QTREX Quantum Ltd 6-K, filed Sep 29, 2022
QTREX Quantum Ltd. (QTEX)
About this 6-K
QTREX Quantum Ltd filed this 6-K on September 29, 2022.
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: September
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
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
CONTENTS
This Report of Foreign Private Issuer on Form 6-K consists of the Registrant’s (i) Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2022, 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, 2022, 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and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.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, 2022. | |
| 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, 2022. | |
| EX-101.INS | Inline XBRL Taxonomy Instance Document | |
| EX-101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| EX-101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |
| EX-101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| EX-101.LAB | Inline XBRL Taxonomy Label Linkbase Document | |
| EX-101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 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: September 29, 2022 | 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, 2022
UNAUDITED
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
(UNAUDITED)
TABLE OF CONTENTS
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF FINANCIAL POSITION
(U.S. dollars in thousands)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Deposits | - | |||||||
| Other accounts receivable | ||||||||
| Restricted cash | ||||||||
| 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 | 2022 | 2021 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||
| Current Liabilities: | ||||||||||
| Trade accounts payables | ||||||||||
| Other accounts payable | 3 | |||||||||
| Lease liabilities | ||||||||||
| Financial Liabilities at fair 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 deficit | ||||||||||
| Total Liabilities and Shareholders’ Equity | ||||||||||
| September 28, 2022 | ||||
| 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, | |||||||
| 2022 | 2021 | |||||||
| Research and development expenses | ||||||||
| Sales and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Operating loss | ||||||||
| Finance expense (income) | ( | ) | ||||||
| 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’ DEFICIENCY
(U.S. dollars in thousands)
For the six months ended June 30, 2022:
| Share Capital | Additional paid-in capital | 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 base compensation | ||||||||||||||||||||
| Balance at June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||
For the six months ended June 30, 2021:
| Share Capital | Additional paid-in capital | Adjustments arising from translating financial operation | Accumulated deficit | Total | ||||||||||||||||
| Balance at January 1, 2021: | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Changes during the period: | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Per value cancellation | ( | ) | ||||||||||||||||||
| Options exercise | ||||||||||||||||||||
| Share base compensation | ||||||||||||||||||||
| Balance at June 30, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||
The accompanying notes are an integral part of the financial statements.
-4-
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
| Six months ended June 30, 2022 | Six months ended June 30, 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Increase (decrease) in other accounts receivable | ( | ) | ||||||
| Increase (decrease) in trade accounts payables | ( | ) | ||||||
| Increase (decrease) in other accounts payable | ( | ) | ||||||
| Share based compensation | ||||||||
| Change in fair value of Financial Liabilities at fair value | ( | ) | ||||||
| Financial income | ( | ) | ||||||
| Financial expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Payment of deposit | ( | ) | ||||||
| Net cash provided investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Principal paid on lease liabilities | ( | ) | ( | ) | ||||
| Receipt of SAFE proceeds | ||||||||
| Receipt convertible loan | ||||||||
| Payment of convertible loan | ( | ) | ||||||
| Loan from the Israeli Innovation Authority | ||||||||
| 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.
-5-
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 and is developing a proprietary respiratory support device called the “Inspira ART system”. The Inspira ART system is a cost effective, early extracorporeal respiratory support system with an intent to function as an “artificial lung” for deteriorating respiratory patients.
The Inspira ART system is designed to utilize a hemo-protective flow approach aimed to rebalance saturation levels while patients are awake and breathing, potentially minimizing the patient’s need for mechanical ventilation.
The Company’s product has not yet been tested or used in humans and has not been approved by the U.S. Food and Drug Administration (FDA).
On July 16, 2021, the Company completed
its initial public offering (“IPO”) on Nasdaq Capital Market whereby the Company sold
On July 16, 2021, following the IPO, the Company issued
| 2. | The Company has not generated any revenue since its inception,
and the Company is still at the development stage of its products. The Company’s operating loss for the six-months ended June 30, 2022
and 2021 were |
The Company has also the ability to decrease its expenses in order to meet its existing cash flow streams. Management believes that the proceeds of the fundings agreements, combined with its cash on hand and the Company plans, are sufficient to meet the Company’s obligations as they come due in 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.
The Company does not have any material financial obligations as of the balance date.
-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):
| 3. | The global pandemic resulting from the disease known as COVID-19, caused by a novel strain of coronavirus, SARS-CoV-2, has caused national and global economic and financial market disruptions and may adversely impact our business. Although the Company continued to operate almost fully including carrying out the studies in compliance with all applicable Israeli rules and guidelines on COVID-19, the employees worked remotely when full lockdowns were enforced. The spread of an infectious disease, including COVID-19, may also result in the inability of the manufacturers to deliver components or finished products on a timely basis and may result in the inability of the Company’s suppliers to deliver the parts required by the manufacturers to complete manufacturing of components or finished products. The Company cannot predict the duration or magnitude of the pandemic or the full impact that it may have on the Company’s operations and workforce, including the Company’s research and clinical trials and its ability to raise capital, which in turn could have an adverse impact on the Company’s business, financial condition and results of operation. |
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 2021 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, 2022. 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, 2022 (the date on which the Company’s next annual financial statements will be prepared up to) that the Company has 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.
-7-
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, | December 31, 2021 | |||||||
| Employees’ salaries and related liabilities | ||||||||
| Accrued expenses | ||||||||
| Other | ||||||||
| Total | ||||||||
NOTE 4 – FINACIAL LIABILITIES VALUE:
June 30, 2022 | December 31, 2021 | |||||||
| 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 |
The warrants were designated to be measured at fair value through profit or loss.
On July 2021, as part of the IPO,
the investors received the specified warrants. As of June 30, 2022, the fair value of the warrants were $
-8-
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 4 – FINACIAL LIABILITIES VALUE (Cont):
| 2. | Non-tradable warrants, SAFE and Convertible Loan investors |
On July 16, 2021, following the IPO, the Company issued 2,113,905 Ordinary Shares and 1,149,582 non-tradable warrants to investors in connection with the conversion of Company’s CLAs and SAFEs according to their terms, the fair value of the shares was classified as equity with total value of $10,041. The non-tradable warrants were designated to be measured at fair value through profit or loss.
The non-tradable warrants fair value as of June
30, 2022 is $
| 3. | Tradable warrants |
The tradable warrants were designated to be measured at fair value through profit or loss.
The tradable warrants fair value as of June 30, 2022, is $
| 4. | Financial liability |
Financial liability to pay
The fair value as of June 30, 2022 is $
-9-
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:
In December 2019, the Company established a share option plan (the
“Plan”). As of June 30, 2022, a total of
On March 24, 2022, the Company’s board of directors approved
a grant of 536,141 RSUs to employees and a grant of 22,500 RSUs to the Company’s advisory board members and an additional consultant.
On March 24, 2022, the Company’s board of directors granted a
total of
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
The fair value of all granted options was estimated by using the Black Scholes model, which was aimed to model the value of the Company’s assets over time. The simulation approach was designed to take into account the terms and conditions of the share options, as well as the capital structure of the Company and the volatility of its assets, on the date of grant based on certain assumptions. 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 management’s assumptions.
During the six months ended June 30, 2022, the Company
recorded share-based payment expenses in the amount 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.):
The options to services providers and advisers outstanding as of June 30, 2022, as follows:
| Six
months ended June 30, 2022 | ||||||||
| Number of options | Weighted
average Exercise price NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Forfeited | ||||||||
| Outstanding as of June 30, 2022 | | |||||||
| Exercisable options | ||||||||
During the six-months ended June 30, 2022, the Company recorded share-based
payment expenses of option to services providers and advisers in the amount of $
The RSUs to services providers and advisers outstanding as of June 30, 2022, as follows:
| 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 services providers and advisers in the amount of $
The options to employees and directors outstanding as of June 30, 2022, as follows:
| Six months ended June 30, 2022 | ||||||||
| Number of options | Weighted average Exercise price NIS | |||||||
| Outstanding at beginning of year | ||||||||
| Forfeited | ( | ) | ||||||
| Outstanding as of June 30, 2022 | ||||||||
| Exercisable options | ||||||||
During the six-months ended June 30, 2022, the Company recorded share-based
payment expenses of options to employees and directors 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.):
The RSUs to employees and directors outstanding as of June 30, 2022, as follows:
| 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 $
NOTE 6 - FAIR VALUE MEASUREMENT:
Fair value hierarchy
The following tables detail the Company’s assets and liabilities, measured or disclosed at fair value, using a three-level hierarchy, based on the lowest level of input that is significant to the entire fair 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, 2022:
| Level 1 | Level 2 | Level 3 | ||||||||||
| Non-Tradable Warrants | - | - | ||||||||||
| Non-tradable warrants of SAFE and Convertible Loan investors | ||||||||||||
| Financial liability | - | - | ||||||||||
| Tradable warrants | - | - | ||||||||||
| Total | ||||||||||||
-12-
INSPIRA TECHNOLOGIES OXY B.H.N. LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
(U.S. dollars in thousands)
NOTE 6 - FAIR VALUE MEASUREMENT (Cont.):
As of December 31, 2021:
| 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, 2022, the fair 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: risk-free interest rate between
As of December 31, 2021, the fair 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 a thus represent a level 2 measurement within the fair value hierarchy.
The key inputs that were used in the both items of non-tradable warrants
valuation were: risk-free interest rate between
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.
Movements in level 3 assets and liabilities during the corresponding period are set out below:
| Warrants | SAFE | Convertible loan | ||||||||||
| Balance at December 31, 2020 | ||||||||||||
| Gains (losses) recognized in profit or loss | ||||||||||||
| Gains (losses) recognized in other comprehensive loss | ( | ) | ||||||||||
| Additions | ||||||||||||
| Balance at June, 30 2021 | ||||||||||||
NOTE 7 – SIGNIFICANT EVENTS DURING THE PERIOD:
On March 4, 2022, a service provider filed a complaint against the Company in connection with a contract between the parties. To date, the Company has not been formally served with the complaint. The Company’s management and the Company’s legal counsel believe it is more likely than not that the complaint will be dismissed based on the language of the written contract between the parties.
-13-
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, or the FDA, state regulators, if any, or other similar foreign regulatory agencies, including approval to conduct clinical trials, the timing and scope of those trials and the prospects for regulatory approval or clearance of, or other regulatory action with respect to our products or services; | |
| ● | the regulatory environment and changes in the health policies and regimes in the countries in which we intend to operate, including the impact of any changes in regulation and legislation that could affect the medical device industry; | |
| ● | our ability to meet our expectations regarding the commercial supply of our 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 COVID-19 and resulting government actions on us; | |
| ● | the impact of competition and new technologies; | |
| ● | general market, political and economic conditions in the countries in which we operate; | |
| ● | the impact of competition and new technologies; | |
| ● | our ability to internally develop new inventions and intellectual property; | |
| ● | our expectations regarding the use of proceeds from this offering | |
| ● | changes in our strategy; and | |
| ● | litigation. |
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, 2021 which we filed with the Securities and Exchange Commission, or the SEC, on March 31, 2022, 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, 2022, 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
2
Overview
Since our inception in 2018, we have incurred operating losses. Our operating loss for the six-months ended June 30, 2022 and 2021 were $8 million and $2.6 million, respectively, and our net loss for the same period was $3.4 million and $8.3 million, respectively. As of June 30, 2022, we had an accumulated deficit of $32.2 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 product pursuant different regulatory pathway 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 product if it receives 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 closed 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 overallotment 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.
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, 2022, our cash and cash equivalents were $14,154,000 and cash under deposits was $5,020,000.
We expect that our existing cash and cash equivalents, deposits and restricted cash as of the June 30, 2022 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; | |
| ● | 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. |
3
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 currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.
Interest Rate Risk
We do not anticipate undertaking any significant long-term borrowings. At present, our investments consist primarily of cash and cash equivalents, and short-term deposits. The primary objective of our investment activities is to preserve principal while maximizing the income that we receive from our investments without significantly increasing risk and loss. Our investments may be exposed to market risk due to fluctuation in interest rates, which may affect our interest income and the fair market value of our investments, if any.
Impact of Inflation and Currency Fluctuations
Inflation generally affects us by increasing our NIS-denominated expenses, including salaries
and benefits, as well as facility rental costs and payment to local suppliers. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the six months ended June 30, 2022.
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, 2022, we received a total of $843,000 from the IIA and no additional grants are expected to be received.
4
The following table discloses the breakdown of research and development expenses:
| Unaudited | Six Months Ended June 30, | |||||||
| U.S. dollars in thousands | 2022 | 2021 | ||||||
| Salary and related expenses | 1,441 | 584 | ||||||
| Materials and related expenses | 392 | 80 | ||||||
| Subcontractors | 682 | 147 | ||||||
| IIA participation | - | (51 | ) | |||||
| Share-based compensation | 1,594 | 241 | ||||||
| Depreciation | 100 | 59 | ||||||
| Office maintenance | 33 | 44 | ||||||
| Other | 52 | - | ||||||
| Total | 4,294 | 1,104 | ||||||
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 discloses the breakdown of general and administrative expenses:
| Unaudited | Six Months Ended June 30, | |||||||
| U.S. dollars in thousands | 2022 | 2021 | ||||||
| Professional fees | 754 | 715 | ||||||
| Share-based compensation | 657 | 222 | ||||||
| Director’s fees and share based compensation | 644 | - | ||||||
| Salary and related expenses | 375 | 186 | ||||||
| Insurance expenses | 356 | - | ||||||
| Depreciation | 66 | 34 | ||||||
| Rent and office maintenance | 56 | 25 | ||||||
| Travel abroad | 20 | 14 | ||||||
| Others | 8 | 14 | ||||||
| Total | 2,936 | 1,210 | ||||||
Comparison of the Six Months Ended June, 2022 and 2021
Results of Operations
| Six Months Ended June 30, | ||||||||
| U.S. dollars in thousands | 2022 | 2021 | ||||||
| Research and development expenses | 4,294 | 1,104 | ||||||
| Marketing expenses | 777 | 244 | ||||||
| General and administrative expenses | 2,936 | 1,210 | ||||||
| Operating loss | 8,007 | 2,558 | ||||||
| Financial expenses | (4,534 | ) | 5,732 | |||||
| Net loss | 3,473 | 8,290 | ||||||
| Loss attributable to holders of Ordinary Shares | 3,473 | 8,290 | ||||||
5
Research and Development Expenses
Research and development expenses for the six months ended June 30, 2022, were $4,294,000 compared to $1,104,000 for the corresponding period in 2021. The increase is a result of the Company’s recruitment of specialized manpower and the expanded development of its new technologies and operations.
Marketing expenses
Marketing expenses for the six months ended June 30, 2022, were $777,000, compared to $244,000 for the corresponding period in 2021. The increase is attributed to increases in marketing, payroll, and share-based compensation expenses. Marketing activities commenced in the first quarter of 2021 and became more intensive during 2022 with the Company’s need to create brand awareness and explore go-to-market capabilities.
General and administrative expenses
General and administrative expenses for the six months ended June 30, 2022 were $2.9 million, compared to $1.2 million for the corresponding period in 2021. The increase stemmed primarily from an increase in payroll and related expenses, as well as costs associated with the Company’s status as a publicly traded company following its IPO in July 2021, the increase in existing and new expenses included professional fees, director fees, and directors’ and officers’ insurance costs.
Operating loss
As a result of the foregoing, our operating loss for the six months ended June 30, 2022 was $8,007,000 compared to an operating loss of $2,558,000 for the six months ended June 30, 2021, an increase of $5,449,000, or 213%.
Financial expenses
Financial expenses consist of revaluation of debt instruments presented at fair value and bank fees.
We recognized financial income for the six months ended June 30, 2022 of $4,534,000 compared to financial expenses of $5,732,000 for the six months ended June 30, 2021. The increase in finance income derived mainly from the calculation of the fair value of the Company’s financial equity liabilities to pre-IPO and IPO investors are calculated based on the share price which was decreased radically from the IPO price.
Total comprehensive loss
As a result of the foregoing, our total comprehensive loss for the six months ended June 30, 2022 was $5,708,000, compared to $8,323,000 for the six months ended June 30, 2021, a decrease of $2,615,000, or 31%. The total comprehensive loss was primarily due to exchange losses arising from currency translations for the six months ended June 30, 2022, in the amount of $2,235,000, compared to income in the amount of $33,000 for the six months ended June 30, 2021.
Impact of COVID-19
The global spread of COVID-19 led many countries, including Israel, to impose stringent limitations on movement, gatherings, transit of passengers and goods and to close the borders between countries. The responses of governments have notably impacted many economies as well as capital markets worldwide.
6
Our company was able to maintain almost ordinary levels of operations during the period including the performance of its planned studies. We were affected by service providers lack of availability and extended times of delivery from suppliers abroad. We also experienced several weeks of delay in receiving components for the products during the first half of 2020 and we sill experience delay in supply dates and purchase processes due to lack of components and high demands.
Future possible impact of COVID-19 will depend on future developments with the pandemic which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions by governments around the world to contain COVID-19 or treat its impact, among others.
Critical Accounting Policies and 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 Policies and 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, 2022, included elsewhere in this Report Form 6-K.
B. Liquidity and Capital Resources
Overview
Since our inception through June 30, 2022, we have funded our operations principally from the proceeds of our IPO, convertible securities and loans and from government grants.
As of June 30, 2022, we had $19,174,000 in cash, cash equivalents and restricted cash.
The table below presents our cash flows for the six months ended June 30, 2022:
| Six Months Ended June 30, | ||||||||
| U.S. dollars in thousands | 2021 | 2021 | ||||||
| Net cash used in operating activities | (1,962 | ) | (2,330 | ) | ||||
| Net cash used in investing activities | (5,007 | ) | (898 | ) | ||||
| Net cash provided(used) by financing activities | (156 | ) | 7,114 | |||||
| Net increase in cash and cash equivalents | (7,124 | ) | 3,886 | |||||
Operating Activities
Net cash used in operating activities of $1,962,000 during the six months ended June 30, 2022 and net cash used in operating activities of $2,330,000 during the six months ended June 30, 2021 were primarily used for payment of salaries and related personnel expenses, materials expenses, subcontractors, travel and office maintenance. The change is due to expenses used the company in order to prepare the company to the IPO.
Investing Activities
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. Net cash used in investing activities of $898,000 during the six months ended June 30, 2021, consisted mainly of a short time restricted deposit in amount of $857,000 and $41,000 used for purchasing property and equipment.
Financing Activities
Net cash used in financing activities of $156,000 during the six months ended June 30, 2022, consisted of principal paid on lease liabilities.
Net cash provided by financing activities of $7,114,000 during the six months ended June 30, 2021, consisted primarily of $7,165,000 of net proceeds from convertible loans and simple agreements for future equity, and from a $55,000 grant from the IIA.
7