QTREX Quantum Ltd 6-K, filed Oct 2, 2023
QTREX Quantum Ltd. (QTEX)
About this 6-K
QTREX Quantum Ltd filed this 6-K on October 2, 2023.
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 October
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, 2023, 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, 2023, 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 No. 333-259057), 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and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.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, 2023. | |
| 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, 2023. | |
| 101 | The following financial information from the Registrant’s Interim Condensed Financial Statements as of June 30, 2023, 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: October 2, 2023 | 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, 2023
UNAUDITED
_______________________
________________
____________
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
(UNAUDITED)
TABLE OF CONTENTS
- i -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF FINANCIAL POSITION
(U.S. dollars in thousands)
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Deposits | ||||||||
| Other current assets | ||||||||
| 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 STATEMENTS OF FINANCIAL POSITION
(U.S. dollars in thousands)
| June 30, | December 31, | |||||||||||
| Note | 2023 | 2022 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||
| Current Liabilities: | ||||||||||||
| Trade accounts payable | ||||||||||||
| Other accounts payable | 3 | |||||||||||
| Lease liabilities | ||||||||||||
| Financial liabilities at fair market value | 4 | |||||||||||
| Total current liabilities | ||||||||||||
| Non-Current Liabilities: | ||||||||||||
| Lease liabilities | ||||||||||||
| Loan from the Israeli Innovation Authority | ||||||||||||
| Total non- current liabilities | ||||||||||||
| Shareholders’ Equity: | ||||||||||||
| Share capital and additional paid-in capital | 2 | |||||||||||
| Foreign exchange reserve | ( | ) | ( | ) | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||
| Total equity | ||||||||||||
| Total Liabilities and Shareholders’ Equity | ||||||||||||
September 27, 2023 | ||||
Yafit Tehila Chief Financial Officer |
Dagi Ben-Noon Chief Executive Officer |
Date of approval of financial statements |
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, | |||||||
| 2023 | 2022 | |||||||
| Research and development expenses | ||||||||
| Sales and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Operating loss | ||||||||
| Finance income | ( | ) | ( | ) | ||||
| Finance expense | ||||||||
| Loss before tax | ||||||||
| Taxes on income | ||||||||
| Total net loss | ||||||||
| Other comprehensive loss, net of tax: | ||||||||
| Items that will not be reclassified to profit or loss: | ||||||||
| Exchange losses arising on translation to presentation currency | ( | ) | ( | ) | ||||
| Total comprehensive loss | ||||||||
| Weighted average number of ordinary shares | ||||||||
| ( | ) | ( | ) | |||||
The accompanying notes are an integral part of the financial statements.
- 3 -
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, 2023:
| Ordinary Share Capital | ||||||||||||||||||||
| Number of shares | Share Additional | Adjustments arising from translating financial operation | Accumulated deficit | Total | ||||||||||||||||
| Balance at January 1, 2023: | ( | ) | ( | ) | ||||||||||||||||
| Changes during the period: | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| Total comprehensive loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||
| RSUs vesting | ||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||
| Balance at June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||
For the six months ended June 30, 2022:
| Ordinary Share Capital | ||||||||||||||||||||
| Number of shares | Share Additional | Adjustments arising from translating financial operation | Accumulated deficit | Total | ||||||||||||||||
| Balance at January 1, 2022: | ( | ) | ||||||||||||||||||
| Changes during the period: | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| Total comprehensive loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||
| Share based compensation to exercise | ||||||||||||||||||||
| RSUs vesting | ||||||||||||||||||||
| Share base compensation | - | |||||||||||||||||||
| Balance at June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||
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, 2023 | Six months ended June 30, 2022 | |||||||
| 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 | ||||||||
| Share based compensation | ||||||||
| Change in fair market value of financial liabilities at fair market value | ( | ) | ||||||
| Financial income | ( | ) | ( | ) | ||||
| Financial expenses | ||||||||
| 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 investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Principal paid on lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided financing activities | ( | ) | ( | ) | ||||
| Net increase in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at the beginning of the period | ||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at the end of the period | ||||||||
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’s functional currency is the New Israeli Shekel (“NIS”). |
The Company operates in the medical technology industry in the field of respiratory support technology. It is engaged in the research, development, manufacturing-related activities, and go-to-market activities of proprietary products and technologies. The Company is developing the following products:
(*) The INSPIRA ART500 (Augmented Respiratory Technology), a respiratory support technology geared towards 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, 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, 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.
The Company’s products are in the development stage. The INSPIRA ART100 device and the INSPIRA ART500 have not yet been tested or used in humans and the Company’s products have not been approved by the U.S. Food and Drug Administration.
On July 16, 2021, the Company completed
its initial public offering (the “IPO”) on the Nasdaq Capital Market, whereby the Company sold
In October 2021, investors exercised
tradable warrants to purchase
| 2. | The Company has not generated any revenue since its inception and the Company is still in its development stage. The Company’s operating losses for the six-months ended June 30, 2023 and 2022 were $ |
| 3. | The Company’s management intends to raise additional funds through offerings of its securities, that will be utilized to fund product development and continue operations. |
- 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.):
On April 4, 2023, the Company, entered
into a sales agreement with Roth Capital Partners, LLC, as sales agent (the “Sales Agent”), pursuant to which the Company
may offer and sell, from time to time, through the Sales Agent, the Company’s Ordinary Shares, no par value per share (the “ATM”).
The Ordinary Shares shall be offered and sold pursuant to the Company’s Registration Statement on Form F-3 (the “Registration
Statement”) filed on August 10, 2022 and the prospectus supplement to the Registration Statement. The Company will pay the Sales
Agent a commission amounting to
| 4. | Management believes that the proceeds of its funding agreements, combined with its cash on hand and the Company’s plans to raise additional funds through the ATM facility or through other means, are sufficient to operate in the foreseeable future. |
| 5. | These interim condensed financial statements were authorized by the Company’s board of directors on September 27 2023. |
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES:
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These interim condensed financial statements have been prepared in accordance with the International Accounting Standards (the “IAS”) 34 Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB). They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2022 annual financial statements filed with the Company’s annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 31, 2023. The Company has applied the same accounting policies and methods of computation in its interim financial statements as in its 2022 annual financial statements.
Impact of accounting standards to be applied in future periods
There are a number of standards and interpretations which have been issued by the IAS board that are effective for periods beginning subsequent to December 31, 2023 (the date through which the Company’s next annual financial statements will be prepared up to) that the Company decided not to adopt early. The Company does not believe these standards and interpretations will have a material impact on the financial statements once adopted.
A number of amended standards became applicable for the current reporting period. The Company did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards:
| 1. | Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 |
| 2. | Definition of Accounting Estimates – Amendments to IAS 8 |
| 3. | Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction – Amendments to IAS 12 |
- 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 (Cont.):
Amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgement
On February 11, 2021, the IASB issued amendments to IAS 1, “Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgement,” to provide guidance in determining which accounting policy to disclose. The amendments require entities to disclose material accounting policies rather than significant policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. In assessing the materiality of accounting policy information, entities need to consider both size of the transaction, other events or conditions and the nature of them, even if the related amounts are immaterial. The adoption of the amendments as of January 1, 2023, did not have an impact on the Company’s financial statements.
Amendments to IAS 8, Accounting Policies, Change in Accounting Estimates and Errors
On February 11, 2021, the IASB issued amendments to IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors,” to clarify how to distinguish changes in accounting policies, which must be applied retrospectively, from changes in accounting estimate, which are accounted for prospectively. The amendments clarify the definition of accounting estimates as “monetary amounts in the financial statements that are subject to measurement uncertainty.” The amendments clarify that a change in accounting estimate is a change in input or a change in a measurement technique used to develop an accounting estimate, if they do not result in the correction of a prior period error. The adoption of the amendments as of January 1, 2023, did not have an impact on the Company’s financial statements.
Amendments to IAS 12, Income Taxes
On May 6, 2021, the IASB released “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12).” The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The adoption of the amendments as of January 1, 2023, did not have an impact on the Company’s financial statements.
- 8 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 3 – OTHER ACCOUNTS PAYABLE:
June 30, 2023 | December 31, 2022 | |||||||
| Employees’ salaries and related liabilities | ||||||||
| Related parties | ||||||||
| Accrued expenses | ||||||||
| Other | ||||||||
| Total | ||||||||
NOTE 4 – FINACIAL LIABILITIES AT FAIR VALUE:
June 30, 2023 | December 31, 2022 | |||||||
| Non-tradable warrants (1) | ||||||||
| Non-tradable warrants of SAFE and Convertible Loan investors (2) | ||||||||
| Tradable warrants (3) | ||||||||
| Financial liability (4) | ||||||||
| Total | ||||||||
| 1. | Non-Tradable Warrants |
As part of an agreement signed in 2019,
the Company’s then convertible loan investors received, upon conversion in 2020,
The warrants shall
be converted into Ordinary Shares at an exercise price equal to the IPO price which was $
On July 2021, as part of the IPO, the investors received the specified warrants.
As of June 30, 2023, the fair market value of the warrants was $
| 2. | Non-tradable warrants, SAFE and Convertible Loan investors |
On July 16, 2021, following the IPO,
the Company issued
The non-tradable warrants were designated to be measured at fair market value through profit or loss.
The non-tradable warrants fair market
value as of June 30, 2023, was $
- 9 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 4 – FINACIAL LIABILITIES AT FAIR VALUE (Cont.):
| 3. | Tradable warrants |
The Company sold
The tradable warrants fair market value
as of June 30, 2023, was $
| 4. | Financial liability |
Financial liability to pay
The fair market value as of June 30,
2023, was $
NOTE 5 – SHARE BASED COMPENSATION:
In December 2019, the Company established
a share option plan (the “Plan”). As of June 30, 2023, a total of
On March 24, 2022,
On March 24, 2022, the Company’s
board of directors granted options to purchase
On April 6, 2022, the Company’s
board of directors approved a grant of fully vested
On May 19, 2022, the Company’s
board of directors approved a grant of
- 10 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 5 – SHARE BASED COMPENSATION (Cont.):
On November 22, 2022, 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:
| (i) | The expected volatility is 50%; |
| (ii) | The dividend rate 0%; and |
| (iii) | Expected term – three years. |
The valuation was completed with the assistance of an external valuator based on the management’s assumptions.
During the six months ended June 30, 2023, the Company
recorded share-based payment expenses in the amount of $
| Six months ended June 30, 2023 | ||||||||
| Number of options | Weighted average Exercise price NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Outstanding as of June 30, 2023 | ||||||||
| Exercisable options | ||||||||
During the six-months ended June 30,
2023, the Company recorded share-based payment expenses of option to services providers and advisers in the amount of $
- 11 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 5 – SHARE BASED COMPENSATION (Cont.):
| Number of RSUs | ||||
| Outstanding at beginning of year | ||||
| Granted | ||||
| Vested | ||||
| Outstanding as of June 30, 2023 | ||||
| Vested as of June 30, 2023 | ||||
During the six months ended June 30,
2023, the Company recorded share-based payment expenses of RSUs to services providers and advisers in the amount of $
| Six months ended June 30, 2023 | ||||||||
| Number of options | Weighted average Exercise price NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Forfeited | ||||||||
| Outstanding as of June 30, 2023 | ||||||||
| Exercisable options as of June 30, 2023 | ||||||||
During the six-months ended June 30,
2023, the Company recorded share-based payment expenses of options to employees and directors in the amount of $
| Number of RSUs | ||||
| Outstanding at beginning of year | ||||
| Granted | ||||
| Forfeited | ( | ) | ||
| Vested | ( | ) | ||
| Outstanding as of June 30, 2023 | ||||
| Vested as of June 30, 2023 | ||||
During the six months ended June 30,
2023, the Company recorded share-based payment expenses of RSUs to employees and directors in the amount of $
During the six months ended June 30,
2022, the Company recorded share-based payment expenses in the amount of $
- 12 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 5 - SHARE BASED COMPENSATION (Cont.):
| Six months ended June 30, 2022 | ||||||||
| Number of options | Weighted average exercise price in NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Forfeited | ||||||||
| Outstanding as of June 30, 2022 | ||||||||
| Exercisable options | ||||||||
During the six-months period ended
June 30, 2022, the Company recorded share-based payment expenses of option to services providers and advisers in the amount of $
| Number of RSUs | ||||
| Outstanding at beginning of year | ||||
| Granted | ||||
| Vested | ||||
| Outstanding as of June 30, 2022 | ||||
| Vested as of June 30, 2022 | ||||
During the six-months period ended
June 30, 2022, the Company recorded share-based payment expenses of RSUs to services providers and advisers in the amount of $
- 13 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 5 - SHARE BASED COMPENSATION (Cont.):
| Six months ended June 30, 2022 | ||||||||
| Number of options | Weighted average exercise price in NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Forfeited | ( | ) | ||||||
| Outstanding as of June 30, 2022 | ||||||||
| Exercisable options | ||||||||
During the six-months period ended
June 30, 2022, the Company recorded share-based payment expenses of options to employees and directors in the amount of $
| Number of RSUs | ||||
| Outstanding at beginning of year | ||||
| Granted | ||||
| Vested | ||||
| Outstanding as of June 30, 2022 | ||||
| Vested as of June 30, 2022 | ||||
During the six-months ended June 30,
2022, the Company recorded share-based payment expenses of RSUs to employees and directors in the amount of $
- 14 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 6 – FAIR MARKET VALUE MEASUREMENT:
Fair market value hierarchy
The following tables detail the Company’s assets and liabilities, measured or disclosed at fair market value, using a three-level hierarchy, based on the lowest level of input that is significant to the entire fair market value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
As of June 30, 2023:
| Level 1 | Level 2 | Level 3 | ||||||||||
| Non-Tradable Warrants | ||||||||||||
| Non-tradable warrants of SAFE and Convertible Loan investors | ||||||||||||
| Financial liability | ||||||||||||
| Tradable warrants | ||||||||||||
| Total | ||||||||||||
As of December 31, 2022:
| Level 1 | Level 2 | Level 3 | ||||||||||
| Non-Tradable Warrants | ||||||||||||
| Non-tradable warrants of SAFE and Convertible Loan investors | ||||||||||||
| Financial liability | ||||||||||||
| Tradable warrants | ||||||||||||
| Total | ||||||||||||
As of June 30, 2023, the fair market value measurement of the warrant’s securities in the table above was estimated using the Black-Scholes model, based on assumptions for the variable that are required as of the warrants’ valuation date.
The key inputs that were used in the
both items of non-tradable warrants valuation were: a risk-free interest rate spread between
As of December 31, 2022, the fair market value measurement of the SAFE and the warrant’s securities in the table above was estimated using the Black Scholes model, based on a variety of significant unobservable inputs- thus representing a level 2 measurement within the fair market value hierarchy.
The key inputs that were used in the
both items of non-tradable warrants valuation were: a risk-free interest rate spread between
- 15 -
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 6 – FAIR MARKET VALUE MEASUREMENT (Cont.):
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair market values due to their short-term nature.
NOTE 7 – COMMITMENTS AND CONTINGENCIES:
Commitments
| 1. | The Company has a bank guarantee in the amount of $ |
| 2. | In July 2022, the Company entered into an agreement with a contractor for the development of the HYLA™ blood sensor. The total payment agreed, per the contract, is $ |
Contingencies
| 1. | On March 4, 2022, Exchange Listing, LLC, or Exchange, filed a complaint in the federal United States District Court for the Southern District of New York against the Company and the Company’s Chief Financial Officer, Joe Hayon, in connection with a contract between the parties pursuant to which Exchange provided certain consultancy services to us in preparation for our IPO. The precise damages sought are not yet established. However, Exchange seeks approximately $250,000, plus 75,000 Ordinary Shares or the cash equivalent. On July 1, 2022, the Company filed a motion to dismiss for failure to state a claim upon which relief can be granted, or 12(b)(6) motion, based on the language of the contract between the parties. |
On March 8, 2023, the court issued an order granting our 12(b)(6) motion in part and denying it in part. Specifically, the court dismissed all claims against Joe Hayon, and he is no longer a party in the action. The court also dismissed the breach of contract action (Count I) to the extent it was based on improper termination or frustration. The Court also dismissed Count IV (Quantum Merit on the written agreement), Count VI (Breach of Implied Covenant of Good Faith) and Count VII (Fraud in the Inducement). The court has not dismissed Count 1 (breach of written agreement based on alleged anticipatory repudiation), Count II (breach of alleged oral agreement), Count III (promissory estoppel to the extent based on alleged oral agreement) or Count V (quantum meruit based on alleged oral agreement).
On June 29, 2023, the Company and
Exchange signed a settlement agreement. The Company agreed to pay Exchange $
| 2. | 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 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 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. The Company strongly disagrees with the claims, believes it has meritorious defenses and will vigorously defend itself against the claims. |
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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; | |
| ● | our ability to advance the development of our products and future potential product candidates; | |
| ● | our ability to commercialize our products and future potential product candidates and future sales of our product or any other 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 capital expenditures and liquidity; | |
| ● | our plans to continue to invest in research and development to develop technology 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 internally develop new inventions and intellectual property; |
| ● | 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; | |
| ● | 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. |
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 our company, reference is made to our annual report on Form 20-F for the fiscal year ended December 31, 2022, which we filed with the Securities and Exchange Commission, or the SEC, on March 31, 2023, or the Annual Report, and the other risk factors discussed from time to time by our company 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 report under International Financial Reporting Standards as issued by the International Accounting Standards Board. None of the financial statements were prepared in accordance with generally accepted accounting principles in the United States.
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, 2023, included elsewhere in this Report 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, 2023 and 2022 were $6.3 million and $8.0 million, respectively, and our net losses for the same period were $5.8 million and $3.4 million, respectively. As of June 30, 2023, we had an accumulated deficit of $44.9 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; |
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| ● | file applications seeking regulatory approval for our products pursuant to different regulatory pathways in the United States; | |
| ● | continue to invest in the preclinical research and development of any future product candidates; | |
| ● | establish a commercial infrastructure to support the marketing, sale and distribution of 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 do not have any products approved for sale and have not 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 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 tradable warrants of the Company. The total proceeds received by the Company from this exercise were approximately $9.4 million before further expenses.
On April 4, 2023, the Company, entered into a sales agreement with Roth Capital Partners, LLC, as sales agent (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agent, the Company’s Ordinary Shares, no par value per share. The Ordinary Shares shall be offered and sold pursuant to the Company’s Registration Statement on Form F-3 (the “Registration Statement”) filed on August 10, 2022 and the prospectus supplement to the Registration Statement. The Company will pay the Sales Agent a commission equal to 3.0% of the aggregate gross proceeds from the sale of Ordinary Shares. To date, 17,566 Ordinary Shares have been sold for aggregate gross proceeds of $26,000.
We have incurred losses and generated negative cash flows from operations since inception in 2018. Since inception, we have not generated any revenue and we do not expect to generate significant revenues in the near future.
As of June 30, 2023, our cash and cash equivalents and deposits were $8.9 million.
We expect that our existing cash and cash equivalents, deposits and restricted cash as of the June 30, 2023, in addition to the registration statement capacity will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 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 our products; | |
| ● | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
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| ● | 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. |
Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency Exchange Risk
We operate primarily in Israel and approximately 80% of our expenses are denominated in NIS. We are therefore exposed to market risk, which represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We are subject to fluctuations in foreign currency rates in connection with these arrangements.
We currently partially hedge our foreign currency exchange rate risk to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currency. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.
Interest Rate Risk
We do not anticipate undertaking any significant long-term 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, 2023.
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. Through June 30, 2023, we received a total of $800,000 from the IIA and no additional grants are expected to be received.
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The following table discloses the breakdown of research and development expenses:
| Unaudited | Six Months Ended June 30, | |||||||
| U.S. dollars in thousands | 2023 | 2022 | ||||||
| Salary and related expenses | 2,148 | 1,441 | ||||||
| Materials and related expenses | 742 | 392 | ||||||
| Subcontractors | 269 | 682 | ||||||
| IIA participation | - | - | ||||||
| Share-based compensation | 470 | 1,594 | ||||||
| Depreciation | 139 | 100 | ||||||
| Office maintenance | 52 | 33 | ||||||
| Other | 10 | 52 | ||||||
| Total | 3,830 | 4,294 | ||||||
We expect that our research and development expenses will increase as we continue to develop our products and will start regulations filings and clinical processes.
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 | 2023 | 2022 | ||||||
| Professional fees | 716 | 754 | ||||||
| Share-based compensation | 258 | 657 | ||||||
| Director’s fees and share-based compensation | 328 | 644 | ||||||
| Salary and related expenses | 421 | 375 | ||||||
| Insurance expenses | 194 | 356 | ||||||
| Depreciation | 56 | 66 | ||||||
| Rent and office maintenance | 64 | 56 | ||||||
| Travel abroad | 44 | 20 | ||||||
| Others | 23 | 8 | ||||||
| Total | 2,104 | 2,936 | ||||||
Comparison of the Six Months Ended June, 2023 and 2022
Results of Operations
| Six Months Ended June 30, | ||||||||
| U.S. dollars in thousands | 2023 | 2022 | ||||||
| Research and development expenses | 3,830 | 4,294 | ||||||
| Sales and marketing expenses | 401 | 777 | ||||||
| General and administrative expenses | 2,104 | 2,936 | ||||||
| Operating loss | 6,335 | 8,007 | ||||||
| Financial income | (652 | ) | (4,558 | ) | ||||
| Financial expenses | 172 | 24 | ||||||
| Net loss | 5,855 | 3,473 | ||||||
| Loss attributable to holders of Ordinary Shares | 5,855 | 3,473 | ||||||
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Research and Development Expenses
Research and development expenses for the six months ended June 30, 2023, were $3,830,000 compared to $4,294,000 for the corresponding period in 2022. The decrease resulted from lower share-based compensation expenses, which was partially reduced by an increase in salary and related expenses as a result of the Company’s recruitment of employees and expanding research and development department
Sales and marketing expenses
Sales and marketing expenses for the six months ended June 30, 2023, were $401,000, compared to $777,000 for the corresponding period in 2022. The decrease is attributable to decreases in share-based compensation expenses and a reduction in marketing activities. The marketing department increased its efforts in the first half of 2022 with respect to brand awareness and exploring go-to-market capabilities.
General and administrative expenses
General and administrative expenses for the six months ended June 30, 2023, were $2,104,000, compared to $2,936,000 for the corresponding period in 2022. The decrease resulted primarily from a decrease in share-based compensation expenses and a lower cost of directors and officers insurance.
Operating loss
As a result of the foregoing, our operating loss for the six months ended June 30, 2023 was $6,335,000 compared to an operating loss of $8,007,000 for the six months ended June 30, 2022, a decrease of $1,672,000, or 21%.
Financial expenses
We recognized financial income for the six months ended June 30, 2023 of $652,000 compared to financial income of $4,558,000 for the six months ended June 30, 2022. The difference was primarily due to a change in the fair value of financial liabilities.
We recognized financial expenses for the six months ended June 30, 2023 of $172,000 compared to financial expenses of $24,000 for the six months ended June 30, 2022.
Total comprehensive loss
As a result of the foregoing, our total comprehensive loss for the six months ended June 30, 2023 was $6,287,000, compared to $5,708,000 for the six months ended June 30, 2022, an increase of $579,000, or 10%. The total comprehensive loss, primarily due to losses arising from foreign currency exchange translations, for the six months ended June 30, 2023 was $432,000, compared to losses in the amount of $2,235,000 for the six months ended June 30, 2022.
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, 2023, included elsewhere in this Report Form 6-K.
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B. Liquidity and Capital Resources
Overview
Since our inception through June 30, 2023, we have funded our operations principally from the proceeds of our IPO, the sale of convertible securities, the proceeds from the exercise of warrants, from loans and from government grants.
In April 2023, we entered into a Sales Agreement, or the Sales Agreement, with Roth Capital Partners, LLC, or the Agent, pursuant to which we may offer and sell, from time to time, our ordinary shares, through the Agent in an at the market offering, or the ATM, as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, in the aggregate amount of up to $5,480,000. During the six months ended June 30, 2023, we sold 15,261 ordinary shares under the ATM for a total amount of $23,000 with issuance costs in the amount of $700. To date, we have sold 17,566 ordinary shares under the ATM for a total amount of $26,000 with issuance costs in the amount of $800.
The Company’s management intends to raise additional funds through offerings of its securities that will be utilized to fund product development and continue operations. The Company does not have any material financial obligations as of the June 30, 2023. The Company’s management believes that the proceeds from its funding agreements, combined with its cash on hand and the Company’s plans to raise additional funds through the ATM facility or through other means, are sufficient to meet the Company’s obligations for the foreseeable future. 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, 2023, we had $8,967,000 in cash, cash equivalents and cash deposits.
The table below presents our cash flows for the periods indicated:
| Six Months Ended June 30, | ||||||||
| U.S. dollars in thousands | 2023 | 2022 | ||||||
| Net cash used in operating activities | (4,651 | ) | (1,962 | ) | ||||
| Net cash provided (used) in investing activities | 1,721 | (5,007 | ) | |||||
| Net cash used by financing activities | (196 | ) | (155 | ) | ||||
| Net increase in cash and cash equivalents | (3,126 | ) | (7,124 | ) | ||||
Operating Activities
Net cash used in operating activities of $4,651,000 during the six months ended June 30, 2023 and net cash used in operating activities of $1,962,000 during the six months ended June 30, 2022 were primarily used for payment of salaries and related personnel expenses, materials expenses, subcontractors, travel and office maintenance.
Share-based compensation expenses for the six months ended June 30, 2023 were $1,017,000, compared to $3,107,000 for the corresponding period in 2022. The decrease is due to an equity grant made during the first half of 2022.
Income resulted by change in fair market value of financial liabilities at fair market value for the six months ended June 30, 2023 was $90,000, compared to expense of $2,586,000 for the corresponding period in 2022. The change is a result of the inflection in the share price.
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Investing Activities
Net cash provided by investing activities of $1,721,000 during the six months ended June 30, 2023, consisted mainly of a short time restricted deposit and the effect of the exchange rate on it in amount of $1,934,000 and $206,000 used for purchasing property and equipment. Net cash used in investing activities of $5,007,000 during the six months ended June 30, 2022, consisted mainly of short-term deposits in the amount of $4,994,000 and $55,000 used for purchasing property and equipment.
Financing Activities
Net cash used in financing activities of $196,000 during the six months ended June 30, 2023 consisted mainly of principal paid on lease liabilities.
Net cash provided by financing activities of $155,000 during the six months ended June 30, 2022 also consisted mainly of principal paid on lease liabilities.
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