QTREX Quantum Ltd 6-K, filed Aug 15, 2024
QTREX Quantum Ltd. (QTEX)
About this 6-K
QTREX Quantum Ltd filed this 6-K on August 15, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of August
Commission File Number:
(Translation of registrant’s name into English)
2 Ha-Tidhar St.
Ra’anana 4366504, Israel
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
☒ Form 20-F ☐ Form 40-F
CONTENTS
This Report of Foreign Private Issuer on Form 6-K consists of Inspira Technologies Oxy B.H.N. Ltd.’s (the “Registrant”) (i) Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2024, which is attached hereto as Exhibit 99.1; and (ii) Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2024, which is attached hereto as Exhibit 99.2.
The Report on Form 6-K is incorporated by reference into the Registrant’s Registration Statements on Form F-3 (Registration No. 333-266748) and Form S-8 (Registration Nos. 333-259057 and 333-277980), filed with the Securities and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
| Exhibit No. | ||
| 99.1 | Inspira Technologies Oxy B.H.N. Ltd.’s Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2024. | |
| 99.2 | Inspira Technologies Oxy B.H.N. Ltd.’s Management’s Discussion and Analysis of Financial Condition and Results of Operation for the Six Months Ended June 30, 2024. | |
| 101 | The following financial information from the Registrant’s Interim Condensed Financial Statements as of June 30, 2024, formatted in XBRL (eXtensible Business Reporting Language): (i) Interim Condensed Statements of Financial Position, (ii) Interim Condensed Statements of Comprehensive Loss, (iii) Interim Condensed Statements of Changes in Shareholders’ Equity; (iv) Interim Condensed Statements of Cash Flows, and (v) Notes to the Unaudited Interim Condensed Financial Statements. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Inspira Technologies Oxy B.H.N. Ltd. | |||
| Date: August 15, 2024 | By: | /s/ Dagi Ben-Noon | |
| Name: | Dagi Ben-Noon | ||
| Title: | Chief Executive Officer | ||
2
Exhibit 99.1
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
INTERIM CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2024
UNAUDITED
_______________________
________________
____________
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
(UNAUDITED)
TABLE OF CONTENTS
- i -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED BALANCE SHEETS
(U.S. dollars in thousands)
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Deposits | ||||||||
| Other current assets | ||||||||
| Inventory | ||||||||
| Total current assets | $ | $ | ||||||
| Non-Current Assets: | ||||||||
| Right of use assets, net | ||||||||
| Property, plant and equipment, net | ||||||||
| Total non-current assets | $ | $ | ||||||
| Total Assets | $ | $ | ||||||
The accompanying notes are an integral part of the financial statements.
- 1 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED BALANCE SHEETS
(U.S. dollars in thousands)
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Trade accounts payable | ||||||||
| Other accounts payable | ||||||||
| Lease liabilities | ||||||||
| Financial liabilities at fair market value | ||||||||
| Total current liabilities | $ | $ | ||||||
| Non-Current Liabilities: | ||||||||
| Lease liabilities | ||||||||
| Total non- current liabilities | $ | $ | ||||||
| Shareholders’ Equity: | ||||||||
| Ordinary shares, par value: Authorized | ||||||||
| Share capital and additional paid-in capital | ||||||||
| Accumulated losses | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity | $ | $ | ||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of the financial statements.
- 2 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars in thousands)
| Six months ended June 30, | Six months ended June 30, | |||||||
| 2024 | 2023 | |||||||
| Research and development expenses | ||||||||
| Sales and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Other expenses | ||||||||
| Operating loss | ||||||||
| Interest income from deposits | ( | ) | ( | ) | ||||
| Finance expenses (income), net | ( | ) | ||||||
| Loss before tax | ||||||||
| Taxes on income | ||||||||
| Total comprehensive and net loss | ||||||||
| ( | ) | ( | ) | |||||
| Weighted average number of ordinary shares | ||||||||
The accompanying notes are an integral part of the financial statements.
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INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(U.S. dollars in thousands)
For the six months ended June 30, 2024:
| Ordinary Share Capital | ||||||||||||||||
| Number of shares | Share capital and Additional Paid in Capital | Accumulated deficit | Total | |||||||||||||
| Balance at January 1, 2024: | ( | ) | ||||||||||||||
| Changes during the six months ended June 30, 2024: | ||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants, net | ||||||||||||||||
| Exercise of options | - | |||||||||||||||
| Restricted share unit (“RSU”) vesting | - | - | - | |||||||||||||
| Issuance of ordinary shares- Advisor fees | ||||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Comprehensive and net loss | - | ( | ) | ( | ) | |||||||||||
| Balance at June 30, 2024 | ( | ) | ||||||||||||||
For the six months ended June 30, 2023:
| Ordinary Share Capital | ||||||||||||||||
| Number of shares | Share capital and Additional Paid in Capital | Accumulated deficit | Total | |||||||||||||
| Balance at January 1, 2023: | ( | ) | ||||||||||||||
| Changes during the six months ended June 30, 2023: | ||||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Restricted share unit vesting | - | |||||||||||||||
| Comprehensive and net loss | - | - | ( | ) | ( | ) | ||||||||||
| Balance at June 30, 2023 | ( | ) | ||||||||||||||
The accompanying notes are an integral part of the financial statements.
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INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
| Six months ended June 30, 2024 | Six months ended June 30, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Increase (decrease) in other current assets | ( | ) | ||||||
| Increase (decrease) in trade accounts payable | ( | ) | ( | ) | ||||
| Increase (decrease) in other accounts payable | ||||||||
| Increase (decrease) in inventory | ( | ) | ||||||
| Share based compensation | ||||||||
| Issuance of ordinary shares - advisor fees | ||||||||
| Change in fair market value of financial liabilities at fair market value | ||||||||
| Decrease (increase) in right of use assets | ( | ) | ( | ) | ||||
| Prepayments of lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Change in deposits, net | ( | ) | ||||||
| Change in restricted deposits | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Issuance of ordinary shares and pre-funded warrants, net | ||||||||
| Exercise of option | ||||||||
| Net cash provided by financing activities | ||||||||
| Net 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 | ||||||||
APPENDIX A – NON-CASH TRANSACTIONS:
| Six months ended June 30, 2024 | Six months ended June 30, 2023 | |||||||
| Share based compensation- placement agent warrants against additional paid in capital (Note 5) | ||||||||
APPENDIX B - AMOUNT PAID DURING THE PERIOD:
| Six months ended June 30, 2024 | Six months ended June 30, 2023 | |||||||
| Interest paid | ||||||||
The accompanying notes are an integral part of the financial statements.
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INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 1 - GENERAL:
| 1. | Inspira Technologies Oxy B.H.N. Ltd (formerly: Insense Medical 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. The Company is engaged in the research, development, manufacturing related and go-to-market activities of proprietary products and technologies. The Company is developing the following products: |
| ● | The INSPIRA ART (Gen 2) (Augmented Respiratory Technology), which is a respiratory support technology targeted toward utilizing direct blood oxygenation to boost patient saturation levels within minutes while the patient is awake and spontaneously breathing. The aim is to reduce the need for invasive mechanical ventilation, with the potential to reduce risks, complications and high costs. | |
| ● | The HYLA blood sensor, which is a non-invasive optical blood sensor designed to perform real-time and continuous blood measurements, potentially minimizing the need to take actual blood samples from patients. | |
| ● | The INSPIRA ART100 Device, an advanced form of life support system better known by the medical industry as a cardiopulmonary bypass system is being designed for use in surgical procedures requiring cardiopulmonary bypass for six hours or less. |
| 2. | The Company’s INSPIRA™ ART100 system received U.S. Food and Drug Administration 510(k) clearance for Cardiopulmonary Bypass procedures and AMAR certification for Extra-Corporeal Membrane Oxygenation and Cardiopulmonary Bypass procedures. The Company’s other products, including the INSPIRA™ ART (Gen 2) and HYLA™ blood sensor, have not yet been tested or used in humans and have not been approved by any regulatory entity. |
| 3. | On
December 26, 2023, the Company entered into a purchase agreement (the “December Purchase Agreement”) with an institutional
investor in a registered direct offering (the “December Offering”), pursuant to which the Company issued (i) an aggregate
of |
| 4. | On
April 1, 2024, the Company entered into a purchase agreement with two investors in a registered direct offering (the “April Offering”),
pursuant to which the Company issued an aggregate of |
- 6 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 1 - GENERAL (Cont.):
| 5. | On
June 14, 2024, the Company entered into a purchase agreement with an individual private investor in a registered direct offering (the
“June Offering”), pursuant to which the Company issued (i) an aggregate of |
| 6. | The
accompanying unaudited condensed financial statements (the “Financial Statements”) have been prepared assuming that the Company
will continue as a going concern. To date, the Company is at its development stage. Therefore, the Company has suffered recurring losses
from operations and negative cash flows from operations since inception. As of June 30, 2024, the Company had incurred accumulated losses
of $ |
| 7. | The Company offices are located in 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 attack, Israel declared war against Hamas and the Israeli military began to call-up reservists for an active duty. At the same time, and because of the declaration of war against Hamas, the clash between Israel and Hezbollah in Lebanon has escalated and there is a possibility that it will turn into a greater regional conflict in the future. As of the date of these financial statements, these events have had no material impact on the Company’s operations. |
| 8. | Although we do not currently conduct business in Russia and Ukraine, the escalation of geopolitical instability in Russia and Ukraine as well as currency fluctuations in the Russian Ruble has had a negative impact on worldwide markets. Such an impact may negatively impact our supply chain, our operations and future growth prospects in that region. As a result of the crisis in Ukraine, both the U.S. and other countries have implemented sanctions against certain Russian individuals and entities. Our global operations expose us to risks that could adversely affect our business, financial condition, results of operations, cash flows or the market price of our securities, including the potential for increased tensions between Russia and other countries resulting from the current situation involving Russia and Ukraine, tariffs, economic sanctions and import-export restrictions imposed, and retaliatory actions, as well as the potential negative impact on our potential business and sales in the region. Current geopolitical instability in Russia and Ukraine and related sanctions by the U.S. and other governments against certain companies and individuals may hinder our ability to conduct business with potential customers and vendors in these countries. |
- 7 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of preparation
The accompanying unaudited condensed financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the financial statements reflect all normal and recurring adjustments necessary to fairly state the financial position and results of operations of the Company. The information included in this report should be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) on March 25, 2024. The year-end balance sheet data was derived from the audited financial statements as of December 31, 2023, but not all disclosures required by generally accepted accounting principles in the United States (“U.S. GAAP”) are included in this interim report.
Use of Estimates in the Preparation of Financial Statements
The preparation of the Company’s financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity (including share-based compensation) and the amount of expenses. Actual results could differ from those estimates.
Impact of accounting standards to be applied in future periods
In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU’s amendments are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of this pronouncement on our Financial Statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Under this ASU, public entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU’s amendments are effective for all entities that are subject to Topic 740, Income Taxes, for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of this pronouncement on our disclosures.
- 8 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 3 - FINACIAL LIABILITIES AT FAIR MARKET VALUE:
June 30, 2024 | December 31, 2023 | |||||||
| Financial liability (1) | ||||||||
| Non-tradable warrants (2) | ||||||||
| Total | ||||||||
| 1. | Financial liability |
Financial
liability to pay
| 2. | Private Warrants |
On
December 26, 2023, the Company entered into the December Purchase Agreement (Note 1 and Note 5), pursuant to which it issued unregistered
warrants, to purchase up to an aggregate of
The
Private Warrants fair value as of the issuance date and December 31, 2023, were $
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield of | % | % | ||||||
| Expected term of warrants | ||||||||
NOTE 4 - RELATED PARTIES
The following transactions arose with related parties:
Transactions and balances with related parties:
| 1. |
| June 30, 2024 | June 30, 2023 | |||||||
| Salary and related expenses – officers and directors | ||||||||
| Share based payment – officers and directors | ||||||||
- 9 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 4 - RELATED PARTIES (Cont.):
| 2. |
| Name | Nature of transaction | June 30, 2024 | December 31, 2023 | |||||||
| Officers | ( | ) | ( | ) | ||||||
| Directors | ( | ) | ( | ) | ||||||
NOTE 5 - SHAREHOLDERS’ EQUITY:
A. Share capital:
On
April 4, 2023, the Company entered into a sales agreement (the “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 (“ATM”). During 2023, the Company sold
On
December 26, 2023, the Company completed the December Offering, whereby the Company sold (i)
The
December Pre-Funded Warrants were exercised on the same day and the day after the transaction in full in an exercise price of $
The
Company issued the placement agent in the December Offering warrants to purchase a number of shares equal to a total of
The Company accounts for the December 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 December Placement Agent Warrants on the issuance date was $
- 10 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 5 - SHAREHOLDERS’ EQUITY (Cont.):
During
the year ended December 31, 2023, the Company issued an aggregate amount of
On
April 1, 2024, the Company completed its April Offering, whereby the Company sold
On
May 20, 2024, the Company issued
On
June 14, 2024, the Company completed its June Offering, whereby the Company sold (i)
The
aggregate proceeds received by the Company from the June Offering were approximately $
The
Company issued the June Placement Agent in the agreement warrants equal to a total of
The
Company accounting treatment for the June 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 June 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 June Pre-Funded Warrants as equity in the June Offering.
On
June 30, 2024, the Company issued
- 11 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 5 - SHAREHOLDERS’ EQUITY (Cont.):
| B. | Warrants reserves - Composition and movements: |
| 1. |
| Number of Warrants | Weighted-average exercise price | Weighted average remaining contractual term (in years) | Aggregate value USD | |||||||||||||
| Balance as of December 31, 2023 | ||||||||||||||||
| Issuance of warrants | ||||||||||||||||
| Issuance of - Pre-Funded Warrants | ||||||||||||||||
| Issuance of Placement Agent Warrants | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Expired | ||||||||||||||||
| Balance as of June 30, 2024 | ||||||||||||||||
| 2. |
| Exercise Price | Warrants outstanding as of June 30, 2024 | Expiration date | Aggregate Intrinsic value | |||||||||
- 12 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 5 - SHAREHOLDERS’ EQUITY (Cont.):
| C. | Loss per share: |
| Year ended June 30, 2024 | Year ended June 30, 2023 | |||||||
| Loss for the period | ||||||||
| Total number of Ordinary Shares | ||||||||
| Weighted average number of Ordinary Shares | ||||||||
| ( | ) | ( | ) | |||||
NOTE 6 - SHARE BASED COMPENSATION:
In
December 2019, the Company established a share option plan (the “Plan”). As of June 30, 2023, a total of
On
January 22, 2024, the Company’s board of directors approved a grant of
On
February 5, 2024, the Company’s board of directors approved a grant of
The fair market value of all granted options was estimated by using the Black-Scholes model, aimed at modelling 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. Those conditions are, among others:
- 13 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 6 - SHARE BASED COMPENSATION (Cont.):
The valuation was completed by the company based on the following assumptions:
| (i) | Risk-free
interest rate |
|
| (ii) | The
expected volatility is |
|
| (iii) | The
dividend rate |
|
| (iv) | Expected
term – 0- |
During
the six months ended June 30, 2024, the Company recorded share-based payment expenses in the amount of $
| Six months ended June 30, 2024 | ||||||||
| Number of options | Weighted average Exercise price NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Outstanding as of June 30, 2024 | ||||||||
| Exercisable options | ||||||||
| Share-based payment expenses | $ | |||||||
| Number of RSUs | ||||
| Outstanding at beginning of year | ||||
| Granted | ||||
| Vested | ||||
| Outstanding as of June 30, 2024 | ||||
| Vested as of June 30, 2024 | ||||
| Share-based payment expenses | $ | |||
- 14 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 6 - SHARE BASED COMPENSATION (Cont.):
The options to employees and directors outstanding as of June 30, 2024, as follows:
| Six months ended June 30, 2024 | ||||||||
| Number of options | Weighted average Exercise price NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Outstanding as of June 30, 2024 | ||||||||
| Exercisable options as of June 30, 2024 | ||||||||
| Share-based payment expenses | $ | |||||||
The RSUs to employees and directors outstanding as of June 30, 2024, as follows:
| Number of RSUs | ||||
| Outstanding at beginning of year | ||||
| Granted | ||||
| Forfeited | ( | ) | ||
| Vested | ( | ) | ||
| Outstanding as of June 30, 2024 | ||||
| Vested as of June 30, 2024 | ||||
| Share-based payment expenses | $ | |||
NOTE 7 - COMMITMENTS AND CONTINGENCIES:
| A. | Royalties to the IIA |
In
September 2019, the Israel Innovation Authority (“IIA”) approved an application that supports upgrading the Company’s
manufacturing capabilities for an aggregate budget of NIS
According
to the agreements with the IIA, the Company will pay royalties of
During
October 2023, the IIA has approved a support of another development project of the Company at an aggregate budget of NIS
As
of June 30, 2024, the maximum obligation with respect to the grants received from the IIA, contingent upon entitled future sales, is
$
- 15 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 7 - COMMITMENTS AND CONTINGENCIES (Cont.):
| B. | Lease Commitments – Operating Leases: |
In
August 2022, 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
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.
| June 30, 2024 | December 31, 2023 | |||||||
| 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 | % | % | ||||||
- 16 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 7 - COMMITMENTS AND CONTINGENCIES (Cont.):
| June 30, 2024 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total undiscounted lease payment | ||||
| Less: Interest* | ( | ) | ||
| Present value of lease liabilities | ||||
| * |
| C. | 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 six month period ended June 30, 2024.
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, the Company received notice of a complaint filed by Mr. Nussinovitch, as well as a complaint filed with the regional labor court in Tel Aviv, Israel on November 8, 2022. Mr. Nussinovitch has 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. A partial hearing was held in the regional labor court on July 19, 2023, and 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 the Plaintiff in the District Court.
A pre-trial hearing was held in the district court on January 21, 2024. During the hearing, the court suggested that the parties consider the possibility of resolving the case through an out-of-court arrangement or mediation. The parties agreed to a mediation process.
As of the date of these Financial Statement, the Company believes that the claims will result in no payments by the Company.
NOTE 8 - SUBSEQUENT EVENTS:
In July
2024 the Company received NIS
As of June 30, 2024, there is no impact on the financial statements.
- 17 -
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
Certain information included herein may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “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 expectation regarding the sufficiency of our existing cash and cash equivalents to fund our current operations and our ability to obtain additional funding; | |
| ● | 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 product candidates; | |
| ● | our assessment of the potential of our products and future potential product candidates to treat certain indications; | |
| ● | our planned level of revenues, capital expenditures and liquidity; | |
| ● | our plans to continue to invest in research and development to develop technology and intellectual property for new products; | |
| ● | anticipated actions of the U.S. Food and Drug Administration, 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 products and future product candidates; | |
| ● | our ability to retain key executive members; | |
| ● | our ability to maintain our relationships with suppliers, manufacturers, distributors and other partners; | |
| ● | the overall global economic environment; | |
| ● | the impact of competition and new technologies; | |
| ● | general market, political and economic conditions in the countries in which we operate, including those related to the conflict in Israel and other parts of the Middle East; | |
| ● | our ability to internally develop new inventions and intellectual property; | |
| ● | the possible impacts of cybersecurity incidents on our business and operations; | |
| ● | changes in our strategy; and | |
| ● | litigation. |
These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. For a more detailed description of the risks and uncertainties affecting us, reference is made to our annual report on Form 20-F for the fiscal year ended December 31, 2023, which we filed with the Securities and Exchange Commission, or the SEC, on March 25, 2024, or the Annual Report, and the other risk factors discussed from time to time by us in reports filed or furnished to the SEC.
Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.
Unless otherwise indicated, all references to “we,” “us,” “our,” the “Company” and “Inspira” refer to Inspira Technologies Oxy B.H.N. Ltd. References to “NIS” are to New Israeli Shekels and references to “dollars” or “$” are to U.S. dollars. We prepare and report our financial statements in accordance with generally accepted accounting principles in the United States.
2
A. Operating Results
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2024, included elsewhere in this Report of Foreign Private Issuer on Form 6-K. 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.
Overview
Since our inception in 2018, we have incurred operating losses. Our operating losses for the six-months ended June 30, 2024 and 2023 were $5.8 million and $6.5 million, respectively, and our net losses for the same period were $6.2 million and $6.2 million, respectively. As of June 30, 2024, we had an accumulated deficit of $61.8 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 applications seeking regulatory approval for our products pursuant to the various regulatory pathways in the United States; | |
| ● | continue to invest in the preclinical research and development of any future product candidates; | |
| ● | establish the commercial infrastructure to support the marketing, sale and distribution of our products if they were to 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 not yet generated any revenue from product sales.
Current Outlook
On July 16, 2021, we completed our initial public offering, or IPO, whereby we sold 2,909,091 ordinary shares, or Ordinary Shares, and 3,345,455 tradable warrants (inclusive of 436,364 tradable warrants pursuant to the exercise of an over-allotment option granted to the underwriters). The aggregate net 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 Israel Innovation Authority, or the IIA.
In October 2021, investors exercised 1,705,000 of our tradable warrants. The total proceeds we received from this exercise were approximately $9.4 million before further expenses.
On April 4, 2023, we entered into a sales agreement with Roth Capital Partners, LLC, as sales agent, or the Sales Agent, pursuant to which we were able to offer and sell, from time to time, through the Sales Agent, our Ordinary Shares, no par value per share. The Ordinary Shares were offered and sold pursuant to our Registration Statement on Form F-3 or the Registration Statement, filed with the Securities and Exchange Commission on August 10, 2022 and the prospectus supplement to the Registration Statement. We paid the Sales Agent a commission equal to 3.0% of the aggregate gross proceeds from the sale of Ordinary Shares. On October 23, 2023, notice was provided to the Sales Agent to terminate the sales agreement, effective immediately. As of the date of termination, we sold an aggregate of approximately $26,000 of Ordinary Shares pursuant to the sales agreement.
On December 26, 2023, we entered into a securities purchase agreement with respect to a registered direct offering, or the December Offering, whereby we sold: (i) 1,375,000 Ordinary Shares at a purchase price of $1.28 per share; (ii) pre-funded warrants to purchase up to 1,656,250 Ordinary Shares at a purchase price of $1.28, less $0.001 per pre-funded warrant; and (iii) private warrants, to purchase up to an aggregate of 3,031,250 Ordinary Shares at an exercise of $1.28 per share. The pre-funded warrants were exercised subsequent to the transaction in full and as a result, we issued 1,656,250 additional Ordinary Shares for such exercise. The gross proceeds in connection with the December Offering were $3.88 million. In addition, we retained a placement agent with respect to the December Offering and issued the placement agent warrants equal to a total of 7.0% of the aggregate number of Ordinary Shares sold in the December Offering, or warrants to purchase up to 212,188 Ordinary Shares. The placement agent warrants were substantially similar to the warrants issued to the investor in the December Offering and have an exercise price of $1.60 per share. The placement agent warrants were exercisable immediately upon issuance and will expire five years following issuance.
3
On April 1, 2024, the Company entered into a purchase agreement (the “Purchase Agreement”) with two investors in a registered direct offering, or the April Offering, pursuant to which the Company issued an aggregate of 1,339,285 Ordinary Shares at a purchase price of $1.232 per share, The aggregate proceeds received by the Company from the April Offering were approximately $1.65 million
On June 14, 2024, we entered into a purchase agreement with a single, individual investor, providing for the issuance in a registered direct offering, or the June Offering, of (i) an aggregate of 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. Each pre-funded warrant is exercisable for one Ordinary Share at an exercise price of $0.001 per share. The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full. The June Offering resulted in gross proceeds of $3.4 million. We issued placement agent in the agreement warrants equal to a total of 7.0% of the aggregate number of Ordinary Shares sold in the transaction and 185,591 warrants to purchase up to 185,591 Ordinary Shares with an exercise price of $1.56 per share. The placement agent warrants were exercisable immediately upon issuance and will expire four years following issuance.
We have incurred losses and generated negative cash flows from operations since inception in 2018. Since inception, we have not generated any revenue.
As of June 30, 2024, our cash and cash equivalents and deposits were $7.3 million.
We expect that our existing cash and cash equivalents as of June 30, 2024, will enable us to fund our operating expenses and capital expenditure 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.
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 and selling 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. |
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 raises substantial doubts 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.
Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency Exchange Risk
We operate primarily in Israel and approximately 70% 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 currency. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.
4
Interest Rate Risk
We do not anticipate undertaking any significant long-term borrowing. 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 the 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 six months ended June 30, 2024.
Operating Expenses
Our current operating expenses consist of three components — research and development expenses, general and administrative expenses and marketing expenses.
Revenue
To date, we have not generated revenue from the sale of any product, and we do not expect to generate significant revenue within the next 12 months.
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 product service fees, and other related research and development expenses.
In October 2019, we received the approval of the IIA for its participation in certain development expenses carried out by the Company, within the framework of determined budgets and time periods. In October 2023, the IIA approved funding for another development project of the Company at an aggregate budget of NIS 3,850,869 (approximately $1,062 thousand) and committed to funding 40% of the approved budget. Approximately $159 thousand has been received as of July 31, 2024. Through June 30, 2024, we received a total of $959 thousand from the IIA.
The following table discloses the breakdown of research and development expenses:
| Unaudited | Six Months Ended June 30, | |||||||
| U.S. dollars in thousands | 2024 | 2023 | ||||||
| Salary and related expenses | 2,019 | 2,385 | ||||||
| Materials and related expenses | 113 | 478 | ||||||
| Subcontractors | 172 | 234 | ||||||
| Professional services | 233 | 243 | ||||||
| IIA participation | - | - | ||||||
| Share-based compensation | 495 | 495 | ||||||
| Depreciation | 166 | 135 | ||||||
| Other | 72 | 52 | ||||||
| Total | $ | 3,270 | $ | 4,022 | ||||
We expect that our research and development expenses will increase as we continue to develop our products and as we continue to make all necessary product related regulatory filings and clinical processes.
5
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 table shows the breakdown of general and administrative expenses:
| Unaudited | Six Months Ended June 30, | |||||||
| U.S. dollars in thousands | 2024 | 2023 | ||||||
| Professional fees | 970 | 701 | ||||||
| Share-based compensation | 363 | 470 | ||||||
| Director’s fees and share-based compensation | 119 | 121 | ||||||
| Salary and related expenses | 404 | 420 | ||||||
| Insurance expenses | 107 | 191 | ||||||
| Depreciation | 56 | 56 | ||||||
| Rent and office maintenance | 63 | 64 | ||||||
| Travel abroad | 45 | 45 | ||||||
| Others | 55 | 21 | ||||||
| Total | $ | 2,182 | $ | 2,089 | ||||
Comparison of the Six Months Ended June 2024 and 2023
Results of Operations
| Six Months Ended June 30, | ||||||||
| U.S. dollars in thousands | 2024 | 2023 | ||||||
| Research and development expenses | 3,270 | 4,022 | ||||||
| Sales and marketing expenses | 349 | 398 | ||||||
| General and administrative expenses | 2,182 | 2,089 | ||||||
| Other expenses (income) | 5 | 4 | ||||||
| Operating loss | 5,806 | 6,513 | ||||||
| Interest income from deposits | (83 | ) | (191 | ) | ||||
| Financial expenses (income) | 517 | (138 | ) | |||||
| Total comprehensive net loss | $ | 6,240 | $ | 6,184 | ||||
Research and Development Expenses
Research and development expenses for the six months ended June 30, 2024, were $3,270 thousand compared to $4,022 thousand for the corresponding period in 2023. The decrease is attributable to a decrease in share-based compensation expenses and a decrease in salary and related expenses due to a change in the needs in different research and development and professional positions.
Sales and marketing expenses
Sales and marketing expenses for the six months ended June 30, 2024, were $349 thousand compared to $398 thousand for the corresponding period in 2023. The decrease is attributable to lower professional expenses.
6
General and administrative expenses
General and administrative expenses for the six months ended June 30, 2024, were $2,182 thousand compared to $2,089 thousand for the corresponding period in 2023. The increase is attributable to increased professional fees in relation to fund raising and investors relations.
Operating loss
As a result of the foregoing, our operating loss for the six months ended June 30, 2024 was $5,806 thousand compared to an operating loss of $6,513 thousand for the six months ended June 30, 2023, a decrease of $707 thousand, or 11%.
Financial expenses
We recognized financial expenses for the six months ended June 30, 2024 of $517 thousand compared to financial income of $138 thousand for the six months ended June 30, 2023. The difference is due to a change in the fair value of financial liability.
Total comprehensive loss
As a result of the foregoing, our total comprehensive loss for the six months ended June 30, 2024 was $6,240 thousand compared to $6,184 thousand for the six months ended June 30, 2023, an immaterial increase of $56 thousand, or 0.01%.
Critical Accounting Estimates
The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. A comprehensive discussion of our critical accounting policies is included in “Critical Accounting Estimates” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our Annual Report, as well as our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2024, included elsewhere in this Report of Foreign Private Issuer on Form 6-K.
B. Liquidity and Capital Resources
Overview
Since our inception through June 30, 2024, we have funded our operations principally from the proceeds of our IPO, the sale of convertible securities, the proceeds from the exercise of warrants and from government grants.
Our management intends to raise additional funds through offerings of our securities that will be utilized to fund product development and continue operations and marketing. We do not have any material financial obligations as of the June 30, 2024. We believe that the proceeds from any future financings, combined with our cash on hand, are sufficient to meet our obligations for the next six months. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of its product offering.
As of June 30, 2024, we had $7,258 thousand in cash, cash equivalents and cash deposits.
7
The table below presents our cash flows for the periods indicated:
| Six Months Ended June 30, | ||||||||
| U.S. dollars in thousands | 2024 | 2023 | ||||||
| Net cash used in operating activities | (4,857 | ) | (4,796 | ) | ||||
| Net cash provided (used) in investing activities | (1,389 | ) | 1,337 | |||||
| Net cash provided by financing activities | 4,755 | - | ||||||
| Net decrease in cash and cash equivalents | (1,491 | ) | (3,459 | ) | ||||
Operating Activities
Net cash used in operating activities of $4,857 thousand during the six months ended June 30, 2024 and net cash used in operating activities of $4,796 thousand during the six months ended June 30, 2023 were primarily used for the payment of salaries and related personnel expenses, materials expenses, subcontractors, travel and office maintenance.
Expenses due to changes in the fair market value of financial liabilities for the six months ended June 30, 2024 were $539 thousand, compared to $3 thousand for the corresponding period in 2023.
Investing Activities
Net cash used in investing activities of $1,389 thousand during the six months ended June 30, 2024 consisted mainly of a short time deposits and the effect of the exchange rate on it in the amount of $1,388 thousand. Net cash provided by investing activities of $1,337 thousand during the six months ended June 30, 2023, consisted mainly of short-term deposits in the amount of $1,538 thousand and $199 thousand used for purchasing property and equipment.
Financing Activities
Net cash provided by financing activities of $4,755 thousand during the six months ended June 30, 2024 consisted primarily of fundraising.
No cash was provided by or used in financing activities during the six months ended June 30, 2023.
8