEVELOPMENT EXPENSES:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Salary and related expenses | ||||||||||||
| Share-based compensation | ||||||||||||
| Materials and related expenses | ||||||||||||
| Depreciation | ||||||||||||
| Subcontractors | ||||||||||||
| IIA participation | ( | ) | ( | ) | ||||||||
| Other | ||||||||||||
| Total | ||||||||||||
NOTE 16 - GENERAL AND ADMINISTRATIVE EXPENSES:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Professional fees | ||||||||||||
| Share-based compensation | ||||||||||||
| Salary and related expenses | ||||||||||||
| Insurance expenses | ||||||||||||
| Director fees | ||||||||||||
| Office maintenance | ||||||||||||
| Depreciation | ||||||||||||
| Travel abroad | ||||||||||||
| Fundraising expenses | ||||||||||||
| Others | ||||||||||||
| Total | ||||||||||||
NOTE 17 - SALES AND MARKETING EXPENSES:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Share-based compensation | ||||||||||||
| Salary and related expenses | ||||||||||||
| Professional fees | ||||||||||||
| Other | ||||||||||||
| Total | ||||||||||||
F-30
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 18 - FINANCIAL (INCOME) AND EXPENSES:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Revaluation of financial liabilities at fair value through profit or loss, net | ( | ) | ( | ) | ||||||||
| Foreign currency transaction income | ( | ) | ( | ) | ( | ) | ||||||
| Others | ( | ) | ||||||||||
| Total | ( | ) | ( | ) | ( | ) | ||||||
NOTE 19 - TAXES ON INCOME:
| A. | Taxes on income: |
The Israeli corporate
tax rate was
| B. | Net operating losses carry forwards: |
Carryforward tax losses of the Company
as of December 31, 2023, amounted to approximately $
Carryforward tax losses of the Company
as of December 31, 2024, amounted to approximately $
Carryforward tax losses of the Company
as of December 31, 2025, amounted to approximately $
The deferred tax assets and liabilities are composed of the following:
| December 31, 2025 | December 31, 2024 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | ||||||||
| Accrued expenses | ||||||||
| R&D temporary differences | ||||||||
| Fund raising costs 2023 | ||||||||
| Operating lease liability | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax liabilities: | ||||||||
| Total deferred tax liabilities | ||||||||
| Net deferred taxes | ||||||||
F-31
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 19 - TAXES ON INCOME (CONT.):
| C. |
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Loss before taxation | ( | ) | ( | ) | ( | ) | ||||||
| Theoretical tax credit at applicable statutory rate: 23% | ( | ) | ( | ) | ( | ) | ||||||
| Non-allowable expenses | ( | ) | ( | ) | ( | ) | ||||||
| Temporary differences and tax losses for which no Deferred Tax Asset is recognized | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit | ||||||||||||
| D. | Effective tax rate reconciliation: |
| Year ended December 31, 2025 | ||||||||
| Tax | Rate | |||||||
| IL statutory tax rate | ( | ) | % | |||||
| Non-taxable or non-deductible items: | ||||||||
| Share-based compensation | ( | %) | ||||||
| Revaluation of financial liabilities at fair value through profit or loss | ( | ) | % | |||||
| Others | ( | %) | ||||||
| Changes in valuation allowances | ( | %) | ||||||
| Other adjustments | ( | ) | % | |||||
| Effective tax rate | ||||||||
The primary reconciling item between the Company’s statutory tax rate and the effective tax rate is the recognition of a valuation allowance against of deferred tax assets related to accumulated net operating losses carried forward, due to uncertainty regarding their realization.
NOTE 20 - SHARE-BASED PAYMENT:
| 1. | On January 22, 2024, the Company’s Board of Directors
approved a grant of |
F-32
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 20 - SHARE-BASED PAYMENT (CONT.):
| 2. | On February 5, 2024, the Company’s Board of Directors
approved a grant of |
| 3. | On February 20, 2025, the Company’s Board of Directors
approved a grant of |
| 4. | On August 6, 2025, the Company’s Board of Directors
approved a grant of |
| 5. | On November 18, 2025, the Company’s Board of Directors
approved a grant of |
The fair value of all granted options was estimated by using the Black Scholes option pricing model, which was aimed to model the value of the Company’s assets over time. The simulation approach was designed to take into account the terms and conditions of the share options, as well as the capital structure of the Company and the volatility of its assets, on the date of grant based on certain assumptions.
The following inputs were used to measure the fair value of the option at grant date:
| November 18, 2025 | February 22, 2025 | |||||||||
| (i) | Expected volatility | |||||||||
| (ii) | Dividend rate | |||||||||
| (iii) | Expected term (vesting period) | One year - Three years | ||||||||
| (iv) | Contractual life | Ten years | ||||||||
| (v) | Free risk rate | |||||||||
| January 22, 2024 | February 5, 2024 | |||||||||
| (i) | Expected volatility | |||||||||
| (ii) | Dividend rate | |||||||||
| (iii) | Expected term (vesting period) | Three years | ||||||||
| (iv) | Contractual life | Ten years | ||||||||
| (v) | Free risk rate | |||||||||
F-33
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 20 - SHARE-BASED PAYMENT (CONT.):
The fair value of all granted RSUs was the Company’s quote price at the grant date.
During the year ended December 31, 2025, the Company recorded
share-based payment expenses to employees, directors and subcontractors in the amount of $
During the year ended December 31, 2024, the Company recorded share-based
payment expenses to employees, directors and subcontractors in the amount of $
During the year ended December 31, 2023, the Company recorded share-based
payment expenses to employees, directors and subcontractors in the amount of $
The options to services providers and advisers outstanding as December 31, 2025, 2024 and 2023 were as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||||||||||||||
| Number of options | Weighted average Exercise price NIS | Number of options | Weighted average Exercise price NIS | Number of options | Weighted average Exercise price NIS | |||||||||||||||||||
| Outstanding at beginning of year | ||||||||||||||||||||||||
| Granted | - | - | ||||||||||||||||||||||
| Exercised | - | - | ||||||||||||||||||||||
| Options outstanding | ||||||||||||||||||||||||
| Options exercisable | ||||||||||||||||||||||||
| Share-based payment expenses | $ | $ | $ | |||||||||||||||||||||
The RSUs to services providers and advisers outstanding as of December 31, 2025, 2024 and 2023 were as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Number of RSUs | Number of RSUs | Number of RSUs | ||||||||||
| Outstanding at beginning of year | ||||||||||||
| Vested | ||||||||||||
| RSUs outstanding | ||||||||||||
| RSU’s Vested | ||||||||||||
| Share-based payment expenses | $ | $ | $ | |||||||||
The options to employees and directors outstanding as of December 31, 2025, 2024 and 2023 were as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||||||||||||||
| Number of options | Weighted average Exercise price NIS | Number of options | Weighted average Exercise price NIS | Number of options | Weighted average Exercise price NIS | |||||||||||||||||||
| Outstanding at beginning of year | ||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||
| Exercised | ||||||||||||||||||||||||
| Forfeited | - | - | ||||||||||||||||||||||
| Options outstanding | ||||||||||||||||||||||||
| Options exercisable | ||||||||||||||||||||||||
| Share-based payment expenses | $ | ( | ) | $ | $ | - | ||||||||||||||||||
F-34
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands $ (except share and per share data)
NOTE 20 - SHARE-BASED PAYMENT (CONT.):
The RSUs to employees and directors outstanding as of December 31, 2025, 2024 and 2023 were as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | ||||||||||
| Number of RSUs | Number of RSUs | Number of RSUs | ||||||||||
| Outstanding at beginning of year | ||||||||||||
| Granted | ||||||||||||
| Forfeited | ||||||||||||
| Vested | ||||||||||||
| RSUs outstanding | ||||||||||||
| RSU’s Vested | ||||||||||||
| Share-based payment expenses | $ | $ | $ | |||||||||
NOTE 21 - RELATED PARTIES:
The following transactions arose with related parties
Transactions and balances with related parties:
| 1. |
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||
| Salary and related expenses – officers and directors | ||||||||||||
| Share based payment – officers and directors | ||||||||||||
| 2. | Balances with related parties |
| Name | Nature of transaction | December 31, 2025 | December 31, 2024 | |||||||
| Officers | Salaries and related | ( | ) | ( | ) | |||||
| Directors | Compensation for directors | ( | ) | ( | ) | |||||
NOTE 22 - SUBSEQUENT EVENTS:
| 1. | On February 5, 2026, the Company entered into a Securities Purchase Agreement with a single institutional investor (the “Purchaser”), pursuant to which the Company agreed to issue and sell, in a registered direct offering: (i) |
| 2. | Subsequent to December 31, 2025 and following the expiration of the March 2025 Sales Agreement due to expiration of the Company’s Registration Statement on Form F-3 (File No. 333-266748), the Company entered into a new sales agreement with A.G.P./Alliance Global Partners, as sales agent, pursuant to which the Company could offer and sell, from time to time, through the sales agent, Ordinary Shares pursuant to the ATM, having an aggregate offering price of up to $2,016. |
| 3. | Subsequent to December 31, 2025, the second half of commitment fee amount of the SEPA, which represents |
F-35
Exhibit 2.1
Description of Securities
The following description of the share capital of Inspira Technologies Oxy B.H.N. Ltd. (the “Company”, “we”, “us” or “our”), provisions of the Company’s amended and restated articles of association, as they may be amended and restated from time to time (our “Articles”), and Israeli law are summaries and do not purport to be complete, and is qualified in its entirety by reference to, the provisions of our Articles as well as the Israeli law and any other documents referenced in the summary and from which the summary is derived.
General
As of March 24, 2026, our authorized share capital consisted of 100,000,000 Ordinary Shares, no par value (“Ordinary Shares”), of which 43,579,260 Ordinary Shares were issued and outstanding as of such date.
As of March 24, 2026, we had issued and outstanding warrants to purchase up to 1,640,455 of our Ordinary Shares issued in our initial public offering (the “IPO Warrants”). Each IPO Warrant is exercisable for one Ordinary Share at an exercise price of $5.50 per share and expires five years from the date of issuance, or July 16, 2026, and underwriter warrants to purchase up to an aggregate of 145,455 Ordinary Shares at an exercise price of $6.875 per share, which expire five and half years from the date of issuance, or January 15, 2027, issued to Aegis Capital in connection with our initial public offering.
As of March 24, 2026, we also had issued and outstanding warrants to purchase up to an aggregate of 3,031,250 Ordinary Shares at an exercise price of $0.70 per share, which expire on February 5, 2031, issued to an institutional investor. In addition, we had issued and outstanding placement agent warrants to purchase up to an aggregate of 212,188 Ordinary Shares at an exercise price of $1.60 per share, which expire three and a half years following their date of issuance, or June 28, 2027, that the Company agreed to issue to H.C. Wainwright & Co., LLC, the placement agent, or its designees.
As of March 24, 2026, we had issued and outstanding placement agent warrants to purchase up to an aggregate of 185,591 Ordinary Shares at an exercise price of $1.56 per share, which expire four years following their date of issuance, or June 18, 2028, that the Company agreed to issue to Newbridge Securities Corporation, the placement agent, or its designees.
As of March 24, 2026, we also had issued and outstanding warrants to purchase up to an aggregate of 3,753,001 Ordinary Shares at an exercise price of $1.10 per share, which expire eighteen (18) months from the date of issuance, or June 30, 2026, issued in a private placement financing with certain accredited investors, on December 31, 2024.
As of March 24, 2026, we had outstanding options to purchase up to an aggregate of 450,074 Ordinary Shares and 3,625,612 unvested Restricted Share Units issued to certain employees, directors, consultants and service providers who are our employees, officers, directors or consultants under our Amended and Restated 2019 Equity Incentive Plan (the “Plan”).
As of March 24, 2026, we also had issued and outstanding warrants to purchase up to an aggregate of 6,785,715 Ordinary Shares at an exercise price of $0.70 per share, which are exercisable six months after their issuance and will expire on the five year anniversary of their initial exercise date, or August 5, 2031, issued in a private placement financing with a single institutional investor, on February 6, 2026.
As of March 24, 2026, we also had issued and outstanding pre-funded warrants to purchase up to an aggregate of 588,001 Ordinary Shares at an exercise price of $0.0001 per share, issued in a registered direct offering with a single institutional investor, on February 6, 2026. The pre-funded warrants are exercisable immediately and may be exercised at any time until the pre-funded warrants are exercised in full.
Name of Exchange on which Registered
Our Ordinary Shares have been listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “IINN” since July 2021.
Our IPO Warrants have been listed on Nasdaq under the symbol “IINNW” since July 2021.
Transfer of Shares
No transfer of shares may be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory to the board of directors (the “Board of Directors”)) has been submitted to the Company (or its transfer agent), together with any share certificate(s) and such other evidence of title as the Board of Directors may reasonably require. The Board of Directors, may, from time to time, prescribe a fee for the registration of a transfer, and may approve other methods of recognizing the transfer of shares in order to facilitate the trading of the Company’s shares on the Nasdaq or on any other stock exchange on which the Company’s shares are then listed for trading. The ownership or voting of our Ordinary Shares by non-residents of Israel is not restricted in any way by our Articles or the laws of the State of Israel.
Liability to Further Capital Calls
Our Board of Directors may make, from time to time, such calls as it may deem fit upon shareholders with respect to any sum unpaid with respect to shares held by such shareholders which is not payable at a fixed time. Such shareholder has to pay the amount of every call so made upon him or her.
Election of Directors
Under our Articles, our Board of Directors must consist of at least three (3) and not more than twelve (12) directors, including two external directors, if applicable, which will be elected if and when required under the Companies Law.
Other than external directors, if applicable (who shall be elected and serve in office in strict accordance with the provisions of the Companies Law), and other than directors elected by our Board of Directors (due to the number being less than the maximum amount, or due to a director’s office becoming vacant), directors of the Company shall be elected solely at an annual general meeting and shall serve in their office until the next annual general meeting, or until they cease to serve in their office in accordance with the provisions of our Articles or any law, whichever is earlier. Prior to every annual general meeting of the Company, and subject to clause 39 (a) and (f) of our Articles, the Board of Directors (or a committee thereof) shall select, by a resolution adopted by a majority of the Board of Directors (or such committee), a number of persons to be proposed to the shareholders for election as Directors at such annual general meeting.
In addition, if a director’s office becomes vacant, the remaining serving directors may continue to act in any manner, provided that the number of the serving directors shall not be less than three (3). If the number of serving directors is lower than their minimal one, the Board shall not be permitted to act, they may only act in an emergency or to fill the office of director which has become vacant up to a number equal to the minimum number provided for pursuant to our Articles.
External directors, if applicable, are elected for an initial term of three years, and may be elected thereafter for up to two additional three-year terms under certain circumstances, and may be removed from office pursuant to the terms of the Companies Law. Under certain circumstances, the term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including the Nasdaq Stock Market, may be extended indefinitely in increments of additional three-year terms.
Dividend Rights
The Board of Directors may from time to time declare, and cause the Company to pay, such dividend as may appear to the Board of Directors to be justified by the profits of the Company and as permitted by the Companies Law. The Board of Directors shall determine the time for payment of such dividends and the record date for determining the shareholders entitled thereto.
Pursuant to the Companies Law, the distribution amount is limited to the greater of retained earnings or earnings generated over the previous two years, according to our then last reviewed or audited consolidated financial statements, provided that the date of the financial statements is not more than six months prior to the date of the distribution, or we may distribute dividends that do not meet such criteria only with Israeli court approval. In each case, we are only permitted to distribute a dividend if our Board of Directors and the court, if applicable, determines that there is no reasonable concern that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due.
Annual and Special Shareholder Meetings
Under the Companies Law, we are required to hold an annual general meeting of our shareholders once every calendar year that must be held no later than 15 months after the date of the previous annual general meeting. All general meetings other than the annual meeting of shareholders are referred to in our Articles as special meetings. Our Board of Directors may call special meetings whenever it sees fit, at such time and place, within or outside of Israel, as it may determine. In addition, the Companies Law provides that our Board of Directors is required to convene a special meeting upon the written request of (i) any two of our directors or one-quarter of the members of our Board of Directors or (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares and 1% or more of our outstanding voting power or (b) 5% or more of our outstanding voting power (the “Non Exempted Holding”).
However, under an exemption applicable for Israeli companies whose shares are listed outside of Israel (the “Exemption Regulations”), the Board of Directors shall convene a special meeting at the request of one or more shareholders holding at least ten percent (10%) of the issued and outstanding share capital instead of five (5%) in the past, and at least one percent (1%) of the voting rights in the company, or one or more shareholders holding at least ten percent (10%) of the voting rights in the company, provided that if the applicable law to companies incorporated in the country which the company is listed for trade, establishes a right to demand convening of such a meeting for those holding a percentage of holdings lower than ten percent (10%), then the Non Exempted Holding shall apply.
Under the Companies Law, one or more shareholders holding at least 1% of the voting rights at the general meeting may request that the Board of Directors include a matter in the agenda of a general meeting to be convened in the future, provided that it is appropriate to discuss such a matter at the general meeting.
2
However, under the Exemption Regulations, one or more shareholders may request the Board of Directors to include a nomination of a candidate for a position on the Board of Directors or the termination of a director, as an item on the agenda of a future general meeting if they hold at least five percent (5%) of the voting rights of the company, instead of one percent (1%) as required in the past.
Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the Board, which according to the Companies Law may be between four (4) and sixty (60) days prior to the date of the meeting, as applicable according to the matters on the general meeting agenda. According to the Companies Law, resolutions regarding the following matters must be passed at a general meeting of the Company’s shareholders:
| ● | amendments to our Articles; | |
| ● | the exercise of the Board of Director’s powers by a general meeting if the Board of Director’s is unable to exercise its powers and the exercise of any of its powers is required for the Company’s proper management; |
| ● | appointment or termination of the Company’s auditors; |
| ● | appointment of directors (other than in the cases specified in our Articles); |
| ● | approval of acts and transactions requiring general meeting approval pursuant to the provisions of the Companies Law and any other applicable law; |
| ● | increases or reductions of the Company’s authorized share capital; |
| ● | a merger (as such term is defined in the Companies Law); and | |
| ● | dissolution of the Company by the court, voluntary dissolution, or by voluntary dissolution in an expedited procedure. |
Notices
Under our Articles, we are not required to give notice to our registered shareholders pursuant to the Companies Law, unless otherwise required by law. The Companies Law requires that a notice of any annual or special general meeting be provided 14 or 21 days (as applicable) prior to the meeting, and if the agenda of the meeting includes certain matters prescribed under the Companies Law and the regulations promulgated thereafter, among others, the appointment or removal of directors, the approval of transactions with office holders or interested or related parties, approval of the Company’s general manager to serve as the chairman of the Board of Directors or an approval of a merger, notice must be provided at least 35 days prior to such meeting.
Voting Rights
Every shareholder shall have one vote for each share held by him of record, on every resolution, without regard to whether the vote thereon is conducted by a show of hands, by written ballot or by any other means.
Quorum Requirements
As permitted under the Companies Law and as stated in our Articles, the quorum required for the Company’s general meetings consists of two or more shareholders, present in person or by proxy and holding shares conferring in the aggregate at least twenty five percent (25%) of the voting power of the Company. If within half an hour of the time set forth for the general meeting a quorum is not present, the general meeting shall stand adjourned either (i) to the same day of the following week, at the same hour and in the same place (ii) to such other date, time and place as prescribed in the notice to the shareholders and in such adjourned meeting or (iii) to such day and at such time and place as the chairperson of the general meeting shall determine (which may be earlier or later than the date pursuant to clause (i) above). If no quorum is present within half an hour of the time arranged to the adjourned meeting, any number of shareholders participating in the meeting, shall constitute a quorum.
If a special general meeting was called following the request of a shareholder according to applicable law, and within half an hour a legal quorum has not been formed, the meeting shall be canceled.
3
Vote Requirements
Our Articles provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required by the Companies Law or by our Articles. Under the Companies Law, each of (i) the approval of an extraordinary transaction with a controlling shareholder and (ii) the terms of employment or other engagement of the controlling shareholder of the company or such controlling shareholder’s relative (even if not extraordinary) requires the approval described under “Item 6.C. Directors, Senior Management and Employees—Board Practices— Fiduciary Duties of Office Holders and Approval of Related Party Transactions under Israeli Law — Disclosure of Personal Interests of an Office Holder.” Certain transactions with respect to remuneration of our office holders and directors require further approvals described under “Item 6. Directors, Senior Management and Employees—C. Board Practices— Fiduciary Duties of Office Holders and Disclosure of Personal Interests of an Office Holder.” Another exception to the simple majority vote requirement is a resolution for the voluntary winding up, or an approval of a scheme of arrangement or reorganization, of the company pursuant to Section 350 of the Companies Law, which requires the approval of the court and the approval of the majority of the shareholders voting their shares, other than abstainees, holding at least 75% of the voting rights represented at the meeting, in person, by proxy or by voting deed and voting on the resolution.
Access to Corporate Records
Under the Companies Law, shareholders are entitled to have access to: minutes of the Company’s general meetings; the Company’s shareholders register and principal shareholders register, articles of association and annual audited financial statements; and any document that the Company is required by law to file publicly with the Israeli Companies Registrar or the Israel Securities Authority. These documents are publicly available and may be found and inspected at the Israeli Registrar of Companies. In addition, shareholders may request to be provided with any document related to an action or transaction requiring shareholder approval under the related party transaction provisions of the Companies Law. The Company may deny this request if the Company believes it has not been made in good faith or if such denial is necessary to protect the Company’s interest or protect a trade secret or patent.
Special or Class Rights; Modification of Rights
If at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class, unless otherwise provided by the Companies Law or our Articles, may be modified or cancelled by the Company by a resolution of the general meeting of the holders of all shares as one class, without any required separate resolution of any class of shares.
The provisions of our Articles relating to general meetings shall, mutatis mutandis, apply to any separate general meeting of the holders of the shares of a particular class. It being clarified that the requisite quorum at any such separate general meeting shall be two or more shareholders present in person or by proxy and holding not less than 15 percent of the issued shares of such class.
Unless otherwise provided by our Articles, an increase in the authorized share capital, the creation of a new class of shares, an increase in the authorized share capital of a class of shares, or the issuance of additional shares thereof out of the authorized and unissued share capital, shall not be deemed to modify or derogate or cancel the rights attached to previously issued shares of such class or of any other class.
Acquisitions under Israeli Law
Full Tender Offer
If, as a result of an acquisition of shares, the acquirer will hold more than 90% of an Israeli public company’s outstanding shares or of certain class of shares, the acquisition must be made by means of a tender offer for all of the outstanding shares, or for all of the outstanding shares of such class, as applicable. In general, if less than 5% of the outstanding shares, or of applicable class, are not tendered in the tender offer and more than half of the offerees who have no personal interest in the offer tendered their shares, all the shares that the acquirer offered to purchase will be transferred to it by operation of law. However, a tender offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the applicable class of shares. Any shareholders that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not, may request, by petition to an Israeli court, (i) appraisal rights in connection with a full tender offer, and (ii) that the fair value should be paid as determined by the court, for a period of six months following the acceptance of the offer. However, the acquirer is entitled to stipulate, under certain conditions, that tendering shareholders will forfeit such appraisal rights.
4
Special Tender Offer
The Companies Law also provides that, subject to certain exceptions, an acquisition of shares in an Israeli public company must be made by means of a “special” tender offer if as a result of the acquisition (1) the purchaser would become a holder of 25% or more of the voting rights in the company, unless there is already another holder of at least 25% or more of the voting rights in the company or (2) the purchaser would become a holder of 45% or more of the voting rights in the company, unless there is already a holder of more than 45% of the voting rights in the company. These requirements do not apply if, in general, the acquisition (1) was made in a private placement that received shareholders’ approval, subject to certain conditions, (2) was from a holder of 25% or more of the voting rights in the company which resulted in the acquirer becoming a holder of 25% or more of the voting rights in the company, or (3) was from a holder of more than 45% of the voting rights in the company which resulted in the acquirer becoming a holder of more than 45% of the voting rights in the company. A “special” tender offer must be extended to all shareholders. In general, a “special” tender offer may be consummated only if (1) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by the offeror and (2) the offer is accepted by a majority of the offerees who notified the company of their position in connection with such offer (excluding the offeror, controlling shareholders, holders of 25% or more of the voting rights in the company or anyone on their behalf, or any person having a personal interest in the acceptance of the tender offer). If a special tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser or such controlling person or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender offer.
However, under the Exemption Regulations, the aforesaid limitations regarding a special tender offer do not apply for an Israeli company whose shares are listed outside of Israel, provided that if the applicable law as applicable to companies incorporated in the country which the company is listed for trade, provide a restriction on the acquisition of control of any proportion of the company or that the acquisition of control of any proportion requires the purchaser to also offer a purchase offer to shareholders from among the public.
Merger
The Companies Law includes provisions that allow a merger transaction and requires that each company that is a party to the merger have the transaction approved by its board of directors and, unless certain requirements described under the Companies Law are met, a vote of the majority of its shareholders, and, in the case of the target company, also a majority vote of each class of its shares. For purposes of the shareholder vote of each party, unless a court rules otherwise, the merger will not be deemed approved if shares representing a majority of the voting power present at the shareholders meeting and which are not held by the other party to the merger (or by any person or group of persons acting in concert who holds 25% or more of the voting power or the right to appoint 25% or more of the directors of the other party) vote against the merger. If, however, the merger involves a merger with a company’s own controlling shareholder or if the controlling shareholder has a personal interest in the merger, then the merger is instead subject to the same Special Majority (as defined below) approval that governs all extraordinary transactions with controlling shareholders. Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that as a result of the merger the surviving company will be unable to satisfy the obligations of any of the parties to the merger, and may further give instructions to secure the rights of creditors. If the transaction would have been approved by the shareholders of a merging company but for the separate approval of each class or the exclusion of the votes of certain shareholders as provided above, a court may still approve the merger upon the petition of holders of at least 25% of the voting rights of a company. For such petition to be granted, the court must find that the merger is fair and reasonable, taking into account the value of the parties to the merger and the consideration offered to the shareholders. In addition, a merger may not be completed unless at least (1) 50 days have passed from the time that the requisite proposals for approval of the merger were filed with the Israeli Registrar of Companies by each merging company; and (2) 30 days have passed since the merger was approved by the shareholders of each merging company.
The term “Special Majority” will be defined as described in section 275(a)(3) of the Companies Law as:
| ● | at least a majority of the shares held by shareholders who are not controlling shareholders and do not have personal interest in the merger have voted in favor of the proposal (shares held by abstaining shareholders shall not be considered); or | |
| ● | the total number of shares voted against the merger does not exceed 2% of the aggregate voting rights of the company. |
Borrowing Powers
Pursuant to the Companies Law and our Articles, our Board of Directors may exercise all powers and take all actions that are not required under law or under our Articles to be exercised or taken by a certain organ of the Company, including the power to borrow money for company purposes.
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Changes in Capital
Our Articles enable us to increase or reduce our authorized share capital. Any such changes are subject to the provisions of the Companies Law and must be approved by a resolution duly adopted by our shareholders at a general meeting. In addition, transactions that have the effect of reducing capital, such as the declaration and payment of dividends in the absence of sufficient retained earnings or profits, require the approval of both our Board of Directors and an Israeli court.
IPO Warrant Agreement
The IPO Warrants were issued in registered form pursuant to the warrant agent agreement dated July 13, 2021, by and between the Company and VStock Transfer, LLC, as warrant agent (the “Warrant Agreement”). On August 8, 2022 the Company and American Stock Transfer & Trust Company, LLC, as a successor warrant agent, entered into an amendment to the Warrant Agreement (the “Amendment to the Warrant Agreement”). You should review a copy of the Warrant Agreement, the Amendment to the Warrant Agreement and the form of IPO Warrant filed as exhibits to our Annual Report on Form 20-F for the year ended December 31, 2025, for a complete description of the terms and conditions of the Warrants, the Warrant Agreement and the Amendment to the Warrant Agreement.
Duration and Exercise Price Adjustments
The IPO Warrants expire at 5:00 p.m., New York City time on July 16, 2026. The exercise price and number of Ordinary Shares issuable upon exercise is subject to appropriate adjustments in the event of stock dividends, stock splits, reorganizations or other events affecting our Ordinary Shares and the exercise price.
Exercisability
The IPO Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by paying in full, in lawful money of the United States by wire transfer to the warrant agent, for the number of Warrants being exercised. The warrant holders do not have the rights or privileges of a shareholder of the Company and any voting rights until they exercise their IPO Warrants.
Fractional Shares
No fractional shares will be issued in connection with the exercise of an IPO Warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price.
Transferability
Subject to applicable laws, each warrant may be transferred at the option of the holder upon surrender of the warrant to the Company or its designated agent together with a written assignment substantially in the form attached to the warrant as an exhibit.
Warrant Agent
The warrant agent for the IPO Warrants is Equinity Trust Company, LLC (formerly known as American Stock Transfer & Trust Company, LLC) Its address is 48 Wall Street, 23rd floor, New York, NY 10043.
Exchange Listing
The IPO Warrants are listed on Nasdaq under the symbol “IINNW”.
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Exhibit 11.1
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
INSIDER TRADING POLICY
AND GUIDELINES WITH RESPECT TO
CERTAIN TRANSACTIONS IN COMPANY SECURITIES
Date: March 25, 2026
This Insider Trading Policy (the “Policy”) provides guidelines to directors, officers, employees and other related persons of Inspira Technologies Oxy B.H.N. Ltd., an Israeli company (the “Company”), with respect to transactions in the Company’s securities. The Company has adopted this Policy in order to ensure compliance with securities laws and to avoid even the appearance of improper conduct by anyone associated with the Company. Failure to comply with these procedures could result in a serious violation of the securities laws by you and/or the Company and can result in both civil penalties and criminal fines and imprisonment. We have all worked hard to establish the Company’s reputation for integrity and ethical conduct, and we are all responsible for preserving and enhancing this reputation. The appearance of insider trading can cause a substantial loss of confidence in the Company and its shares on the part of the public and the securities markets. This could result in an adverse impact on the Company and its shareholders. Accordingly, avoiding the appearance of engaging in share transactions on the basis of material undisclosed information can be as important as avoiding a transaction actually based on such information. The Company has appointed its VP Finance, or in his or her absence, the Company’s Chief Executive Officer (the “Compliance Officer,” as the case may be), as the Company’s Insider Trading Compliance Officer.
| I. | Applicability of Policy |
This Policy applies to all transactions in the Company’s securities, including ordinary shares, American depositary shares, American depositary receipts, options and any other securities the Company may issue from time to time, such as preferred shares, warrants, notes, and convertible debentures, as well as to derivative securities relating to the Company’s shares, whether or not issued by the Company, such as exchange-traded options and debt securities. It applies to all officers of the Company, all members of the Company’s Board of Directors, and all employees of, and consultants and contractors to, the Company and its subsidiaries/branches who receive or have access to Material Nonpublic Information (as defined below) regarding the Company (collectively, “Company Affiliated Persons”). Company Affiliated Persons, members of their immediate families (which include spouse and minor children), members of their households, other family members living with them or who are supported by them, are sometimes referred to in this Policy as “Insiders”. This Policy also applies to any trust or other estate in which an Insider has a substantial beneficial interest or as to which he or she serves as trustee or in a similar fiduciary capacity, and to any trust, corporation, partnership or other entity which the Insider controls, including venture capital partnerships. This Policy also applies to any person who receives Material Nonpublic Information from any Insider.
Any person who possesses Material Nonpublic Information regarding the Company is an Insider for so long as the information is not publicly known. Any employee can be an Insider from time to time and would at those times be subject to this Policy.
The Policy imposes additional restrictions upon Insiders who have routine access to Material Nonpublic Information, referred to as “Access Insiders.” Access Insiders are: (1) members of the board of directors, (2) the executive officers, (3) the controller, and (4) the investor relations department of the Company. In addition, other employees of the Company who have routine access to Material Nonpublic Information as determined by the Compliance Officer, who were notified that these additional restrictions apply to them shall also be Access Insiders until otherwise determined by the Compliance Officer.
In addition, the Company itself must comply with securities laws applicable to its own securities trading activities, and must not engage in any transaction involving a purchase or sale of its securities, including any offer to purchase or offer to sell or other disposition of its securities, when it is in possession of Material Nonpublic Information concerning the Company, other than in compliance with applicable law, subject to the policies and procedures adopted by the Company and the exceptions listed in Section XII of this Policy to the extent applicable.
| II. | General Policy |
It is the policy of the Company to oppose the unauthorized disclosure of any nonpublic information acquired in the work-place and the misuse of Material Nonpublic Information in securities trading.
| III. | Specific Policies |
1. Trading on Material Nonpublic Information. No Insider shall engage in any transaction involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell or gift, or any other disposition of the Company’s securities, during any period commencing with the time that he or she first receives Material Nonpublic Information concerning the Company, and ending at the close of business on the second Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. As used herein, the term “Trading Day” shall mean a day on which the Nasdaq Capital Market is open for trading.
2. Tipping. No Insider shall disclose (sometimes called a “Tip”) Material Nonpublic Information to any other person (including family members) where such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor shall such Insider or related person make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company’s securities.
3. Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is forbidden. In the event any officer, director or employee of the Company receives any inquiry from outside the Company, such as a stock analyst, for information (particularly financial results and/or projections) that may be Material Nonpublic Information, the inquiry should be referred to the Compliance Officer, and to the other appropriate Company officers, as provided for in the Disclosure Policy of the Company, if any, as may be in place from time to time.
| IV. | Potential Criminal and Civil Liability and/or Disciplinary Action |
1. Liability for Insider Trading. In the United States and many other countries, the personal consequences to an Insider of illegally trading securities while in possession, or on the basis of, Material Nonpublic Information can be quite severe. In the United States there are substantial civil penalties and criminal sanctions which may be assessed for insider trading. Civil penalties are a payment of a penalty of up to three times the illicit windfall. In addition, Insiders may be subject to criminal fines of up to $5,000,000 and up to twenty years in prison for engaging in transactions in the Company’s securities at a time when they have knowledge of Material Nonpublic Information regarding the Company.
If you are located or engaged in dealings outside the U.S., be aware that laws regarding insider trading and similar offenses differ from country to country. Employees must abide by the laws in the country where located. However, you are required to comply with this Policy even if local law is less restrictive. If a local law conflicts with this Policy, you must consult the Compliance Officer.
If securities transactions ever become the subject of scrutiny, they are likely to be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any transaction an Insider should carefully consider how the transaction may be construed in the bright light of hindsight. If you have any questions or uncertainties about this Policy or a proposed transaction, please ask the Compliance Officer.
2. Liability for Tipping. Insiders may also be liable for improper transactions by any person (commonly referred to as a “Tippee”) to whom they have disclosed Material Nonpublic Information or any person to whom the Tippee discloses such Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company’s securities. The civil penalties and criminal sanctions for tipping by an Insider are the same as the ones for an Insider conducting insider trading, even if the disclosing person did not profit from the trading. The U.S. Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority (“FINRA”) and the stock exchanges use sophisticated electronic surveillance techniques to uncover insider trading.
3. Possible Disciplinary Actions. The seriousness of securities law violations is reflected in the penalties and criminal sanctions such violations carry. These violations may also create negative publicity for the Company and a director’s resignation may be sought, or an officer or other employee will be subject to possible Company disciplinary action including ineligibility for future participation in the Company’s equity incentive plans or termination of employment.
| V. | Individual Responsibility |
Every Company Affiliated Person has the individual responsibility to comply with this Policy against insider trading, regardless of whether the Company has recommended a trading window to that person or any other Insiders of the Company. The guidelines set forth in this Policy are not intended to provide a conclusive solution for all circumstances, and appropriate judgment should be exercised in connection with any trade in the Company’s securities.
An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting.
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| VI. | Applicability of Policy to Inside Information Regarding Other Companies |
This Policy and the guidelines described herein also apply to Material Nonpublic Information relating to other companies, including the Company’s customers, vendors or suppliers (“Business Partners”), when that information is obtained in the course of employment with, or other services performed on behalf of, the Company. Civil penalties and criminal sanctions, and termination of employment, may result from trading on inside information regarding the Company’s Business Partners. All employees should treat Material Nonpublic Information about the Company’s Business Partners with the same care required with respect to information related directly to the Company.
| VII. | Dissemination of Company Information |
The prohibition of the disclosure of Material Nonpublic Information applies to all contacts made within and outside the Company. Care should be taken to prevent the disclosure of Material Nonpublic Information during all contact including phone calls and casual conversation. If in doubt about whether information falls into the category of Material Nonpublic Information, then the information should not be disclosed.
Prior to disclosure to any third party, any officer, director or employee of the Company who is aware of any Material Nonpublic Information concerning the Company that has not been disclosed to the public should report the intention to disclose such information promptly to the Compliance Officer and obtain approval to do so, or otherwise act in accordance with the Company’s Disclosure Policy, if any, as may be in place from time to time.
| VIII. | Definition of Material Nonpublic Information |
Material Nonpublic Information is information which is material, and that has not been disclosed or otherwise made available to the general public by the Company.
It is not possible to define all categories of material information. Generally, information should be regarded as material if a reasonable investor would consider it important in making an investment decision regarding the purchase or sale of the Company’s securities or the information, if made public, would likely affect the market price of the Company’s securities. Either positive or negative information may be material. Information may be material even if it relates to future, speculative or contingent events and even if it is significant only when considered in combination with publicly available information. Nonpublic information can be material even with respect to companies that do not have publicly traded stock, such as those with outstanding bonds or bank loans.
While it may be difficult under this standard to determine whether particular information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. If any Insider has questions as to the materiality of information, he or she should contact the Compliance Officer for clarification. Examples of information which is deemed to be material include:
| ● | Financial results; |
| ● | Projections of future earnings or losses; |
| ● | News of a pending or proposed merger or acquisition; |
| ● | New product or project announcements of a significant nature; |
| ● | Expansion or curtailment of operations or the gain or loss of a substantial customer; |
| ● | Changes in control of the Company or major changes in senior management; |
| ● | Significant new joint ventures, alliances, or strategic partnerships or material developments in existing arrangements; |
| ● | Impending bankruptcy or financial liquidity problems; |
| ● | Cybersecurity risks and incidents; |
| ● | Significant product defects or modifications; |
| ● | Significant pricing changes; |
| ● | Events regarding the Company’s securities (e.g. stock splits, repurchases, or changes in dividend policy); |
| ● | Changes in auditors or auditor notification that the Company may no longer rely on an audit report; |
| ● | A significant purchase or sale of assets or disposition of a subsidiary or division; |
| ● | New equity or debt offerings, significant borrowings, or other material financial transactions; |
| ● | Significant litigation exposure due to actual or threatened litigation; |
| ● | Significant actions by regulatory bodies; |
| ● | Receipt, cancellation or deferral of significant purchase orders; |
| ● | Proposed payment of a dividend; and |
| ● | Any of the above with respect to a subsidiary, or other affiliate of the Company. |
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Nonpublic information is information that has not been previously disclosed to the general public and is otherwise not available to the general public. It is important to note that information is not necessarily “public information” merely because it has been discussed in the press, which will sometimes report rumors. You should presume that information is nonpublic unless you can point to its official release by the Company in at least one of the following ways:
1. Information contained in publicly available documents filed with securities regulatory authorities (e.g., filings with the SEC);
2. Issuance of press releases; or
3. Meetings with members of the press and the public.
| IX. | Additional Circumstances Where No Exceptions Apply |
There are almost no exceptions to the prohibition against insider trading. For example, absent a Qualified Plan (as defined below), it does not matter that the transactions in question may have been planned before the Insider came into possession of the undisclosed material information, regardless of the economic loss that the person may believe he or she might suffer as a consequence of not trading.
As noted above, the definition of Insiders, to which this Policy applies, includes immediate family members of Company Affiliated Persons. Although immediate family is narrowly defined, a Company Affiliated Person should be especially careful with respect to family members or to unrelated persons living in the same household.
Finally, there are no limits on the size of a transaction that will trigger insider trading liability; relatively small trades have in the past occasioned investigations and lawsuits.
| X. | Trading Window |
The period beginning two weeks before the end of the last month of each calendar quarter and ending two Trading Days following the date of public disclosure of the financial results for that quarter, is a particularly sensitive period of time for transactions in the Company’s shares from the perspective of compliance with applicable securities laws. This sensitivity is due to the fact that directors, officers and certain other employees will, during that period, often possess Material Nonpublic Information about the expected financial results for the quarter.
Accordingly, to ensure compliance with this Policy and applicable federal and state securities laws, it is the Company’s policy that all directors, officers and employees refrain from conducting transactions involving the Company’s securities other than during the period (the “Trading Window”) commencing at the close of business on the second Trading Day following the date of public disclosure of the financial results for a particular fiscal quarter or year and continuing until the day that is two weeks before the last day of the last month of the next fiscal quarter. As a courtesy to the persons subject to this Policy, the Company may provide advance notice before the Trading Window opens.
From time to time, the Company may also notify that directors, officers, selected employees and others are required to suspend trading because of developments known to the Company and not yet disclosed to the public. In such event, such persons are advised not to engage in any transaction involving the Company’s securities during such period and should not disclose to others the fact of such suspension of trading.
The purpose behind the self-imposed Trading Window period is to help establish a diligent effort to avoid any improper transaction. It should be noted, however, that even during the Trading Window, any person possessing Material Nonpublic Information concerning the Company may not attempt to “beat the market” by trading simultaneously with, or shortly after, the official release of Material Nonpublic Information. Although there is no fixed period for how long it takes the market to absorb information, out of prudence a person aware of Material Nonpublic Information should refrain from any trading activity for at least two full Trading Days following its official release, whether or not the Company has recommended a suspension of trading to that person.
NOTWITHSTANDING THESE TIMING GUIDELINES, IT IS ILLEGAL FOR ANY PERSON TO TRADE WHILE IN POSSESSION OF MATERIAL NONPUBLIC INFORMATION, INCLUDING SITUATIONS IN WHICH THE PERSON IS AWARE OF MAJOR DEVELOPMENTS THAT HAVE NOT YET BEEN PUBLICLY ANNOUNCED BY THE COMPANY. TRADING IN THE COMPANY’S SECURITIES DURING THE TRADING WINDOW SHOULD NOT BE CONSIDERED A "SAFE HARBOR," AND ALL DIRECTORS, OFFICERS AND OTHER INSIDERS SHOULD USE GOOD JUDGMENT AT ALL TIMES.
| XI. | Inquiries |
All Insiders should review this Policy carefully and contact the Compliance Officer if they have a concern that a contemplated transaction in the Company’s securities might not conform with this Policy.
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| XII. | Certain Exceptions |
For purposes of this Policy, the Company considers that the exercise of share options for cash under the Company’s share option plans or the purchase of shares under employee purchase plans in effect at the time of the adoption of this Policy and that may be adopted in the future (but not the sale of any such shares) is exempt from this Policy, since the other party to the transaction is the Company itself and the price does not vary with the market but is fixed by the terms of the option agreement or the plan. Accordingly, cashless exercises of options are subject to the Policy when they involve the sale of shares into the public marketplace.
The restrictions set forth in this Policy shall not apply to purchases or sales made pursuant to a Qualified Plan. For purposes of this exception, a “Qualified Plan” is a written plan for purchasing or selling the Company’s securities which meets each of the following requirements: (a) the plan is adopted by the Insider during a Trading Window and when the Insider is not in possession of material non-public information; (b) the plan is adhered to strictly by the Insider; (c) the plan either (i) specifies the amount of securities to be sold and the date on which the securities are to be sold, (ii) includes a written formula or algorithm, or computer program, for determining the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold, or (iii) does not permit the Insider to exercise any subsequent influence over how, when, or whether to effect sales; provided, in addition, that any other person who, pursuant to the plan, does exercise such influence must not have been aware of the material nonpublic information when doing so; (d) d) the plan includes a representation from the Insider adopting the plan that such Insider (i) is not aware of any material nonpublic information about the Company or its securities and (ii) is adopting the plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (e) the plan provides that trading under the plan cannot begin until the later of (i) 90 days after the adoption of the plan or (ii) two business days following the disclosure of the Company’s financial results in a Form 6-K or Form 20-F (such period being referred to as the “cooling-off period”, but, in either case, not to exceed 120 days following the adoption of the plan, and provided that if the Insider is not a director or officer of the Company, such cooling-off period shall be at least 30 days rather than the longer periods set forth above); and (e) at the time it is adopted the plan conforms to all other requirements of Rule 10b5-1 under the Exchange Act as then in effect. Rule 10b5-1 provides an affirmative defense from insider trading liability under the U.S. federal securities laws for trading plans that meet the above requirements.
In accordance with Rule 10b5-1 under the Exchange Act, any change to the amount, price, or timing of the purchase or sale of securities underlying a Qualified Plan constitutes termination of the Qualified Plan and the adoption of a new Qualified Plan, which triggers the cooling-off period described above. No Insider may have more than one Qualified Plan for purchases or sales of securities on the open market during the same period. In addition, no Insider may have more than one single-trade Qualified Plan during any 12-month period. A single-trade plan is one that has the practical effect of requiring the purchase or sale of securities as a single transaction. With respect to overlapping Qualified Plans, an Insider may have two separate plans provided (i) the later-commencing plan does not begin until all trades have been completed under the first plan or the first plan expires without execution, and trading during the cooling-off period that would have applied if the later-commencing plan was adopted on the date the earlier-commencing plan terminates and (ii) the separate plans satisfy all other conditions applicable to Qualified Plans. With respect to overlapping Qualified Plans, an Insider may have separate plans for “sell-to-cover” transactions in which an Insider instructs an agent to sell securities in order to satisfy tax withholding obligations at the time an equity award vests. Any such additional plan must only authorize qualified “sell-to-cover” transactions. With respect to single-trade Qualified Plans, an Insider may have a single-trade plan for “sell-to-cover” transactions.
In addition to the above requirements, a Qualified Plan shall be signed and dated by the Insider, and submitted to the Compliance Officer at least two (2) trading days before it is filed with the broker who executes it. The Company shall have the right, at all time, to suspend purchases or sales under a Qualified Plan, for instance in the event that the Company needs to comply with requirements by underwriters for “lock-up” agreements in connection with an underwritten public offering of the Company’s securities. Any cancellation, suspension, expansion or other modification of a Qualified Plan by the Insider who established it must: (1) be in writing, signed and dated by such Insider, (2) be submitted to the Compliance Officer within two (2) trading days before the cancellation, suspension, expansion or other modification was reduced to writing, and (3) be made during a Trading Window, and when the Insider who established it has no Nonpublic Material Information about the Company.
| XIII. | Additional Information for Directors, Officers and Certain Employees with Routine Access to Material Nonpublic information |
This Policy imposes additional restrictions upon Access Insiders, because of their routine access to Material Nonpublic Information.
1. Preclearance of Trades. The Company has determined that all Access Insiders should refrain from trading in the Company’s securities, even during the Trading Window, without first complying with the Company’s “preclearance” process. Each Access Insider should contact the Compliance Officer prior to commencing any trade, gift or other transaction in the Company’s securities. At the time of executing a trade in the Company’s securities, such individuals will be responsible for verifying that the Company has not imposed any restrictions on their ability to engage in transactions. If the individual has not completed the transaction within ten Trading Days of notification of the intention to execute a transaction, then the individual must again notify the Compliance Officer that he or she intends to execute a transaction and re-verify the nonexistence of any restrictions on such trade. For the avoidance of doubt, this paragraph shall not apply to a Qualified Plan, after it has been set up.
Before each transaction in the Company’s securities by a Company each officer and director should contact the Compliance Officer regarding compliance with Rule 144 under the U.S. Securities Act of 1933, as amended (“Rule 144”), which contains guidelines for the sale of privately issued shares and sales by affiliates of the Company, if such sales are not covered by an effective registration statement, to the extent applicable, and regarding compliance with the provisions of Section 16(a) of the U.S. Securities Exchange Act of 1934, as amended (“Section 16”), which effective March 18, 2026, require the Company’s directors and officers (as defined in Section 16) to make public electronic filings with the U.S. Securities and Exchange Commission reporting their beneficial ownership and to disclose their transactions in the Company’s securities.
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2. Rule 144 and Section 16 Matters for Directors and Officers. Directors and principal officers of the Company must also comply with Rule 144, or another applicable exemption from registration. The practical effect of Rule 144 is that directors and officers who sell the Company’s securities may be required to comply with a number of requirements including holding period, volume limitation, manner of sale and SEC filing requirements. The Company may provide separate memoranda and other appropriate materials to its directors and officers regarding compliance with Rule 144. Directors and officers (as defined in Section 16) of the Company must also comply with the provisions of Section 16, which effective March 18, 2026, requires the Company’s directors and officers to report transactions in the Company’s securities through filing of Form 3, Form 4 and Form 5 with the U.S. Securities and Exchange Commission. It is the responsibility of each director and officer to comply with their Section 16 reporting obligations.
| XIV. | Specific Requirements |
1. Speculative Trading. No Insider may engage in transactions of a speculative nature at any time. All Insiders are prohibited from short-selling the Company’s securities or engaging in transactions involving the Company’s based derivative securities. A short sale, for these purposes, means any transaction whereby one may benefit from a decline in the price of the Company’s securities. “Derivative Securities” are options, warrants, stock appreciation rights or similar rights whose value is derived from the value of an equity security, such as the Company’s ordinary shares. This prohibition includes, but is not limited to, trading in the Company’s based put and call option contracts, transacting in straddles, hedging or monetization transaction with respect to the Company’s securities, and the like. In addition, no Insider shall engage in a transaction with respect to securities of the Company if he or she owns the security, but does not deliver it against such sale (a “short sale against the box”) within twenty days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation. The above does not derogate from Insiders’ right to hold and exercise options or other derivative securities granted under the Company’s employee share option or equity incentive plans as long as such exercise is not prohibited by this Policy.
2. Margin Accounts and Pledges. Securities held in a margin account may be sold by the broker without the consent of the owner thereof if such owner fails to meet a margin call. Similarly, securities pledged as collateral for a loan may be sold if the owner thereof defaults on the loan. In case of an owner who is subject to this Policy, these sales may occur at a time when such person is aware of material, non-public information or otherwise not permitted to trade such securities. Therefore, this policy prohibits holding any Company securities in a margin account or pledging any Company securities as collateral for a loan.
3. Post-Termination Transactions. If an Insider is aware of Material Nonpublic Information at the time such Insider’s association with the Company is terminated, whether by the Insider or the Company, the Insider may not trade in Company securities until such information is no longer material or until two Trading Days after such information has become public. In addition, if the Company is not in a Trading Window at the time such association with the Company is terminated, the Insider may not trade in Company securities until two Trading Days after the next announcement of quarterly earnings or of the material, non-public information.
4. Ad hoc Restrictions. The Compliance Officer has the authority to impose restrictions on trading in the Company’s securities by appropriate individuals at any time. In such event, the Compliance Officer will notify the affected individuals, either personally, by email or by voicemail, to inform them of the restrictions.
5. Open Orders. Any Insider who has placed a limit order or open instruction to buy or sell the Company’s securities shall bear responsibility for canceling such instructions immediately upon becoming in possession of Material Nonpublic Information.
| XV. | Acknowledgement |
Please sign the attached acknowledgement form and return it to the Compliance Officer.
If you have any questions with respect to this Policy, please contact the Company’s Compliance Officer, at yafit@inspirao2.com.
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ACKNOWLEDGEMENT
I have received, read and understand the Insider Trading Policy and Guidelines with Respect to Certain Transactions in Company Securities of Inspira Technologies Oxy B.H.N. Ltd., a copy of which is attached hereto, and agree to comply with the provisions thereof.
| Date: | |
| Signature | |
| Name | |
| Title |
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Exhibit 12.1
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a) or 15d-14(a)
I, Dagi Ben-Noon, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Inspira Technologies Oxy B.H.N. Ltd. (the “company”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent function): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| Date: March 26, 2026 | /s/ Dagi Ben-Noon |
| Dagi Ben-Noon | |
| Chief Executive Officer |
Exhibit 12.2
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a) or 15d-14(a)
I, Yafit Tehila, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Inspira Technologies Oxy B.H.N. Ltd. (the “company”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent function): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| Date: March 26, 2026 | /s/ Yafit Tehila |
| Yafit Tehila | |
| Chief Financial Officer |
Exhibit 13.1
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350
In connection with the filing of the Annual Report on Form 20-F for the period ended December 31, 2025 (the “Report”) by Inspira Technologies Oxy B.H.N. Ltd. (the “company”), the undersigned, as the Chief Executive Officer of the company, hereby certifies pursuant to 18 U.S.C. Section 1350, that, to my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
| Date: March 26, 2026 | /s/ Dagi Ben-Noon |
| Dagi Ben-Noon | |
| Chief Executive Officer |
Exhibit 13.2
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350
In connection with the filing of the Annual Report on Form 20-F for the period ended December 31, 2025 (the “Report”) by Inspira Technologies Oxy B.H.N. Ltd. (the “company”), the undersigned, as the Chief Financial Officer of the company, hereby certifies pursuant to 18 U.S.C. Section 1350, that, to my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
| Date: March 26, 2026 | /s/ Yafit Tehila |
| Yafit Tehila | |
| Chief Financial Officer |
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Inspira Technologies Oxy B.H.N. Ltd.
2 Ha-Tidhar St.
Rananna 4366504, Israel
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-259057,333-277980, 333-285565, 333-290162 and 333-292592) and Form F-3 (Nos. 333-284308 and 333-289324) of Inspira Technologies Oxy B.H.N Ltd (“the Company”) of our report dated March 25, 2026, relating to the financial statements of the Company which appears in this Annual Report on Form 20-F.
Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
|
/s/ Ziv Haft Certified Public Accountants (Isr.) BDO Member Firm |
Tel Aviv, Israel
March 26, 2026
