QTREX Quantum Ltd F-1/A, filed Jun 28, 2021

QTREX Quantum Ltd. (QTEX)

F-1/A 2021-06-28

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State of Israel		3841		Not Applicable
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Title of each class of securities to be registered	Proposed maximum aggregate offering price ⁽¹⁾⁽²⁾		Amount of registration fee ⁽³⁾
Units consisting of:	$	17,250,000	$	1,881.96
(i) Ordinary shares no par value ⁽⁴⁾
(ii) Warrants to purchase Ordinary shares ⁽⁴⁾
Pre-funded Units consisting of:
(i) Pre-funded warrants to purchase Ordinary shares ⁽⁴⁾
(ii) Warrants to purchase Ordinary shares ⁽⁴⁾
Representative’s warrants to purchase ordinary shares ⁽⁵⁾
Ordinary shares issuable upon exercise of warrants	$	17,250,000	$	1,881.96
Ordinary shares issuable upon exercise of pre-funded warrants
Ordinary shares issuable upon exercise of representative’s warrants ⁽⁶⁾	$	991,875	$	108.22
Total Registration Fee	$	35,491,875	$	3,872.17	⁽⁶⁾⁽⁷⁾

(1)	Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the ordinary shares, or Ordinary Shares, registered hereby also include an indeterminate number of additional Ordinary Shares as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions.

(2)	Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act. Includes the offering price of Ordinary Shares that the Underwriters have the option to purchase to cover over-allotments, if any.

(3)	Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

(4)	No separate fee is required pursuant to Rule 457(i) of the Securities Act.

(5)	In accordance with Rule 457(g) under the Securities Act, because the Ordinary Shares of the Registrant underlying the warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby.

(6)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the representative’s warrants is equal to 125% of $862,500 (which is 5% of $17,250,000.)

(7)	Previously paid.

(1)	Does not include a non-accountable expense allowance equal to 1.0% of the initial public offering price payable to the underwriters. In addition, we have agreed to issue warrants to the representative of the underwriters in an amount equal to 5% of the aggregate number of ordinary shares sold in this offering (including any ordinary shares underlying the Pre-Funded Warrants, but excluding the shares sold through the exercise of the over-allotment option). See the section titled “Underwriting” beginning on page 118 of this prospectus for additional disclosure regarding underwriter compensation and offering expenses.

(2)	Does not include proceeds from the exercise of the warrants in cash, if any.

	Page
Prospectus Summary	1
Risk Factors	8
Cautionary Note Regarding Forward-Looking Statements	45
Listing Details	47
Use of Proceeds	48
Dividend Policy	49
Capitalization	50
Selected Financial Data	51
Dilution	52
Management’s Discussion and Analysis of Financial Condition and Results of Operations	54
Business	64
Management	83
Beneficial Ownership of Principal Shareholders and Management	100
Related Party Transactions	101
Description of Share Capital	103
Description of Securities we are Offering	107
Shares Eligible for Future Sale	109
Taxation	110
Underwriting	118
Expenses	120
Legal Matters	120
Experts	120
Enforceability of Civil Liabilities	121
Where You Can Find Additional Information	122
Index of Financial Statements	F-1

	●	*Pursuing world-wide regulatory approvals*: we plan to pursue regulatory approvals in the United States, Europe, Asia, South America, Africa and the Middle East.

	●	**Collaborating with leading medical centers and health organizations**: we are working with leading medical centers and health organizations to reach regional deployment of the ART500. This also includes collaborations with top ranked hospitals and to expose our ART500 and attain both clinical endorsement and adoption of use in acute respiratory care.

	●	*Identifying potential customer profiles*: we will be targeting leading medical centers that are interested in acquiring the key components of our ART500 for blood enrichment applications. We will be also targeting emergency medical services to offer our ART for early saturation elevation and stabilization in awake patients. Potentially, our ART500 can be used to treat patients with respiratory failure to prevent MV. Moreover, our ART500 can potentially be used together with MV to reduce the risk of ventilator induced lung injury by reducing MV pressure level in lungs and shortening the weaning period.

	●	*Strategic partners*: we have entered into discussions to establish collaborations with leading medical device companies, manufactures and distributors. This will include efforts that may generate a strategic investment by the strategic partners. The development of a strategic team is key in order to enable our company to rapidly deploy the ART500 to meet potentially growing demand as well as reach and service clientele internationally, subject to regulatory approval.

	●	*Investing in marketing and public relations to increase awareness of our solution*: in order to drive market demand for the ART500, we are building our pre-commercialization infrastructure to support sales following regulatory approvals. We are focusing our efforts within the medical community to introduce our product and technology to leading hospitals, military branches and government bodies. We also believe that our ART500 has potential for use outside of the ICU, so we also intend to focus on conventional hospital wards as well as ambulatory settings. Although our ART500 remains in development, has not yet been used in humans, and is not cleared or approved by the FDA or similar foreign regulatory bodies, we believe that due to the potential ease of use and affordability of the ART500, we will also be able to target smaller urban and rural hospitals that do not have ICUs, in order to make acute respiratory care accessible to patients living outside of major city centers.

	●	*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 the ART500. With intensive care becoming increasingly expensive, the ART500 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 & Medicaid Services, or CMS, actual data, presented by us together with top-ranking hospitals. The data collected will be used to demonstrate our ART500’s efficiency and reduced cost of treatment. We intend to pursue reimbursement under specified Medicare Severity-Diagnosis Related Group, or MS-DRG, and have already begun discussions with some of the required parties. We plan to explore using existing Current Procedural Terminology (CPT) Codes using a “New Approach” to an existing procedure, because potentially certain codes selected for COVID-19 may be relevant for the ART500.

	●	we have a limited operating history on which to assess the prospects for our business, have incurred losses since inception and anticipate that we will continue to incur significant losses until we are able to successfully commercialize our ART500. In addition, we have not generated revenue from the sale of our products and may never be profitable;

	●	given our lack of positive cash flow, we will likely need to raise additional capital after this offering, which may be unavailable to us and which, if obtained, will cause dilution to our shareholders;

	●	we may not succeed in completing the development and commercialization of our products and generating significant revenues;

	●	our business and operations have been and are likely to continue to be adversely affected by the evolving and ongoing COVID-19 global pandemic;

	●	our success depends on a broad degree of market acceptance of our product ART500 and any future product candidates, physician adoption and use, which are necessary for commercial success;

	●	medical device development is costly and involves continual technological change which may render our current or future products obsolete. In addition, if our competitors are able to develop and market products that are more effective, safer or more affordable than ours, or obtain marketing approval before we do, our commercial opportunities may be limited;

	●	we will be dependent upon success in our customer acquisition strategy and successfully integrating acquired companies and technology;

	●	we are dependent upon third-party manufacturers and service suppliers making us vulnerable to supply shortages and problems, increased costs and quality or compliance issues, which could harm our business. We may not be able to replace our current manufacturing capabilities in a timely manner 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;

	●	exchange rate fluctuations between the U.S. dollar, the New Israeli Shekel, the Euro and other foreign currencies, may negatively affect our future revenues and expenses;

	●	we manage our business through a small number of employees and key consultants. 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;

	●	we may need to expand our organization and may not be able to attract and retain highly skilled managerial, scientific and technical personnel, which will adversely affect our ability to implement our business model successfully;

	●	international expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States or Israel;

	●	if third-party payors do not provide adequate coverage and reimbursement for the use of our ART500 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 United States and abroad. Regulatory requirements for development of our product candidates are uncertain and evolving. Our failure to comply with applicable requirements or to obtain FDA or other regulatory clearances or approvals to market and sell future products could harm our business;

	●	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;

	●	we may be party to or target of lawsuits, investigations and proceedings arising out of claims alleging product liability, breach of warranty or similar claims that may involve large claims and significant defense costs whether or not such liability is imposed. Such potential claims may be costly to defend, could consume management resources and could adversely affect our reputation and business;

	●	we are subject to uncertainty relating to healthcare reform measures and reimbursement policies that, if not favorable to our products, could hinder or prevent our products’ commercial success and adversely affect our financial condition;

	●	we are dependent on patents and other forms of non-patent intellectual property protection. If we fail to adequately protect this intellectual property our ability to commercialize products could suffer. If we infringe the rights of third parties, we could be prevented from selling products, forced to pay damages and/or royalties, and forced to defend against litigation which might be very expensive to us;

	●	the market price of our securities may be highly volatile, and you may not be able to resell your Ordinary Shares or Warrants at or above the initial public offering price;

	●	our principal shareholders, officers and directors currently beneficially own approximately 70% of our Ordinary Shares and will therefore be able to exert significant control over matters submitted to our shareholders for approval;

	●	our relationships with healthcare professionals, institutional providers, consultants, third-party payors and customers are subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations in the United States and similar laws in other countries, which could expose us to penalties, including without limitation, civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations;

	●	we may be subject to security breaches and other disruptions could compromise our information, expose us to liability under privacy laws, and harm our reputation and business;

	●	as a public company following the conclusion of this offering, we will need to comply with extensive additional U.S. governmental and Nasdaq regulations, which will be expensive, and which will require significant management attention; and

	●	political, military and economic conditions in Israel could materially and adversely affect our business. In addition, as an Israeli company, we are subject to provisions of Israeli law which govern the rights and responsibilities of our shareholders, may prevent us from enforcing covenants not-to-compete and delay, prevent or otherwise impede an acquisition of us or our merger with another company.

Ordinary Shares currently issued and outstanding		4,542,317 Ordinary Shares

Units offered by us		Up to 2,307,692 Units (based on an assumed public offering price of $6.50 per Unit, the midpoint of the range set forth on the cover page of this prospectus), each consisting of one Ordinary Share and one Warrant to purchase one Ordinary Share. The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The Ordinary Shares and Warrants are immediately separable and will be issued separately in this offering.

Pre-funded Units offered by us		We are also offering to those purchasers, if any, whose purchase of Units in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of our outstanding Ordinary Shares immediately following the consummation of this offering, Pre-funded Units, each consisting of one Pre-funded Warrant to purchase one Ordinary Share and one Warrant to purchase one Ordinary Share. The Pre-funded Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The Pre-funded Warrants and Warrants are immediately separable and will be issued separately in this offering. For each Pre-funded Unit we sell, the number of Units we are offering will be decreased on a one-for-one basis. Because we will issue a Warrant as part of each Unit or Pre-funded Unit, the number of Warrants sold in this offering will not change as a result of a change in the mix of the Units and Pre-funded Units sold.

Warrants		Each Warrant will have an exercise price of $6.50 (based on an assumed public offering price of $6.50 per Unit, the midpoint of the range set forth on the cover page of this prospectus), per Ordinary Share (100% of the public offering price per Unit), will be immediately exercisable and will expire five years from the date of issuance. To better understand the terms of the Warrants, you should carefully read the “Description of Securities we are Offering” section of this prospectus. You should also read the form of Warrant, which is filed as an exhibit to the registration statement that includes this prospectus.

Pre-funded Warrants		Each Pre-funded Warrant will be immediately exercisable at an exercise price of $0.01 per Ordinary Share and may be exercised at any time until exercised in full. To better understand the terms of the Pre-funded Warrants, you should carefully read the “Description of Securities we are Offering” section of this prospectus. You should also read the form of Pre-funded Warrant, which is filed as an exhibit to the registration statement that includes this prospectus.

Ordinary Shares to be outstanding after this offering		6,850,014 Ordinary Shares (assuming no exercise of the representative’s warrants and assuming the exercise of any Pre-Funded Warrants and excluding 2,307,692 Ordinary Shares issuable upon exercise of the Warrants sold in this offering), or 7,196,167 Ordinary Shares if the underwriters exercise in full the over-allotment option to purchase additional Ordinary Shares.

Over-allotment option		We have granted the representative of the underwriters an option to purchase from us, up to 346,153 additional Ordinary Shares and/or Pre-Funded Warrants, and/or up to an additional 346,153 Warrants, within 45 days from the date of this prospectus to cover over-allotments, if any. The purchase price to be paid per additional Ordinary Share or Pre-Funded Warrant will be equal to the public offering price of one Unit or Pre-Funded Unit (less $0.001 allocated to the Warrants), as applicable, less the underwriting discount, and the purchase price to be paid per additional Warrant will be $0.001. The underwriters may exercise this option with respect to Ordinary Shares only, Pre-Funded Warrants only, Warrants only, or a combination thereof.

Representative’s Warrants		We will issue to Aegis Capital Corp., the representative of the underwriters, or its permitted designees warrants to purchase up to 115,385 Ordinary Shares (or 132,692 Ordinary Shares if the underwriters exercise their over-allotment option in full). The representative’s warrants will have an exercise price of 100% of the per Ordinary Share public offering price, will be exercisable on the date of issuance and will expire five years from the effective date of the registration statement of which this prospectus forms a part.

Risk factors		Investing in our securities involves a high degree of risk. You should read the “Risk Factors” section starting on page 8 of this prospectus for a discussion of factors to consider carefully before deciding to invest in our Ordinary Shares.

Proposed Nasdaq Capital Market symbol:		We have applied to list our Ordinary Shares and Warrants to be issued in this offering on the Nasdaq under the symbol “IINN” and “IINNW,” respectively.

	●	559,912 Ordinary Shares issuable upon the exercise of options to directors, employees and consultants under our equity incentive plan, outstanding as of such date, with exercise prices ranging between NIS 0.37 (approximately $0.12) to NIS 0.97 (approximately $0.29) per share, of which 378,419 were vested as of such date;

	●	2,038 Ordinary Shares reserved for future issuance under our equity incentive plan;

	●	169,016 Ordinary Shares issuable upon the exercise of warrants issued to InSense Medical Pty Ltd. in connection with a certain termination agreement, with an exercise price equal to the price per Ordinary Share in this offering;

	●	673,402 Ordinary Shares issuable upon the exercise of warrants to be issued in connection with certain equity investment agreements, which we refer to as Simple Agreements for Future Equity, or SAFEs and an additional 2,747 Ordinary Shares issuable upon the exercise of warrants to be issued to promoters in connection with such SAFEs; and

	●	293,650 Ordinary Shares issuable upon the exercise of warrants issued in connection with a certain convertible loan, and an additional 11,288 Ordinary Shares issuable upon the exercise of warrants to be issued to promoters in connection with such convertible loan agreements.

	●	no exercise of the underwriters’ over-allotment option;

	●	no exercise of the representative’s warrants;

	●	the issuance in November 2020 of bonus shares under Israeli law to all of our shareholders on a basis of 68.097927 bonus shares for each ordinary share outstanding (equivalent to a 69.097927-for-1 stock split) and the customary adjustments to our outstanding options;

	●	1,190,050 Ordinary Shares to be issued upon the conversion of SAFEs, for aggregate proceeds of $5,414,593, which will automatically convert upon the consummation of this offering, based on an assumed public offering price of $6.50 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus;

	●	587,297 Ordinary Shares to be issued upon the conversion of convertible loan agreements for aggregate proceeds of $3,053,920, which will automatically convert upon the consummation of this offering, based on an assumed public offering price of $6.50 per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus;

	●	97,762 Ordinary Shares to be issued to financial advisors, upon completion of this offering; and

	●	a 1-for-12.5 reverse stock split effected on March 18, 2021, and an additional 1-for-2.94 reverse stock split effected on June 1, 2021.

	Year Ended December 31,
U.S. dollars in thousands, except per share data	2020			2019

Research and development expenses		3,873			887
general and administrative expenses		2,447			384
Other income		51

Total operating expenses		6,269			1,271
Operating loss		6,269			1,271
Finance expenses, net		959			3,304
Loss before taxes on income		7,228			4,575
Income tax expense (benefit)		-			-
Loss for the year		7,228			4,575
Other comprehensive income (loss)		(599	)		(37	)
Net comprehensive loss		7,827			4,612
Net comprehensive loss for the period attributable to:
Inspira technologies Oxy B.H.N. Ltd. Shareholders		7,827			4,612
Basic and diluted loss per share		(3.6 7)			(2.401	)

	As of December 31, 2020
U.S. dollars in thousands	Actual *			Pro Forma ⁽¹⁾			Pro Forma As Adjusted ⁽²⁾
	(Unaudited)
Balance Sheet Data:
Cash and cash equivalents		496			7,309			20,283
Total assets		987			7,800			20,774
Total current liabilities		951			951			951
Accumulated deficit		(11,836	)		(12,465	)		(12,687	)
Total shareholders’ equity (deficit)		(1,704	)		6,382			19,356

	●	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.

	●	continue the research and development of our ART500;

	●	seek regulatory and marketing approvals for our ART500;

	●	establish a sales, marketing, and distribution infrastructure to commercialize our ART500;

	●	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.

	●	complete research and development of our ART500 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 ART500 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 ART500 and any future product candidates, if and when approved;

	●	identifying, assessing, acquiring and/or developing 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 identifying demand for our ART500 or any future product candidates;

	●	expose and educate physicians and other medical professionals to use our products;

	●	obtain market acceptance, if and when approved, of our ART500 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 ART500 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.

	●	the progress, results and costs of our ongoing and planned studies and, if applicable, clinical trials of ART500 and any future product candidates;

	●	the cost, timing and outcomes of regulatory review of ART500 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;

	●	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.

	●	we may not have adequate financial or other resources to complete the development of our ART500;

	●	we may not be able to manufacture our ART500 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;

	●	healthcare professionals and patients may not accept our products;

	●	we may not be aware of possible complications from the continued use of our ART500 since we have limited clinical experience with respect to the actual use of our ART500;

	●	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 ART500;

	●	third-party payors may not agree to reimburse patients for any or all of the purchase price of our ART500, which may adversely affect patients’ willingness to use our ART500;

	●	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.

	●	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 are not currently a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours;

	●	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;

	●	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.

	●	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;

	●	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, or the FCPA, its books and records provisions or its anti-bribery provisions.

	●	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.

	●	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.

	●	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 United States relating to the sale or pricing of medical devices;

	●	the depth of the trading market in our Ordinary Shares and Warrants;

	●	termination of the lock-up agreements or other restrictions limiting our ability or that of any of our existing shareholders to sell our Ordinary Shares (or any other securities that we may issue, if any) after this offering;
	●	economic weakness, including inflation, or political instability in particular foreign economies and markets;

	●	business interruptions resulting from a local or worldwide pandemic, such as COVID-19, geopolitical actions, including war and terrorism, or natural disasters;

	●	the granting or exercise of employee stock options or other equity awards; and

	●	changes in investors’ and securities analysts’ perception of the business risks and conditions of our business.

	●	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;

	●	Section 107 of the JOBS Act, which provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption of new or revised accounting standards. As a result of this adoption, our financial statements may not be comparable to companies that comply with the public company effective date;

	●	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; and

	●	our ability to furnish two rather than three years of income statements and statements of cash flows in various required filings.

	●	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 ART500 and future potential product candidates;

	●	our ability to commercialize our ART500 and future potential product candidates and future sales of our ART500 or any other future potential product candidates;

	●	our assessment of the potential of our ART500 and future potential product candidates to treat certain indications;

	●	our planned level of capital expenditures and liquidity;

	●	our plans to continue to invest in research and development to develop technology for new products;

	●	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;

	●	our ability to meet our expectations regarding the commercial supply of our ART 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 COVID-19 and resulting government actions on us;

	●	the impact of competition and new technologies;

	●	general market, political and economic conditions in the countries in which we operate;

	●	the impact of competition and new technologies;

	●	our ability to internally develop new inventions and intellectual property;

	●	our expectations regarding the use of proceeds from this offering

	●	changes in our strategy; and

	●	litigation.

	●	approximately $1 million for product integration;

	●	approximately $7 million for research and development, including human observational studies, system engineering and other regulatory approval process;

	●	approximately $2 million for business development and marketing activities and implementation of our go-to-market strategy; and

	●	the remainder for working capital and general corporate purposes and next generation product development.

	As of December 31, 2020
U.S. dollars in thousands	Actual			Pro Forma			Pro Forma As Adjusted ⁽¹⁾
	(Unaudited)
Cash and cash equivalents		496			7,309			20,283

Convertible note		1,273-			-			-

Shareholders’ equity (deficit):
Share capital		304			514			771
Share premium		7,749			16,255			29,193
Foreign exchange reserve		(635	)		(635	)		(635	)
Share base compensation		2,714			2,714			2,714
Accumulated deficit		(11,836	)		(12,465	)		(12,687	)
Total shareholders’ equity (deficit)		(1,704	)		6,382			19,356
Total capitalization		(1,704	)		6,382			19,356

Assumed public offering price per Unit	$	6.50
Pro Forma net tangible book value per Ordinary Share as of December 31, 2020	$	0.93
Increase in pro forma net tangible book value per Ordinary Share attributable to new investors	$	1.90
Pro forma as adjusted net tangible book value per Ordinary Share after this offering	$	2.83
Dilution per Ordinary Share to new investors	$	3.67
Percentage of dilution in net tangible book value per Ordinary Share for new investors		56	%

	Shares					Total Consideration					Average Price Per Ordinary
	Number		Percent			Amount		Percent			Share
Existing shareholders		4,542,317		66.3	%	$	10,943,537		42	%	$	2.41
New investors		2,307,692		33.7			15,000,000		58			6.50
Total		6,850,009		100.0	%	$	25,943,537		100	%	$

	●	559,912 Ordinary Shares issuable upon the exercise of options to directors, employees and consultants under our equity incentive plan, outstanding as of such date, with exercise prices ranging between NIS 0.37 (approximately $0.12) to NIS 0.97 (approximately $0.29) per share, of which 378,419 were vested as of such date;

	●	2,038 Ordinary Shares reserved for future issuance under our equity incentive plan;

	●	169,019 Ordinary Shares issuable upon the exercise of warrants issued to InSense Medical Pty Ltd. in connection with a certain termination agreement, with an exercise price equal to the price per Ordinary Share in this offering;