Turbogen Ltd F-1/A, filed Aug 21, 2026
Turbogen Ltd. (TRBG)
As filed with the Securities and Exchange Commission on August 21, 2026
Registration No. 333-294225
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
to
Form F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TURBOGEN LTD.
(Exact name of registrant as specified in its charter)
| State of Israel | 4931 | Not Applicable | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
|
Yaron Gilboa Chief Executive Officer 22 Efal Street, Kiryat Aryeh, Petah Tikva 4951122 Israel Tel: +972-3-579-5452 |
Puglisi & Associates 850 Library Ave., Suite 204 Newark, DE 19711 Tel: (302) 738-6680 | |
| (Address, including zip code, and telephone number, | (Name, address, including zip code, and telephone | |
| including area code, of registrant’s principal executive offices) | number, including area code, of agent for service) |
Copies to:
Oded Har-Even, Esq. Eric Victorson, Esq. |
Reut
Alfiah, Adv. Gal Cohen, Adv. | |
Sullivan & Worcester LLP 1251 Avenue of the Americas |
Sullivan &
Worcester Tel-Aviv (Har-Even & Co.) HaArba’a Towers 28 HaArba’a St. North Tower, 14th Floor Tel-Aviv, Israel 6473925 Tel: +972-74-758-0480 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date hereof.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. ☒
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
| PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION | DATED AUGUST 21, 2026 |
Up to 2,066,243 Ordinary Shares
| TurboGen Ltd. |
This prospectus relates to the resale by the selling shareholders identified in this prospectus of up to 2,066,243 ordinary shares, no par value per share, or the Ordinary Shares, of TurboGen Ltd., or the Company, consisting of (i) 1,131,616 Ordinary Shares issued in connection with the August 2026 Private Placement and (ii) 934,627 Ordinary Shares that were issued upon the exercise of warrants pursuant to the 2025 Warrant Inducement Agreement, as further described below under “Prospectus Summary — Recent Developments.”
The selling shareholders are identified in the table commencing on page 100. No Ordinary Shares are being registered hereunder for sale by us. We will not receive any proceeds from the sale of the Ordinary Shares by the selling shareholders. All net proceeds from the sale of the Ordinary Shares covered by this prospectus will go to the selling shareholders. See “Use of Proceeds”. The selling shareholders are offering their securities so that a public trading market is formed for our equity securities in the United States. Unlike an initial public offering, any sale by the selling shareholders of the Ordinary Shares is not being underwritten by any investment bank. The selling shareholders may sell all or a portion of the Ordinary Shares from time to time in market transactions through any market on which our Ordinary Shares are then traded, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the then prevailing market price or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a combination of such methods of sale. See “Plan of Distribution”.
We have applied to list the Ordinary Shares on the Nasdaq Capital Market, or Nasdaq, under the symbol “TRBG.” This offering is contingent upon the listing of the Ordinary Shares on Nasdaq. Although we believe that as of the closing of the August 2026 Private Placement we will meet the initial listing criteria for listing our Ordinary Shares on Nasdaq, no assurance can be given that our application will be approved or that a trading market in the United States will develop. We will not complete this offering if the Ordinary Shares are not approved for listing on Nasdaq.
Our Ordinary Shares currently trade on the Tel Aviv Stock Exchange Ltd., or TASE, under the symbol “TURB.” The last reported sale price of our Ordinary Shares on August 20, 2026 was NIS 13.22, or approximately $4.42 per share, based on the exchange rate reported by the Bank of Israel on such date.
We expect the opening price of our Ordinary Shares on Nasdaq to be determined based on the closing price of our Ordinary Shares on the TASE on , 2026, converted to U.S. dollars, based on the exchange rate reported by the Bank of Israel on such date.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and a “foreign private issuer”, as defined in Rule 405 under the U.S. Securities Act of 1933, as amended, or the Securities Act, and are eligible for reduced public company reporting requirements.
We are a “controlled company” as defined under the Israeli Companies Law 5759-1999, or the Companies Law, because our existing controlling shareholders, Anglo Turbo Limited Partnership, or Anglo Turbo, and Emil Katan, or the Controlling Shareholders, subject to a certain shareholder agreement between the Controlling Shareholders, own 32.1% of the total voting power of our issued and outstanding Ordinary Shares. As a result, the Controlling Shareholders are able to exercise a significant level of control over all matters requiring shareholder approval, including the election of directors, amendment of our amended and restated articles of association, or Articles of Association, and approval of significant corporate transactions. Under Nasdaq rules, however, we will not be considered a “controlled company”.
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 9 of this prospectus.
Neither the Securities and Exchange Commission, or the SEC, the Israel Securities Authority, or the ISA, nor any state or other foreign securities commission has approved nor disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2026
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred you. Neither we nor any of the selling shareholders have authorized anyone to provide you with different information. Neither we nor any of the selling shareholders are making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any applicable prospectus supplement is accurate as of any date other than the date of the applicable document. Since the date of this prospectus, our business, financial condition, results of operations and prospects may have changed.
For investors outside of the United States: neither we nor any of the selling shareholders have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.
In this prospectus, “we,” “us,” “our,” the “Company” and “TurboGen” refer to TurboGen Ltd.
Our reporting currency is the U.S. dollar and our functional currency is the U.S. dollar. Unless otherwise expressly stated or the context otherwise requires, references in this prospectus to “NIS” are to New Israeli Shekels and to “dollars” or “$” to U.S. dollars. Unless otherwise noted, all translations from NIS to U.S. dollars in this prospectus were made at a rate of NIS 3.19 for $1.00, the exchange rate as of December 31, 2025, published by the Bank of Israel. All translations from Euro to U.S. dollars in this prospectus were made at a rate of €1.00 for $1.17, the exchange rate as of December 31, 2025, published by the H.10 statistical release of the Federal Reserve Board. The aforementioned exchange rate is provided solely for your convenience and may differ from the actual rates used in this prospectus and other financial data appearing in this prospectus.
We report our financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
This prospectus includes statistical, market and industry data and forecasts which we obtained from publicly available information and independent industry publications and reports that we believe to be reliable sources. These publicly available industry publications and reports generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the information. Although we believe that these sources are reliable, we have not independently verified the information contained in such publications. While we believe the estimated market position, market opportunity and market size information included in this prospectus is generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Other market data and industry information is based on management’s knowledge of the industry and good faith estimates of management. All of the market data, panel data and industry information used in this prospectus involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties.
This prospectus contains trademarks, trade names, and service marks, which are the property of their respective owners. Solely for convenience, trademarks, trade names, and service marks referred to in this prospectus may appear without the ®, ™, or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties.
i
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. Before you decide to invest in our securities, you should read the entire prospectus carefully, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this prospectus.
Our Company
Founded in 2014 in response to technologically address the threat of climate change and the lack of grid capacity, we develop combined heat and power, or CHP, systems based on multifuel microturbines, or microturbines. These microturbines are used for local electricity, energy, and heat production.
Upon completion of our research and development, we will transition to manufacturing and installing our first developed microturbine system, the TG-40, which produces up to 40 kilowatts, or KW, of electrical energy and up to 60 KW of heat. We are designing the TG-40 prototype to be highly efficient at producing energy. We are currently developing the TG-40 for the purpose of lowering production, assembly, and maintenance costs, which will enable us to increase the number of potential installation sites, in part due to its low weight and agile modularity, compared to existing solutions in the 40 KW to 1 megawatt, or MW, range. In December 2025, we entered into a supplier agreement with a European company for the planned scaled production of our recently developed 32 KW microturbine, or the TR3200 microturbine system. As of the date of this prospectus, we have placed an order for twelve systems, three of which are expected to be installed in fourth quarter of 2026, and an additional nine over the next twelve months. In addition, we are in the process of negotiations with one European Union-based company and one United States-based company for research and development stage of a range of technologies related to our CHP systems.
In addition to our TG-40 system and TR3200 system, we completed the assembly of our first TR8000 system, an 80 KW system designed for large buildings and micro data centers, and are developing new mobile and stationary microturbine systems ranging from 20 KW to 100 KW as later described in this prospectus.
As of the date of this prospectus, we are a development stage company that possesses production capacity intended solely for demonstration purposes and we have not generated any revenues. However, we are in the process of transitioning from development to commercial production and are preparing for commercialization of our products.
As part of our transition into scaled production, we are refining and adapting our systems to the requirements of the production lines, assembly capabilities, and the applicable standards and regulations in the United States and Europe. Accordingly, the technical data of our systems, including power output, weight, and efficiency rates, may change and be updated compared to the initial development specifications, depending on the model produced, its type, and additional requirements.
We believe that our microturbine technology can address four main interconnected challenges: the increasing difficulty in maintaining legacy energy infrastructures, including electrical transmission grids; the increasing demand for electricity, the rising importance in highly energy-intensive infrastructure projects such as building, small server farms or small data centers and maintaining their operational resiliency, and the increasing electrification of power sources; the demand for cost efficiency in energy sources; and the reduction of carbon emissions.
We expect to market and sell our microturbines to owners and developers of building clusters, such as office buildings, residential buildings, hospitality buildings, “off-grid consumers,” and server farms. Our primary target markets are those that possess advanced natural gas grids, such as the United States and countries in the European Union.
We aim to become a global leader in the field of local generation of energy, electricity, and heat, as well as in the management of comprehensive energy resources, or EMS. Our systems are designed to incorporate natural gas, landfill gas, diesel and hydrogen in varying compositions to produce energy.
We intend to continue differentiating our products by leveraging our multi-fuel combustion capabilities, high-efficiency turbine compressor units, enhanced modularity, relatively low weight, and reduced operation and maintenance costs. We are offering an Energy-as-a-Service, or EaaS model, under which customers enter long-term agreements to purchase the electricity and heat our systems generate with little to no upfront cost, or, alternatively, may purchase an installed unit at full cost along with a service contract.
Additionally, we plan to offer on-demand integration of our products with existing off-the-shelf market solutions, such as energy storage, heat storage enabling the deployment of a localized micro-grid. This will include comprehensive energy management capabilities that cover both electricity and heat supply to a designated area from multiple sources.
1
Recent Developments
2025 Warrant Inducement Agreements
On August 21, 2025, our audit committee and board of directors approved, and on November 26, 2025, our shareholders approved our entry into two separate warrant exercise commitment and registration rights agreements with (i) Mr. Alex Katz, or the Katz Warrant Inducement Agreement, (ii) certain lenders including Mr. Eliot Tannenbaum, Mr. Dov Tannenbaum, and Mr. David Binyamin Greenberg, or the Tannenbaum Group (defined below), or the Tannenbaum Warrant Inducement Agreement, pursuant to Section 270(4) of the Israeli Companies Law. We refer to the Katz Warrant Inducement Agreement and the Tannenbaum Warrant Inducement Agreement collectively as the 2025 Warrant Inducement Agreement. Under the 2025 Warrant Inducement Agreement, Mr. Katz and certain lenders comprising the Tannenbaum Group, separately agreed to exercise, no later than two business days following the date on which we inform them that we received approval to list our Ordinary Shares on Nasdaq, all warrants held by them and previously issued to them pursuant to the Katz Conversion Agreement and Tannenbaum Conversion Agreement (both defined below), dated December 25, 2024 and December 31, 2024, respectively. In consideration for this commitment, we agreed to register with the SEC 934,627 Ordinary Shares underlying the warrants. On March 24, 2026, the investors under the 2025 Warrant Inducement Agreement transferred to us the total exercise amount of $2.7 million under the warrants. The Ordinary Shares underlying the warrants will be issued upon receipt of Nasdaq listing approval. For additional information regarding the Katz Warrant Inducement Agreement and the Tannenbaum Warrant Inducement Agreement, see “Related Party Transactions – 2025 Warrant Inducement Agreement with Alex Katz and Tannenbaum Group.”
August 2026 Private Placement
On August 21, 2026, we entered into five separate securities purchase agreements with (i) Kesem Mutual Funds Ltd., (ii) Ari Real Estate (Arena) Investment Ltd., (iii) Pinhas Biton, (iv) Daphna Bram and (v) Moshe Danino, in connection with a private placement, or the August 2026 Private Placement. Pursuant to the securities purchase agreements, each purchaser, agreed to purchase, and we agreed to issue and sell to such purchaser, Ordinary Shares in a private placement in reliance on Regulation S under the Securities Act and, to the extent applicable, Section 4(a)(2) of the Securities Act. In connection with the August 2026 Private Placement, the purchasers separately agreed to purchase, and we separately agreed to issue and sell in private placements, an aggregate of 1,131,616 Ordinary Shares at a purchase price of NIS 13.22 ($4.42) per Ordinary Share, subject to customary adjustments for share splits, share dividends, share combinations and similar transactions, for aggregate gross proceeds of $5 million. The August 2026 Private Placement is subject to the achievement of a specified milestone, or the Milestone, and the receipt of the SEC’s approval of the Registration Statement and Nasdaq’s approval for the listing of the Company’s securities for trading on Nasdaq. The Milestone will be achieved when both (i) the SEC has completed its review of this registration statement on Form F-1 and has indicated that it has no further comments and (ii) Nasdaq has completed its substantive review of our listing application and has indicated that no further comments or substantive conditions remain outstanding, other than the consummation of the applicable closing and other customary conditions required for final listing approval.
Upon achievement of the Milestone, we are required to notify the purchasers, and each purchaser will be required, within one Business Day following such notice, to pay its applicable purchase price to us by wire transfer of immediately available funds. Immediately upon effectiveness of this registration statement, we are required to deliver to each purchaser the Ordinary Shares purchased by such purchaser.
However, if following a purchaser’s payment of its applicable purchase price, Nasdaq’s final approval for the listing of the Ordinary Shares on Nasdaq has not been obtained and the listing process has not been completed within seven business days, we will be required to return the full amount funded by the applicable purchaser.
The securities purchase agreements may be terminated by each purchaser, solely with respect to such purchaser’s obligations thereunder and without affecting the obligations of the other purchasers, if the applicable Closing has not occurred within 14 days after the date of the applicable securities purchase agreement. Such 14-day period may be extended for an additional 14 days by mutual consent of the applicable parties.
Our Business Strengths
We intend to generate revenue from the paid energy usage of our prospective customers under EaaS model.
To attract interest from prospective customers, we seek to implement these strategies:
| ● | Install demonstration systems to provide prospective customers and collaborating parties with a use-case demonstrating the efficiency of our systems and that savings of up to 15%, compared to standard grid tariffs, can be obtained by using our microturbines; |
2
| ● | enter collaborations with energy service companies, engineering firms, electrical companies and natural gas suppliers that provide complementary products; |
| ● | scale our systems and products to lower the costs of installation, production and maintenance to make our microturbine subscriptions and rates more competitively priced when compared to existing solutions; |
| ● | build local distribution and marketing networks to adapt our microturbine technology to our target markets; |
| ● | work towards improving and upgrading our products; |
| ● | take advantage of regulatory opportunities, subsidies and incentives that may be available in various jurisdictions; and |
| ● | retain and hire skilled personnel. |
In the coming year, we intend to focus on the following activities:
| ● | Continuing improvements of the TG-40, including improving the recuperator, the heat recovery system, the engine bearing system and the output of the engine, as well as conducting subsystem tests, integration, and tests of the multi-fuel system, including operation with hydrogen; |
| ● | Completing the production and assembly of 12 TR3200 systems and carrying out initial installations of three of these systems in the fourth quarter of 2026; |
| ● | Conducting internal test runs for our first assembled TR8000 system, transferring it to a demonstration site in Israel for continuous test runs, and beginning its installation outside Israel in the fourth quarter of 2026; | |
| ● | Installing 5 to 10 demonstration systems of our products at various demonstration sites in the United States and Europe to examine system performance under relevant market conditions, demonstrate our technological capabilities, and promote evaluation by potential customers and partners; and | |
| ● | Completing development of the demonstrator for delivery to the governmental entity in connection with our agreement with subsidiary of a leading multinational defense corporation. |
Corporate Information
We are an Israeli corporation and are incorporated under the name TurboGen Ltd. Our principal executive offices are located at 22 Efal Street, Kiryat Aryeh, Petah Tikva, Israel 4951122. Our telephone number is +972 3-579-5452. Our website address is https://turbogenchp.com. The information contained on, or that can be accessed through, our website is not part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
Implications of Being an Emerging Growth Company
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to, and intend to, take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” such as not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenue exceeds $1.235 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.
3
Implications of Being a Foreign Private Issuer
We are subject to the information reporting requirements of the Exchange Act that are applicable to “foreign private issuers,” and under those requirements, we file reports with the SEC. As a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we are subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We also have four months after the end of each fiscal year to file our annual report with the SEC and are not required to file current reports as frequently or promptly as U.S. domestic reporting companies. Our officers, directors, and principal shareholders are exempt from the short-swing profit liability provisions contained in Section 16 of the Exchange Act, and our principal shareholders are exempt from the reporting requirements thereunder. As a foreign private issuer, we are not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. In addition, as a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under the Nasdaq rules for domestic U.S. issuers and are not required to be compliant with all Nasdaq rules as would domestic U.S. issuers. These exemptions and leniencies will reduce the frequency and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting company. We intend to take advantage of the exemptions available to us as a foreign private issuer during and after the period we qualify as an “emerging growth company.”
Implications of being a Controlled Company under the Companies Law
The term “control” is defined in the Companies Law as the ability to direct the activities of a company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder “holds” (within the meaning of the Companies Law) 50% or more of the voting rights in a company or has the right to appoint 50% or more of the directors of the company or its general manager. With respect to certain matters, a controlling shareholder is deemed to include a shareholder that holds 25% or more of the voting rights in a public company if no other shareholder holds more than 50% of the voting rights in the company but excludes a shareholder whose power derives solely from his or her position as a director of the company or from any other position with the company.
As of the date of this prospectus, the Controlling Shareholders control 32.1% of the voting power in our Company.
For so long as we have one or more controlling shareholder(s) (as defined above) following the consummation of the offering, any transaction which involves the controlling shareholder(s) must be approved by a special majority of our shareholders general meeting, in addition to other required approvals under Companies Law, without taking the controlling shareholder(s) vote into consideration in the said matter. Certain exemptions may apply to transactions with our controlling shareholder(s), as described in the Companies Law regulations.
Additionally, for so long as the Company has a controlling shareholder(s), members of the audit and compensation committees of the board of directors may not be an employee or service provider of the controlling shareholder(s).
Under regulations promulgated pursuant to the Companies Law, in case we do not have a controlling shareholder(s) in the future, the board of directors may adopt exemptions from various corporate governance requirements of the Companies Law, so long as such company satisfies the requirements of applicable foreign country laws and regulations, including applicable stock exchange rules, that apply to companies organized in that country and relating to the appointment of independent directors and the composition of audit and compensation committees. Such exemptions include an exemption from the requirement to appoint external directors and the requirement that an external director be a member of certain committees, as well as exemption from limitations on directors’ compensation.
Nasdaq Stock Market Listing Rules on Being a Controlled Company
Nasdaq Stock Market Listing Rule 5615(a)(7) defines a “controlled company” as a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. As of the date of this prospectus, the Controlling Shareholders control 32.1% of the voting power in our Company. Therefore, as of the date of this prospectus, we are not a controlled company under Nasdaq Stock Market Listing Rule 5615(c)(1).
4
Summary Risk Factors
Our business is subject to numerous risks, as more fully described in the section entitled “Risk Factors” immediately following this prospectus summary. You should read these risks in full before you invest in our securities. The following is a summary of such risks.
Risks Related to Our Business and Industry
| ● | any impediment to the successful research and development may lead to a failure to maintain a high standard of innovative research and development, respond adequately to customer requirements, and bring to market our microturbine technology and products; | |
| ● | we are dependent on the success of marketing strategy and efforts which could result in a lower market penetration success than expected, which will impact our business model and our revenue; | |
| ● | we are in negotiations with one EU-based company and one U.S.-based company, and failure to reach an understanding and finalizing agreements with those companies could substantially delay our go to market efforts and impact the revenue generated; |
| ● | we are dependent on our key employees, the absence of whom may lead to research and development slowdowns; |
| ● | our industry is in its infancy, and we may not be aware of all of the risks of the industry; |
| ● | we are exposed to volatility in the energy markets; |
| ● | we may face competition from companies that develop energy solutions that are near-interchangeable or substitutable, with the possibility that there may not be sufficient demand for our products or technology; | |
| ● | our dependency on a select number of third-party manufacturers and suppliers potentially exposes us to issues arising from deteriorations in end-product and quality control, supply chain bottlenecks, price hikes and compliance matters, all of which may affect our operating results; | |
| ● | our ability to adjust to the secondary and indirect effects of Trump administration tariffs; | |
| ● | our business model is dependent on collaboration agreements with major companies, and failure to form collaborations with a high caliber of companies would imperil any prospective scaling of our production and assembly; and | |
| ● | our business and operations might be adversely affected by security breaches. |
Risks Related to the Manufacturing of Our Products
| ● | in addition to a variety of supplier-provided parts, we use local manufacturing sub-contractors and contract manufacturing services. Any prospective reliance on subcontractors after completing the development of our products may result in failing to find alternatives to subcontractors that uphold minimum standards should any one or more subcontractors cease to conduct business. Significant shortages, capacity constraints, disruptions to production or price increases, including those caused by the security, geopolitical and political conditions in Israel, could increase our operating costs and adversely impact our competitive positions. |
Risks Related to Our Financial Condition and Capital Requirements
| ● | Our financial statements for the year ended December 31, 2025 contain an explanatory paragraph in note 1b of the financial statements, about our ability to continue as a going concern, which may prevent us from obtaining new financing on reasonable terms, if at all, and imperil our ability to continue operating as a going concern; |
5
| ● | we are still in the research and development phase and have not generated any revenue from the installation of our products, we expect to incur operating losses in the future and we may not be able to generate positive cash flow and may never be profitable; | |
| ● | we expect increase in operating and maintenance costs which will impact our net income of each from units we install; | |
| ● | we expect to be exposed to fluctuations in energy tariffs, raw material prices, interest rates, and currency exchange rates, which could adversely affect our financial results; |
| ● | we may enter into agreements to run the operations of projects at a financial loss in order to assert ourselves as a key player in certain markets and to show our ability to scale-up and execute proof-of-concept agreements for our products in a commercial setting; and |
| ● | our revenues and efforts to become profitable may be affected by our obligations related to royalties certain agreements, which may include terms potentially subjecting us to penalties if we are in default or do not satisfy certain material terms. |
Risks Related to Our Intellectual Property
| ● | If we are unable to obtain or maintain patent rights for our products and services, we may not be able to compete effectively. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us. The assertion of intellectual property rights of third parties could adversely affect our ability to commercialize our products and services, and we might be required to litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms. |
Risks Related to Our Ordinary Shares
| ● | We do not know whether a market for the Ordinary Shares will be sustained or what the trading price of the Ordinary Shares will be and, as a result, it may be difficult for you to sell your Ordinary Shares, and the market price of our Ordinary Shares may be highly volatile, and you could lose all or part of your investment. Additionally, our securities will be traded on more than one market or exchange and this may result in price variations; | |
| ● | our management team does not have any experience in managing a public company in the U.S. and will devote substantial management time to the running of a public company in the U.S; and |
| ● | since we are deemed to be a controlled company under the Companies Law, we qualify for exemptions from certain corporate governance requirements that would otherwise provide protection to shareholders of other companies. |
Risks Related to Our Incorporation and Our Operations in Israel
| ● | Our results may be adversely affected by political, economic and military instability in Israel; | |
| ● | we may not be able to enforce non-compete covenants under Israeli law which might result in increased competition for our products; | |
| ● | our grants from the Israel Innovation Authority, or IIA, require us to pay royalties and restrict our ability to transfer intellectual property or know-how outside of Israel; | |
| ● | we may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business; and, | |
| ● | it may be difficult to enforce judgments of U.S. courts against us and our executive officers directors and experts named in this prospectus, to assert U.S. securities law claims in Israel or to serve process on our executive officers, directors, and experts. |
6
THE OFFERING
This prospectus relates to the resale by the selling shareholders identified in this prospectus of up to 2,066,243 Ordinary Shares. All of the Ordinary Shares, when sold, will be sold by these selling shareholders. The selling shareholders may sell their Ordinary Shares from time to time at prevailing market prices. We will not receive any proceeds from the sale of the Ordinary Shares by the selling shareholders.
| Ordinary Shares currently issued and outstanding | 23,389,747 | |
| Ordinary Shares to be issued and outstanding after this offering | 25,455,990 Ordinary Shares | |
| Ordinary Shares offered by the selling shareholders | Up to 2,066,243 Ordinary Shares | |
| Use of proceeds | We will not receive any proceeds from the sale of the Ordinary Shares by the selling shareholders. All net proceeds from the sale of the Ordinary Shares covered by this prospectus will go to the selling shareholders. However, we will receive cash proceeds from the exercise price of the Warrants. See “Use of Proceeds”. | |
| Risk factors | Investing in our securities involves a high degree of risk. You should read the “Risk Factors” section beginning on page 9 of this prospectus and in the documents incorporated by reference in this prospectus for a discussion of factors to consider before deciding to invest in our securities. | |
| Listing | Our Ordinary Shares are listed on the TASE under the symbol “TURB.” We have applied to list our Ordinary Shares on Nasdaq under the symbol “TRBG”. |
The number of Ordinary Shares to be issued and outstanding immediately after this offering is based on 23,389,747 Ordinary Shares outstanding on August 21, 2026 and includes:
| ● | 1,131,616 Ordinary Shares issued to certain Selling Shareholders in connection with the 2026 August Private Placement; and |
| ● | 934,627 Ordinary Shares issued to certain Selling Shareholders upon the exercise of warrants under the 2025 Warrant Inducement Agreement. |
The number of Ordinary Shares to be outstanding immediately after this offering Ordinary Shares excludes:
| ● | 1,710,823 Ordinary Shares issuable upon the exercise of options and restricted share units, or RSUs, vesting to with exercise prices ranging from NIS 0.30 to NIS 18.50 (or approximately $0.10 to $6.20) per share, of which 949,952 have vested as of August 21, 2026; and, |
| ● | 360,000 Ordinary Shares issuable upon exercise of 360,000 outstanding warrants, with exercise prices ranging from NIS 3.73 to NIS 22.50 (approximately $1.25 to $7.55) per share. |
7
SUMMARY FINANCIAL DATA
The following table summarizes our financial data. We have derived the following statements of comprehensive loss for the years ended December 31, 2025 and 2024 from our audited financial statements, which are included elsewhere in this prospectus. Our financial statements have been prepared in accordance with U.S. GAAP. Our historical results are not necessarily indicative of the results that may be expected in the future and interim results are not necessarily indicative of the results that may be achieved in an entire fiscal year. The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes thereto, which are included elsewhere in this prospectus.
| Year Ended December 31, | ||||||||
| US Dollars in thousands (except per share amounts) | 2025 | 2024 | ||||||
| Statements of Comprehensive Loss: | ||||||||
| Research and development expenses, net | 946 | 1,192 | ||||||
| Sales and marketing expenses | 1,265 | 273 | ||||||
| General and administrative expenses | 6,894 | 1,366 | ||||||
| Loss from operations | 9,105 | 2,831 | ||||||
| Changes in fair value of warrants liabilities and extinguishment of debt | 10,666 | 82 | ||||||
| Other financing (income) expenses, net | (286 | ) | 85 | |||||
| Net loss and comprehensive loss | 19,485 | 2,998 | ||||||
| Basic loss per share of ordinary shares | (1.09 | ) | (0.21 | ) | ||||
| Diluted loss per share of ordinary shares | (1.09 | ) | (0.21 | ) | ||||
| US Dollars in thousands | As of December 31, 2025 | |||
| Balance Sheet Data: | ||||
| Cash and cash equivalents | 3,942 | |||
| Total assets | 7,063 | |||
| Total current liabilities | 9,849 | |||
| Additional paid-in capital | 40,367 | |||
| Accumulated deficit | (43,482 | ) | ||
| Total shareholders’ equity | (3,115 | ) | ||
8
Investing in our securities involves a high degree of risk. These disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect us and our securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. Before making an investment in our securities. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the financial statements and related notes, before deciding whether to purchase our securities. If any of the following risks are realized, our business, operating results, financial condition and prospects could be materially and adversely affected. In that event, the price of our securities could decline, and you could lose part or all of your investment.
Risks Related to Our Business and Industry
We are dependent on the successful research and development of our proprietary technology and any reduction in research and development activity would impede our ability to demonstrate the viability of our products.
We are dependent on the successful research and development of our proprietary technology, with a view to marketing and selling such technology to prospective customers. Any impediment to such research and development may lead to a delay and/or a failure to maintain a high standard of innovative research and development, respond adequately to customer requirements, and bring to market our products. Some of our competitors may have more capital resources and access to liquidity than we do and are able to make more investments in research and development than us. If any new or existing competitor develops a product that is perceived as more efficient than, lower in cost than, or generally preferable to our current or future products, our financial results may be negatively impacted. We are at an important stage of our research and development, and we are currently demonstrating our microturbine technology to the market through the use of development projects abroad. If we do not succeed in showcasing our microturbine technology to the marketplace, this may have a material adverse effect on our operations and sales.
Failure to finalize development agreements with third parties could delay commercialization and market entry and adversely affect our results
We are currently in negotiations with one EU-based company and one U.S.-based company for the development of our 23 KW and 80-100 KW systems. If these negotiations fail to result in definitive agreements, our go-to-market strategy may be delayed, which could adversely impact our revenue and results of operations.
We are dependent on our key employees and the loss of services of any of our key employees may adversely affect our ability to execute our business plan.
Our future growth and success depend to a large extent on the continued services of members of our current management including, in particular, Yaron Gilboa, our Chief Executive Officer. Any of our employees and consultants may leave the Company at any time, subject to certain notice periods. The loss of the services of any of our executive officers or any key employees or consultants may adversely affect our ability to execute our business plan and harm our operating results. Our operational success will substantially depend on the continued employment of senior executives, technical staff, and other key personnel. The loss of key personnel may have an adverse effect on our operations and financial performance.
Our field of industry is in its relative infancy, and we may not be able to anticipate all of the risks that we may face resulting from our operations.
The CHP industry is in the early stages of market penetration, and the risks applicable to our business and to holders of our Ordinary Shares may not be fully known or understood. While we seek to identify and mitigate the risks associated with our operations, there may be risks specific to our market sector to which we have not yet been exposed or made aware. In addition, new risks may emerge as the market evolves and matures. For example, the terms of commercial engagement with our prospective customers may require us to arrange or facilitate solutions to finance the working capital necessary for the establishment of a particular project. If we are unable to secure such financing on acceptable terms, or at all, we may experience difficulties in entering into new commercial contracts. Accordingly, holders of our Ordinary Shares may be subject to risks that are not currently known or reasonably foreseeable.
9
We are exposed to volatility in the energy and commodity markets, and in particular natural gas spot and futures exchanges.
We expect to generate a portion of our revenues from both the sale of our products, and energy as a service business model related to the production and use of CHP. Prospective customers may be incentivized to use our products and services depending on factors such as the cost of energy from the electricity grid and other domestic hot water heating alternatives. As a result, we will be exposed to the fluctuating energy prices which are subject to volatility. Fluctuations in the price of energy may have a materially adverse impact on our profitability. Furthermore, any volatility in the price of the raw materials we procure may also have a materially adverse impact on our profitability.
We face intense competition, and we may not be able to compete successfully, which could have a material adverse effect on our results of operation.
The CHP and microturbine market is competitive, with participants ranging in size from small companies to established corporations that develop CHP microturbines and systems. We believe that participants in this industry compete primarily on the basis of price competition and track records of successful installations. Some of our competitors have greater resources than us and our business could be adversely affected by competitors’ new product innovations, technological innovations on competing products and pricing changes made in response to competition from existing or new competitors. We may not be able to compete successfully against competitors and the competitive pressures faced by us could materially affect our business, consolidated results of operations and financial condition.
Competition in the CHP market occurs principally on the basis of energy efficiency, cost of installation systems, and building energy costs and savings. Competition is also affected by alternative energy sources impacting electricity prices, the comparative cost of production of electricity and heat, new market entrants and barriers thereto, construction by others of alternative energy sources and grid transmission capacity, technological advances in energy production, the incentives available and other regulatory authorities, establishment of legislation which favors different energy sources, such as investment tax credits, production tax credits, property-based clean energy financing programs, renewable energy incentives and other factors.
Our business is dependent on our ability to operate successfully in a competitive environment and, unlike regulated utilities, we are not assured of any rate of return on capital investments through a regulated rate structure. These competitive factors may negatively affect our ability to sell CHP products and services, as well as revenue that we may receive for these products and services.
Changes in technology, increased electricity management and saving efforts, or energy sustainability efforts may reduce the value of our CHP solutions and may otherwise have a material adverse effect on us.
If we cannot adopt and offer technological developments on a timely basis, demand for our services may decline, or we may face challenges in implementing or evolving our business strategy. Significant technological changes continue to impact our industry. To grow and remain competitive, we will need to adapt to changes such as implementing energy management system, or EMS, efficiency and using alternative sources of fuel, continually invest in our assets, increase generation capacity, enhance our existing offerings, and introduce new offerings to meet our current and potential customers’ changing service demands. Competitors may incorporate similar technologies into their businesses and services more quickly or more successfully than we do. Adopting new and sophisticated technologies may result in implementation issues, such as scheduling and supplier delays, unexpected or increased costs, technological constraints, regulatory issues, customer dissatisfaction, and other issues that could cause delays in launching new technological capabilities, which in turn could result in significant costs or reduce the anticipated benefits of the upgrades.
10
Technological advances have improved, and are likely to continue to improve, for existing and alternative methods to produce CHP, including fuel cells, electricity storage batteries and heat pumps. Further, federal and state incentives for the development and production of renewable sources of power have contributed to market penetration of these competing technologies. Such technological advances may be superior to, or may not be compatible with, some of our existing technologies, investments and infrastructure, and may require us to make significant expenditures to remain competitive, and are expected to continue reducing the costs of power generation or storage, which may result in the obsolescence of certain of our operating assets. Consequently, the value of our more traditional generation assets could be significantly reduced because of these competitive advances, which could have a material adverse effect on us. Our future success will depend, in part, on our ability to anticipate and successfully adapt to technological changes and to offer services and products that meet customer demands and evolving industry standards.
Technological advances in demand-side management and increased conservation efforts have reduced, and are expected to continue to reduce, electricity demand. Additionally, the development of demand-side management tools and practices can affect peak demand requirements for some of our markets at certain times during the year. A significant decrease in electricity demand as a result of such efforts would significantly reduce the value of our generation assets. Furthermore, effective power conservation by our customers could result in reduced electricity demand or significantly slow the growth in such demand. Any such reduction in demand could have a material adverse effect on us.
Beyond consumer and technological trends, evolving regulatory frameworks continue to influence electricity demand, market dynamics and investment priorities. Certain regulatory and legislative bodies have implemented, introduced or are considering requirements and/or incentives to reduce power consumption. These regulatory initiatives are often evolving, inconsistent across jurisdictions and subject to frequent changes or reversals, creating uncertainty for market participants. Fluctuations in regulatory priorities or enforcement may also materially impact the pace and extent of market penetration for our technologies and services. Furthermore, we may incur increased capital expenditures if we are required to increase investment in conservation measures. Additionally, increased governmental and consumer focus on energy sustainability efforts, including desire for, or incentives related to, the development, implementation and use of low-carbon technology, may result in decreased demand for the traditional generation technologies that we currently own and operate.
We may be subject to unpredictable expenses or claims and there is no assurance that our cash reserves will be sufficient.
With respect to our systems, we typically offer a warranty against any defects in manufacture for a period up to one year from the date of commissioning. Our prospective customers may extend the warranty period for additional payment. Accordingly, we intend to maintain cash reserves for these potential warranty expenses. There is no assurance that future warranty claims will be issued and if we experience a significant number of warranty claims, there is no assurance that our cash reserves will be sufficient. Excessive warranty claims could have a material adverse effect on our business, financial condition and results of operations.
We are dependent on third parties, such as certain manufacturers and suppliers, which may impair our ability to swiftly meet demand from our prospective customers.
We rely on third parties to manufacture and supply us with proprietary custom subcomponents for our CHP microturbines. We rely on a limited number of suppliers who are able to provide us with materials and components as well as manufacture and assemble certain components of our CHP systems. Accordingly, in the event equipment must be repaired or replaced, our operations may be interrupted, and, in turn, our financial results may be negatively impacted. Further, we may incur expenses in the event that the equipment requires a repair or replacement.
Additionally, our suppliers may encounter problems themselves during manufacturing for a variety of reasons, including, for example, failure to follow specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, failure to properly conduct their own business affairs and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our requirements. Our reliance on these third-party suppliers also subjects us to other risks that could harm our business, including:
| ● | we may not be able to obtain an adequate supply in a timely manner or on commercially reasonable terms; | |
| ● | our suppliers, especially new suppliers, may make errors in manufacturing that could negatively affect the efficacy or safety of our products or cause delays in deliveries; |
11
| ● | we may have difficulty locating and qualifying alternative suppliers; | |
| ● | switching components or suppliers may require product redesign and intensive testing, which could significantly impede or delay our commercial activities; | |
| ● | the occurrence of a fire, natural disaster or other catastrophe impacting one or more of our suppliers may affect their ability to deliver products to us in a timely manner; and | |
| ● | our suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements. |
We may not be able to quickly establish additional or alternative suppliers, if necessary, in part because we may need to undertake additional activities to establish such suppliers. Any interruption or delay in obtaining products from our third-party suppliers, or our inability to obtain products from qualified alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our prospective customers and cause them to switch to competing products.
Moreover, we may be required to manufacture our products locally in one of our target markets through sub-contractors that may also encounter issues related to timely manufacturing.
We may not be able to succeed in developing collaboration agreements, which could adversely affect our ability to develop and commercialize our product candidates.
Our business model is dependent on collaboration agreements with major companies. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these arrangements. The success of any collaboration arrangements may depend on the efforts and activities of our collaborators. Disagreements between parties to a collaboration arrangement regarding commercial matters may lead to delays in the development process. Risks arising from entering into collaboration agreements include the risk that collaborators may independently develop, or develop with third parties, products that compete directly with our products and that collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that may threaten our intellectual property or protection of proprietary information. Any failure to enter into collaboration agreements may result in our not being able to further the development of our products and bring them to market and our business may be materially and adversely affected as a result.
Our business and operations might be adversely affected by security breaches.
Despite the implementation of security measures as well as data recovery protocols intended to secure our data against impermissible access and to preserve the integrity and confidentiality of our data, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our new products development programs. For example, the loss of data from our projects could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. We may not be able to remedy any problems caused by hackers or other similar actors in a timely manner, or at all. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until after they are launched against a target, we and our service providers may be unable to anticipate these techniques or to implement adequate preventative measures. To the extent that any disruption or security breach was to result in a loss of or damage to our project data, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims and liability, including under data privacy laws such as the GDPR, damage to our reputation, and the finalization of our products under development could be delayed.
12
Existing electric utility industry policies and regulations, and any subsequent changes, may present technical, regulatory, and economic barriers in connection with the purchase and use of energy storage products that may significantly reduce demand for our products or harm our ability to compete.
The energy industry operates within a complex and evolving regulatory framework that includes federal, state, and local laws, as well as rules established by electric utilities, regional transmission organizations, and other market operators. Existing regulations, and any future changes thereto, may impose technical or interconnection requirements, limit participation in certain markets, or create economic disincentives that restrict the deployment of CHP systems.
Additionally, uncertainty or inconsistency in policy implementation across territories can delay project development, increase compliance costs, or create competitive disadvantages relative to other generation or storage technologies. Governmental entities may also modify, reduce, or eliminate incentives, subsidies, or other support mechanisms for local energy generation, which could adversely affect customer economics and purchasing decisions.
Any such regulatory or policy developments could materially and adversely impact demand for our products, delay or prevent project adoption, or otherwise harm our business, results of operations, and financial condition.
Changes in demand for power or power derived from renewable energy sources specifically may adversely affect our business prospects.
Demand for power is affected by a variety of factors, which are not necessarily within our control. Slow growth or an overall reduction in demand for power, such as through improvements in energy efficiency, or increased penetration of nuclear energy, could have a material adverse effect on our business prospects, financial condition and results of operations. Demand for CHP is affected by a complex interaction of economic and factors and energy and environmental policy preferences. There are uncertainties associated with the timing of fossil fuel plant retirements – in part driven by environmental regulations – and with the scale, pace and structure of replacement capacity. Slow growth or volatility in the demand for CHP specifically could also have a material adverse effect on our plan to grow our business and could, in turn, have a material adverse effect on our business prospects, financial condition and results of operations. A decline in prices for fossil fuels could, in some cases, cause demand for CHP to decrease and adversely affect the demand for our capacity and electricity generation.
Tariffs could adversely affect our business and financial results.
We purchase components of our microturbine technology from suppliers that are affected by price fluctuations for raw materials. The Trump administration has implemented baseline 10% tariffs on imports from the vast majority of the U.S.’s trading partners, and, as of April 9, 2025, has imposed a 10% tariff on imports from the State of Israel, which does not include goods that were shipped and departed for the United States before April 5, 2025. The secondary effects of these policies could significantly increase the cost of components sourced from our suppliers in various countries due to abrupt supply and demand shifts. As a result of the consequences of this tariff policy, we may need to obtain components from other sources or third parties. Any of these factors may adversely affect our financial condition or results of operations.
13
From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. There can be no assurance that we will enter into any such definitive agreements.
From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. We may never enter into definitive agreements after signing a letter of intent and/or entering into a term sheet or other similar arrangement for a multitude of reasons, including, but not limited to, regulatory, operational, financial and other considerations. There may also be forces outside of our control that have an effect on our ability or decision as to whether we enter into such definitive agreements. As a result, there can be no assurance that upon signing a letter of intent and/or entering into a term sheet or similar arrangement, that we will enter into definitive documents. This could have a material adverse effect on our reputation and could cause us to incur expenses if any legal claims arise as a result thereof.
Risks Related to the Manufacturing of Our Products
Unanticipated business disruptions could adversely affect our ability to provide our products to our prospective customers.
We have a complex network of suppliers, co-manufacturing locations, distribution networks, and information systems that support our ability to consistently provide our products to our prospective customers. If we were to experience any significant disruption in the operation of our facilities, we would be unable to supply or face a substantial delay of our products to our prospective customers or would necessitate requiring additional resources to restore our supply chain or distribution network. If we cannot respond to disruptions in our operations, whether by finding alternative suppliers or replacing capacity at key manufacturing or distribution locations, or if we are unable to quickly repair damage to our information, production, or supply systems, we may be late in delivering, or be unable to deliver, products to our prospective customers and may also be unable to track orders, inventory, receivables, and payables. If that occurs, our prospective customers’ confidence in us and long-term demand for our products could decline. Any of these events could materially and adversely affect our product sales, financial condition, and operating results.
We are exposed to commodity price volatility and increased costs for components.
Our products are comprised mainly of turbines and compressors, turbine and compressor housing, recuperators, bearings, bearing housings, valves, alternators, output converters and inverters, as well as supplier-provided raw materials such as the metals MARM247, Hastelloy X, aluminum, and PH 15-5, that are produced and refined by subcontractors in accordance with dedicated and unique specifications. Our reliance on U.S. and non-U.S. suppliers (including third-party manufacturing suppliers, subcontractors and service providers) to secure parts, components and sub-systems used in our products exposes us to volatility in the prices and availability of these components and services.
We are reliant on certain subcontractors which could leave us exposed to supplier concentration.
We rely on other companies to provide materials, components and subsystems for our products. We depend on these subcontractors and suppliers to meet their contractual obligations in full. We manage our supplier base carefully to avoid or minimize risks and customer issues. We sometimes rely on only one or two sources of supply that, if disrupted, could have an adverse effect on our ability to meet our customer commitments. Our ability to perform our obligations may be materially adversely affected if one or more of these suppliers is unable to provide the agreed-upon materials, perform the agreed-upon services in a timely and cost-effective manner, or engage in misconduct or other improper activities.
In many instances, we depend upon a single source of supply, manufacturing, services support or assembly that may be subject to supply and demand imbalances. Generally, the final assembly of the product is carried out in our engineering center in Petah Tikva, Israel. However, in certain cases, we may be required to manufacture and assemble our products locally in one of our target markets through sub-contractors we may use.
However, when we will initiate scaled production we intend to procure our components ahead of time in general, components may be acquired and supplied within a relatively short period. We will attempt to maintain minimum inventory levels in accordance with our short-term manufacturing plan. Any disruption in deliveries from our suppliers, supplier capacity constraints, supplier production disruptions, supplier quality issues (such as issues with defects or fraudulent parts), closing, bankruptcy or financial difficulties of our suppliers, price increases due to inflation or otherwise, or decreased availability of components, including as a result of war, natural disaster, pandemic or other business continuity events, could have a material adverse effect on our ability to meet our commitments to prospective customers or increase our operating costs.
14
The CHP microturbine industry is subject to specific procurement requirements that place a limit on the types of materials used, which may limit the number of eligible suppliers and subcontractors we may use.
Furthermore, we enter into engagement agreements with subcontractors through specific purchase orders. Generally, our terms of payment range between 30 to 90 days from the invoice date. In exceptional cases, we pay in advance for components. Our engagement agreements with some suppliers are carried out by ad hoc orders.
We believe that our supply management and production practice models are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Nonetheless, price increases, supplier capacity constraints, and supplier production disruptions may have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.
Problems with quality or performance in our products as well as product liability claims could result in negative impact on our relationships with prospective customers and our reputation and cause reduced market demand for our products.
Problems with the quality or performance of the microturbines we manufacture may expose us to potential product liability claims. While we have not yet experienced any significant product liability claims, as a result of our limited operating history, we cannot predict whether product liability claims will be brought against us in the future or the impact of any resulting negative publicity on our business. Any product liability claims or regulatory actions related to problems in the quality or performance of our products could be costly and time-consuming to defend. The successful assertion of product liability claims against us could result in potentially significant damages and require us to make significant payments. While in certain cases, our partners may maintain appropriate insurance to cover possible damages, we do not maintain product liability insurance of our own to cover potential bodily injury or property damage arising from the operations of our products and may be unable to obtain sufficient product liability insurance coverage on commercially reasonable terms or at all. Moreover, any product liability claim, with or without merit, could result in significant negative publicity and materially and adversely affect the marketability of our products and our reputation. Additionally, a material design, manufacturing or quality failure or defect in our products or other safety issues could warrant a product recall by us and result in increased product liability claims. If the authorities in the jurisdictions where we sell our products decide that these products failed to comply with applicable quality and safety requirements, we also could be subject to regulatory actions.
Any defect, underperformance or problem of our microturbines or any perception that our products may contain errors or defects, or any product liability claims related to such errors or defects, may adversely impact our customer relationships and harm our reputation and credibility, resulting in a reduced market demand for our microturbines, decrease in our revenues, increase in our expenses and loss of market share.
We may be unable to receive compensation from suppliers for defective raw materials or components used in our wind turbines and warranty provisions in our supply contracts may be insufficient.
In the event that we become subject to product liability or warranty claims caused by defective raw materials or components from third-party suppliers, we can attempt to seek compensation from the relevant suppliers. However, warranties provided by suppliers may be for periods shorter than the warranty periods we provide to our prospective customers and warranty claims against suppliers may be subject to certain conditions precedent which may not be satisfied. Further, our purchase orders usually do not contain provisions to cover lost profits and indirect or consequential losses. If no claim can be asserted against a supplier, or amounts that we claim cannot be recovered from the supplier, to the extent that such amounts cannot be covered by insurance coverage, if any, we may be required to bear customer claims or replace the microturbines or components at our own costs. Our business, financial condition and results of operations could be materially and adversely affected.
15
System commissioning activities may not be successful and may not commence or proceed as scheduled, which could increase our costs and impair our ability to recover our investments.
The commissioning of CHP systems involves ordinary operational and logistical risks that may affect project timing, installation, or cost. Success in commissioning a particular project typically depends on factors such as, but not limited to, obtaining and maintaining required permits and approvals, managing labor and equipment availability, addressing engineering or environmental conditions that may arise during construction, and ensuring contractors and suppliers perform as expected. In some cases, construction of a particular project may be delayed, adjusted, or subject to installation cost overruns due to regulatory changes, local stakeholder actions, or weather-related conditions.
If we fail to timely complete the commissioning of a building project as agreed upon or experience delays, we may be subject to contractual remedies or additional expenses that could modestly affect project profitability or timing of revenue recognition. Cost overruns or unanticipated installation expenses could, in particular, reduce overall project margins and negatively impact profitability.
The projects in our development pipeline are in various stages of development, contracting, permitting, construction, and commissioning. There can be no assurance that our planned projects will commence operations timely, as described in this prospectus, or at all.
Our project development pipeline consists of multiple residential and commercial projects, which are in various stages of the development process. We have not yet commenced commercial operations or entered into binding agreements, or obtained all necessary environmental, regulatory, construction and zoning permissions for a number of projects in our development pipeline. In order to grow our business, we are required to conduct significant early stage development activities, including site evaluation, permitting, interconnection, and commercial contracting activities. In addition, we may enter into customer contracts in the early stages of development that ultimately may be unprofitable or result in termination payments by us. There can be no assurance that we will be able to effectively convert a sufficient number of early stage development projects into operating projects the rate required to meet our targeted growth. Consistent with industry practice, we do not expect that every project in our development pipeline will achieve commencement of operations. Some portion of our pipeline may face siting, permitting, construction, or other challenges that prove prohibitive to further project development, or may ultimately prove unattractive as market conditions change. As a result, we may choose to cancel, delay, or accelerate projects in the pipeline on an opportunistic basis.
In addition, expenses related to our pursuit of contracts and regulatory approvals related to the projects in our development pipeline may be significant and will be incurred by us regardless of whether these assets are ultimately constructed and operational. Further, we may invest capital in early-stage projects that do not ultimately proceed. Later stage projects are also subject to permitting and other risks. We will not receive any material increase in operating cash flows until a project is completed, even though we may have expended considerable funds during the development or construction phases, which may be prolonged.
Our future growth depends on the success of a series of pilot projects which makes it difficult to evaluate our current business and future prospects and may increase the risk that we will not be successful.
Our success as a company and ability to generate revenues in the future is dependent on the success of our pilot projects, the satisfaction of our customers and our ability to commercialize our microturbine technology. In addition, attracting new customers may involve evaluation processes during the pilot stage that prospective clients may not be willing to engage in before experiencing satisfying results with our products and services, while we will continue to accrue research, development and engineering expenses. If we are not successful in our pilot projects, we may not be able to expand our business, which could cause a material adverse effect on our business, financial condition, results of operations and prospects.
16
Risks Related to Our Financial Condition and Capital Requirements
Our financial statements for the year ended December 31, 2025 contained an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. This going concern opinion could prevent us from obtaining new financing on reasonable terms or at all, and risk our ability to continue operating as a going concern.
To date, we have not generated any revenues from our activities and have incurred substantial operating losses. In part because we have incurred losses in each year since our inception, our financial statements for the year ended December 31, 2025 contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. These events and conditions, along with other matters, indicated that a material uncertainty existed as of December 31, 2025, that raises substantial doubt on our ability to continue as a going concern. The financial statements for the year ended December 31, 2025 have been prepared assuming that we will continue as a going concern. Management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through the utilization of its current financial resources, sales of its products, and through additional raises of capital. As of December 31, 2025, we incurred accumulated losses of approximately $43.5 million. A going concern assessment could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise in the future. Further financial statements may also include an explanatory paragraph with respect to our ability to continue as a going concern. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through existing cash, debt or equity financing. We expect to require additional financing to fund our operations in the near future. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to our products and it risks our ability to continue operating as a going concern.
Our management is implementing an efficiency plan which may not necessarily be carried out successfully.
On October 11, 2023, our board of directors approved and adopted an efficiency plan, or the Efficiency Plan, with a view to reducing the number of personnel and reducing salaries of our officers, while in parallel directing resources to financing our ongoing activity and examining additional operational and strategic considerations. The Efficiency Plan included (i) a workforce reduction of approximately 50% through unpaid leave of up to three months or termination, resulting in a reduced workforce of approximately 15 employees, and (ii) significant salary reductions for Company officers, including the CEO’s voluntary postponement of approximately 50% of his monthly compensation and an irrevocable reduction of director remuneration to the minimum permitted under applicable regulations as of October 1, 2023.
Following a temporary reduction in salary for our management and officers, regular pay was partially reinstated in early 2025 and fully reinstated as of October 2025. In parallel with implementing the Efficiency Plan and continuing the Company’s operations in a reduced format, the Company has continued to prioritize allocating resources to financing its ongoing activities and evaluating additional operational and strategic alternatives in light of available resources and the prevailing security situation in Israel. As of the date of this prospectus, the Efficiency Plan is no longer formally in effect, but the Board of Directors continues to convene periodically to monitor our financial position, evaluate our efficiency, and make further decisions as needed.
We have not yet generated any revenue and there can be no assurance that we will ever be profitable.
We have not significantly commercialized our products and have not generated significant revenues since the date of our inception. Our ability to generate revenue and achieve profitability depends on our ability to successfully complete the development of, and to materially commercialize, our products. Our ability to generate future revenue from product and service sales depends heavily on our success in many areas, including but not limited to:
| ● | our dependency on the successful development, marketing and sale of our proprietary technology, including our microturbines CHP systems and EMS, to our target customers; |
| ● | the loss of the services of any of our executive officers or any key employees or consultants may adversely affect our ability to execute our business plan and harm our operating results; |
17
| ● | our dependency upon third-party manufacturers and suppliers making us vulnerable to supply shortages and problems, increased costs and quality or compliance issues, any of which could harm our business; |
| ● | our dependency on the use of certain raw materials and changes in the price or availability of such raw materials may impact our ability to efficiently produce our products; |
| ● | the field of CHP microturbines is relatively new and still developing, and the regulation of the field is also changing and developing; |
| ● | general economic weakness, including inflation, or industry and market conditions; | |
| ● | addressing any competing technological and market developments; |
| ● | negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; |
| ● | maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and |
| ● | attracting, hiring and retaining qualified personnel. |
We expect our operating expenses to increase in the future as we expand our operations. If our revenue does not grow at a greater rate than our expenses, we will not be able to achieve and maintain profitability. We may incur significant losses in the future for many reasons, including without limitation the other risks and uncertainties described in this annual report. Additionally, we may encounter unforeseen expenses, operating delays, or other unknown factors that may result in losses in future periods. If our expenses exceed our revenue, our business may be seriously harmed, and we may never achieve or maintain profitability.
We may enter into agreements at a financial loss.
In order to penetrate certain markets or demonstrate our technological capabilities, and as part of our long-term business strategy, we may enter into agreements to finance, build and operate projects at a financial loss to us. Such agreements may materially affect our business, financial condition, and results of operations.
We expect that we will need to raise substantial additional funding which may divert management from their day-to-day activities and which may not be financed on favorable terms.
Our primary business activity is the development of our CHP microturbines. We anticipate that we will need to rely on external sources of financing, such as credit, for our working capital and project development costs. As of December 31, 2025, our cash and cash equivalents were $3,978 thousand. We expect that we will require substantial additional capital to continue our research and development activity and to proceed with pilot projects that partly will have to be financed by us in order to penetrate relevant markets or secure certain clients and commercialize our products. In addition, our operating plans may change as a result of many factors that may currently be unknown to us. Our future funding requirements will depend on many factors, including but not limited to:
| ● | the costs to produce our CHP systems, including expenses related to research and development to further develop our CHP microturbine range; | |
| ● | the costs to maintain our engineering center in Israel; | |
| ● | the increase in the cost of financing as a result of reasons not necessarily related within our control, which may affect the profitability of our projects; | |
| ● | increasing our marketing efforts to increase the commercialization of our CHP microturbines; and |
| ● | the level of revenues received from commercial sales of our products. |
18
Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products. We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. In addition, our ability to raise capital could be affected by various factors, including prevailing market and economic conditions. Moreover, the terms of any financing may adversely affect the holdings or the rights of holders of our securities and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of the Ordinary Shares to decline. The incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights, and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or products or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results, and prospects. Even if we believe that we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue our research or development efforts or the development or commercialization of our existing products or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition, and results of operations.
Our financial condition may be affected by certain grant repayment and other obligations.
Under the terms of the IIA funding agreements, if any of the projects result in commercialized products, we will be required to pay royalties at the rate of 3% of revenues generated from such products, up to 100% of the grants received, linked to the USD and bearing interest SOFR. These royalty obligations are contingent on future sales; in the absence of sales, no repayments are required.
In addition, under the terms of a grant agreement from the cooperation framework between the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy, the Israeli Ministry of Energy and the IIA, or the BIRD Energy program, repayment of the grant will be made by way of royalties equal to 5% of gross product sales, up to a maximum of 150% of the grant amount. These royalty obligations are contingent upon future sales, and in the absence of sales, no repayment is required.
If we are able to generate revenues from the commercialization of our products, the requirement that we pay royalties on certain projects will impact the amount of revenue that we generate and may delay our efforts to become profitable.
Risks Related to Our Intellectual Property
We may not be able to compete effectively if we are unable to obtain or maintain patent rights.
Our success and future revenue growth will depend, in part, on our ability to protect our patent rights. In addition to the protection afforded by any patents that may be granted, historically, we have relied on trade secret protection and confidentiality agreements with our employees, consultants, and contractors to protect proprietary know-how that is not patentable or that we elect not to patent, processes that are not easily known, knowable or easily ascertainable, and for which patent infringement is difficult to monitor and enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, agreements may be breached, trade secrets may be difficult to protect, and we may not receive adequate remedies for any breach. In addition, our trade secrets and intellectual property may otherwise become known or be independently discovered by competitors or other unauthorized third parties.
19
Although our patent applications were approved in certain jurisdictions, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable, or invalidated. Furthermore, even if they are unchallenged, our patents may not adequately protect our intellectual property, products, or services and provide exclusivity for our new products or services or prevent others from designing around our claims. Furthermore, there is no guarantee that third parties will not infringe or misappropriate our patents or similar proprietary rights. In addition, there can be no assurance that we will not have to pursue litigation against other parties to assert our rights.
Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
If we cannot obtain and maintain effective patent rights for our products and services, we may not be able to compete effectively, and our business and results of operations would be harmed.
No assurance can be made that our trade secrets and other confidential proprietary information will not be disclosed in violation of our confidentiality agreements, or those competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Also, misappropriation or unauthorized and unavoidable disclosure of our trade secrets and intellectual property could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets and intellectual property are deemed inadequate, we may have insufficient recourse against third parties for misappropriating any trade secret.
We may face limitations on our ability to commercialize or further develop products incorporating technology subject to defense-related intellectual property rights held by third parties, which could materially delay or restrict our business plans.
Since 2018, we have been a party to a license agreement with Rafael Advanced Defense Systems Ltd., or Rafael, and R-Jet Engineering Ltd., or R-Jet, relating to joint development and production of our microturbine technology, or the 2018 License Agreement. Under the 2018 License Agreement with Rafael, we have unlimited rights of use of the microturbine technology for civilian applications, other than for use in electric vehicles and aeronautical applications. Although this allocation of rights allows us to pursue commercial opportunities, our ability to develop or commercialize products that leverage or build upon military-use developments is subject to Rafael’s prior consent pursuant to the 2018 License Agreement. For example, in December 2025, we entered into an amendment to the 2018 License Agreement with Rafael in order to complete and enable our engagement under an agreement with a leading defense company for military uses. For more information regarding this specific arrangement, see “Business – Our Agreements – License Agreement with Rafael in Connection with our Agreement with the Defense Company.”
As we advance our collaborations, we intend to utilize aspects of the military-side developments in our broader product roadmap. However, if we plan on entering into further agreements in the future, we are required to obtain permission from Rafael before using or adapting any technology that falls under its defense IP rights, including for purposes of entering into a definitive agreement with the subsidiary of a leading multi-national defense corporation or any future agreements. There is no assurance that such permission will be granted on favorable terms, in a timely manner, or at all. Any refusal, delay, or imposition of additional conditions could limit the scope of technologies available to us, require us to modify or redesign our solutions, or restrict our ability to address certain defense or dual-use markets. If we enter into negotiations with potential strategic partners for the military-use development of the microturbine technology, failure to obtain the required permission would result in the immediate termination of negotiations and the loss of potential profits that could have been realized had we entered into a definitive agreement.
In light of these uncertainties, we continue to explore and evaluate the parallel development of an alternative solution for these types of projects with an EU–based partner that would not rely on defense-related intellectual property owned by our existing defense partners. While such alternative development efforts are intended to mitigate the potential impact of delays, refusals, or constraints arising from defense-related IP restrictions, they may require additional time, investment, and technical resources and may not achieve the same performance, cost efficiencies, or market acceptance as solutions derived from military-use developments. There can be no assurance that any such alternative arrangement will be successful or will fully offset the risks associated with our existing defense collaborations.
20
In addition, the existence of overlapping development programs with separate defense partners increases the risk of IP boundaries being interpreted differently by each party, and any disagreements regarding ownership, permitted uses, or derivative works could lead to disputes, negotiations, or limitations on our activities. These constraints could materially delay product development, reduce potential revenue streams, or negatively affect our strategic efforts to expand into defense-related and dual-use applications.
We may be subject to litigation or incurring license costs on third-party intellectual property.
It is inherently difficult to conclusively assess our freedom to operate without infringing on third-party rights. Our competitive position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or other third-party intellectual property rights are held to cover our products or services or elements thereof, or our manufacturing or uses relevant to our development plans. In such cases, we may not be in a position to develop or commercialize products or services or our products (and any relevant services) unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms. There may also be pending patent applications that if they result in issued patents, could be alleged to be infringed by our new products or services. If such an infringement claim should be brought and be successful, we may be required to pay substantial damages, be forced to abandon our new products or services or seek a license from any patent holders. Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. No assurances can be given that a license will be available on commercially reasonable terms, if at all.
It is also possible that we have failed to identify relevant third-party patents or applications. For example, U.S. patent applications filed before November 29, 2000, and certain U.S. patent applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Patent applications in the United States and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our new products or services could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our services, our new products, or the use of our new products. Third-party intellectual property rights holders may also actively bring infringement claims against us by asserting that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, designs, or methods of manufacture related to the use or manufacture of our products or services. If any third-party patents were held by a court of competent jurisdiction to cover aspects of our processes for designs or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.
If any third-party patents were held by a court of competent jurisdiction to cover aspects of our processes for designs or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our products or services. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or services, or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
21
Thus, we cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable, and time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or marketing our new products or services. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing our new products or services that are held to be infringing. We might, if possible, also be forced to redesign our new products so that we no longer infringe third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.
We may be compelled to protect or enforce our intellectual property.
Competitors may infringe our intellectual property. If we were to initiate legal proceedings against a third party to enforce a patent covering one of our new products or services, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the United States Patent and Trademark Office, or USPTO, or made a misleading statement, during prosecution. Under the Leahy-Smith Act, the validity of U.S. patents may also be challenged in post-grant proceedings before the USPTO. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Derivation proceedings initiated by third parties or brought by us may be necessary to determine the priority of inventions and/or their scope with respect to our patent or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our product development, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our new products or services to market.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our Ordinary Shares.
Filing, prosecuting, and defending patents on products and services, as well as monitoring their infringement in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.
Competitors may use our technologies develop their own products or services in jurisdictions where we have not obtained patent protection to and may export infringing products or services to territories where we have patent protection, but where patents are not enforced as strictly as they are in the United States. These products or services may compete with our products or services. Future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products or services in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our future patents at risk of being invalidated or interpreted narrowly, put the issuance of our patent applications at risk, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and any damages or other remedies that we may be awarded, may not be commercially meaningful. Accordingly, our efforts to monitor and enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
22
Risks Related to Our Ordinary Shares
Future sales of our Ordinary Shares could reduce the market price of our Ordinary Shares.
Substantial sales of our Ordinary Shares on the Nasdaq and TASE, including following this offering, may cause the market price of our Ordinary Shares to decline. Sales by our shareholders of substantial amounts of our Ordinary Shares, or the perception that these sales may occur in the future, could cause a reduction in the market price of our Ordinary Shares.
The issuance of any additional Ordinary Shares or any securities that are exercisable for or convertible into Ordinary Shares may have an adverse effect on the market price of our Ordinary Shares and will have a dilutive effect on our existing shareholders and holders of Ordinary Shares.
We do not know whether a market for the Ordinary Shares will be sustained or what the trading price of the Ordinary Shares will be and as a result, it may be difficult for you to sell your Ordinary Shares.
Although we have applied to list the Ordinary Shares on Nasdaq, the application may not be approved and, even if approved, an active trading market for the Ordinary Shares may not be sustained. It may be difficult for you to sell your Ordinary Shares without depressing the market price for the Ordinary Shares or at all. As a result of these and other factors, you may not be able to sell your Ordinary Shares at or above the offering price or at all. Further, an inactive market may also impair our ability to raise capital by selling Ordinary Shares and may impair our ability to enter into strategic partnerships or acquire companies, products, or services by using our equity securities as consideration.
The market price of our Ordinary Shares may be highly volatile, and you could lose all or part of your investment
The trading price of our Ordinary Shares is likely to be volatile. As a result of this volatility, you may not be able to sell the Ordinary Shares at or above the price at which you paid. The market price for the Ordinary Shares may be influenced by many factors, including:
| ● | our dependency on the successful development, marketing and sale of our proprietary technology, including our CHP microturbines, to our target customers; |
| ● | the loss of the services of any of our executive officers or any key employees or consultants may adversely affect our ability to execute our business plan and harm our operating results; |
| ● | our dependency upon third-party manufacturers and suppliers making us vulnerable to supply shortages and problems, increased costs and quality or compliance issues, any of which could harm our business; |
| ● | our dependency upon third-party service providers to provide a high quality of service, which if not met, may impact the utility of our products, our business, operating results and reputation; |
| ● | our dependency on the use of certain raw materials and changes in the price or availability of such raw materials may impact our ability to efficiently produce our products; |
| ● | obtaining and upholding permits, certifications and authorization in various jurisdictions; |
23
| ● | our sector is relatively new and still developing, and the regulation of the field is also changing and developing; |
| ● | general economic weakness, including inflation, or industry and market conditions; | |
| ● | the impact of competition and new technologies; |
| ● | whether a market for the Ordinary Shares will be sustained; |
| ● | the granting or exercise of employee stock options or other equity awards; and |
| ● | changes in investor and securities analyst perception of the business risks and conditions of our business. |
In addition, the stock market in general, and Nasdaq in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of small companies. Broad market and industry factors may negatively affect the market price of our Ordinary Shares, regardless of our actual operating performance. Further, a systemic decline in the financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly.
There is no established trading market for the Ordinary Shares in the United States, and an active trading market may not develop.
There is currently no public market on a U.S. national securities exchange for the Ordinary Shares. We have applied to list the Ordinary Shares on Nasdaq under the symbol “TRBG.” There can be no assurance that our application will be approved. Even if the Ordinary Shares are listed on Nasdaq, there can be no assurance that an active trading market for the Ordinary Shares will develop or be maintained. In the absence of an active trading market for the Ordinary Shares, shareholders may not be able to sell their Ordinary Shares at or above the offering price or at the time that they would like to sell. The lack of an active trading market may also reduce the fair market value of the Ordinary Shares.
Our securities will be traded on more than one market or exchange and this may result in price variations.
Our Ordinary Shares have traded on the TASE since November 2021. Assuming that our Ordinary Shares are listed for trading on the Nasdaq, trading in our Ordinary Shares will take place in different currencies (dollars on the Nasdaq and NIS on the TASE), and at different times (resulting from different time zones, trading days, and public holidays in the United States and Israel). The trading prices of our securities on these two markets may differ due to these and other factors. Any decrease in the price of our Ordinary Shares on the TASE could cause a decrease in the trading price of our Ordinary Shares on the Nasdaq.
We have never paid cash dividends on our share capital, and we do not anticipate paying any cash dividends in the foreseeable future.
In the two financial years prior to the date of this prospectus, we have incurred losses of approximately $22.5 million in the aggregate, which has resulted in our inability to distribute dividends. We have never declared or paid cash dividends, and we do not anticipate paying cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the Ordinary Shares as a source for any future dividend income. Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount, and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions, and other factors deemed relevant by our board of directors.
24
We expect to incur significant costs and devote substantial management time as a result of operating as a public company.
Upon the listing of our securities on Nasdaq, we will become a publicly traded company in the United States. As a public company in the United States we will incur additional and significant legal, accounting and other expenses beyond those we incur as a publicly traded company in Israel. For example, we are subject to the reporting requirements of the Exchange Act and are required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.
Compliance with the requirements of being a public company in the United States incurs significant legal and financial compliance costs and makes some activities more time consuming and costly. In addition, our management and other personnel must devote substantial time on operational and other business matters when attending to public company requirements. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an emerging growth company, as defined by the JOBS Act, or no longer a non-accelerated filer. We expect to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and maintain an internal audit function. We cannot predict or estimate the amount of additional costs we may incur as a result of operating as a public company or the timing of such costs.
Being a public company makes it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and skilled executive officers. As a result of disclosure of information in our publicly-filed documents, our business and financial condition is more visible, which we believe may result in potential or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be materially adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and materially adversely affect our business, financial condition and operating results.
Raising additional capital would cause dilution to our existing shareholders and may adversely affect the rights of existing shareholders.
We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the issuance of equity, or otherwise including through convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Future sales of our Ordinary Shares or of securities convertible into our Ordinary Shares, or the perception that such sales may occur, could cause immediate dilution and adversely affect the market price of our Ordinary Shares.
Investors may experience dilution as a result of this offering and future offerings.
In addition to the Ordinary Shares being offered for resale under this registration statement, if all the warrants that are currently outstanding are exercised, our outstanding Ordinary Shares would increase from 23,389,747 to 23,749,747, representing an increase of approximately 1.51% in the number of outstanding Ordinary Shares. Accordingly, shareholders will experience dilution of their ownership interests. The resale of these additional Ordinary Shares, or the perception that such issuances or resales could occur, could also further cause the market price of Ordinary Shares to decline.
25
Future issuances or sales, or the potential for future issuances or sales, of our Ordinary Shares may cause the trading price of our Ordinary Shares to decline and could impair our ability to raise capital through subsequent equity offerings.
Shares to be issued in future equity offerings could cause the market price of our Ordinary Shares to decline and could have an adverse effect on our earnings per share if and when we become profitable. In addition, future sales of our Ordinary Shares or other securities in the public markets, or the perception that these sales may occur, could cause the market price of our Ordinary Shares to decline, and could materially impair our ability to raise capital through the sale of additional securities.
The market price of our Ordinary Shares could decline due to sales, or the announcements of proposed sales, of a large number of Ordinary Shares in the market, including sales of up to 360,000 Ordinary Shares issuable upon exercise of warrants issued since February 2023, or other sales of Ordinary Shares by our large shareholders, or the perception that these sales could occur. These sales or the perception that these sales could occur could also depress the market price of our Ordinary Shares and impair our ability to raise capital through the sale of additional equity securities or make it more difficult or impossible for us to sell equity securities in the future at a time and price that we deem appropriate. We cannot predict the effect that future sales of Ordinary Shares or other equity-related securities would have on the market price of our Ordinary Shares.
We have outstanding warrants, some of which contain “full-ratchet” anti-dilution protection, which may cause significant dilution to our stockholders.
We have outstanding warrants, which are exercisable into Ordinary Shares. The issuance of the Ordinary Shares upon the exercise of the outstanding warrants would dilute the percentage ownership interest of all shareholders, might dilute the book value per share of our Ordinary Shares and would increase the number of our publicly traded shares, which could depress the market price of our ordinary shares. The warrants issued to several of our investors contain a “full-ratchet” anti-dilution provision which, subject to limited exceptions, would reduce the exercise price of the warrants (and increase the number of shares issuable) in the event that we in the future issue Ordinary Shares, including any securities issued to investors, at a price per share lower than the applicable exercise price or conversion price then in effect.
Our Articles of Association, provide that, unless we consent to an alternative forum, the federal district courts of the United States shall be the exclusive forum for resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our shareholders’ ability to choose the judicial forum for disputes with us, our directors, shareholders, or other employees.
Our Articles of Association provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for U.S. federal and state courts over all such Securities Act actions. Accordingly, both U.S. state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our Articles of Association provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. This exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, and our shareholders cannot and will not be deemed to have waived our compliance with the U.S. federal securities laws and the rules and regulations promulgated under the Securities Act or the Exchange Act as a result of our exclusive forum provision.
Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to the foregoing provision of our Articles of Association. However, the enforceability of similar forum provisions (including exclusive federal forum provisions for actions, suits, or proceedings asserting a cause of action arising under the Securities Act) in other companies’ organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive forum provision in our Articles of Association. If a court were to find the exclusive forum provision contained in our Articles of Association to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations.
26
Although we believe the exclusive forum provision benefit us by providing increased consistency in the application of U.S. federal securities laws or the Companies Law, as applicable, in the types of lawsuits to which they apply, such exclusive forum provision may limit a shareholder’s ability to bring a claim in the judicial forum that they find favorable and may increase certain litigation costs for disputes with us or any of our directors, shareholders, officers, or other employees, which may discourage lawsuits with respect to such claims against us and our current and former directors, shareholders, officers, or other employees.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our Ordinary Shares, our share price and trading volume could decline.
The trading market for our Ordinary Shares will be influenced in part by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. We do not have any control over these analysts, and we cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our Ordinary Shares, provide more favorable relative recommendations about our competitors or publish inaccurate or unfavorable research about our business, the price of our Ordinary Shares would likely decline. If any analyst who may cover us were to cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price of our Ordinary Shares or trading volume to decline.
An active trading market for our ordinary shares may not be sustained.
Although our Ordinary Shares would be listed on Nasdaq, an active public trading market for our Ordinary Shares may not be sustained. The lack of an active market may impair your ability to sell your Ordinary Shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of your Ordinary Shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling ordinary shares and may impair our ability to acquire other companies or technologies by using our Ordinary Shares as consideration.
We may be a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes in the current taxable year or may become one in any subsequent taxable year. There generally would be negative tax consequences for U.S. taxpayers that are holders of the Ordinary Shares if we are or were to become a PFIC.
Based on the composition of our income and valuation of our assets, we were not a passive foreign investment company, or PFIC, for 2025 and we do not expect to become a PFIC in the future, although there can be no assurance in this regard. The determination of whether we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. We will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross income is “passive income” or (2) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account. The tests for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of the Ordinary Shares. Accordingly, there can be no assurance that we currently are not or will not become a PFIC in the future. If we are a PFIC in any taxable year during which a U.S. taxpayer holds the Ordinary Shares, such U.S. taxpayer would be subject to certain adverse U.S. federal income tax rules. In particular, if the U.S. taxpayer did not make an election to treat us as a “qualified electing fund”, or QEF, or make a “mark-to-market” election, then “excess distributions” to the U.S. taxpayer, and any gain realized on the sale or other disposition of the Ordinary Shares by the U.S. taxpayer: (1) would be allocated ratably over the U.S. taxpayer’s holding period for the Ordinary Shares; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the U.S. Internal Revenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. taxpayer to make a timely QEF or mark-to-market election. U.S. taxpayers that have held the Ordinary Shares during a period when we were a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. taxpayer who made a timely QEF or mark-to-market election. A U.S. taxpayer can make a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance with the instructions thereto. We do not intend to notify U.S. taxpayers that hold the Ordinary Shares if we believe we will be treated as a PFIC for any taxable year in order to enable U.S. taxpayers to consider whether to make a QEF election. In addition, we do not intend to furnish such U.S. taxpayers annually with information needed in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. U.S. taxpayers that hold the Ordinary Shares are strongly urged to consult their tax advisors about the PFIC rules, including tax return filing requirements and the eligibility, manner, and consequences to them of making a QEF or mark-to-market election with respect to the Ordinary Shares in the event that we are a PFIC. See “Taxation — U.S. Federal Income Tax Considerations — Passive Foreign Investment Companies” for additional information.
27
We have not paid, and do not intend to pay, dividends on our Ordinary Shares and, therefore, unless our traded securities appreciate in value, our investors may not benefit from holding our Ordinary Shares.
We have never declared or paid any dividends on our Ordinary Shares. We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our business. Our board of directors has sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our directors may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends. See “Dividend Policy.”
As a “foreign private issuer” we would be subject to less stringent disclosure requirements than domestic registrants and are permitted and may in the future elect to follow certain home country corporate governance practices instead of otherwise applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. registrants.
As a foreign private issuer and emerging growth company, it is possible that we would be subject to different disclosure and other requirements than domestic U.S. registrants and non-emerging growth companies. For example, as a foreign private issuer in the United States, we would not be subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we would intend to rely on exemptions from certain U.S. rules which will permit us to follow Israeli legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants.
We would follow Israeli laws and regulations that are applicable to Israeli public companies with securities registered under the Exchange Act. However, Israeli laws and regulations applicable to Israeli companies do not contain any provisions comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or Form 8-K, or the U.S. rules relating to liability for insiders who profit from trades made in a short period of time, as referred to above.
Furthermore, foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic registrants that are non-accelerated filers are required to file their annual report on Form 10-K within 90 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information, although we would be subject to Israeli laws and regulations that have substantially the same effect as Regulation Fair Disclosure. As a result of the above, even though we would be required to file reports on Form 6-K disclosing the limited information which we would have made or would be required to make public pursuant to Israeli law, or are required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. registrant.
28
These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2027. In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents, and we would fail to meet additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic registrant may be significantly higher.
The JOBS Act allows us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our Company and adversely affect the market price of our Ordinary Shares.
For so long as we remain an “emerging growth company” as defined in the JOBS Act, we intend to take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies” including:
| ● | The provisions of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting; |
| ● | Section 107 of the JOBS Act, which provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption of new or revised accounting standards. As a result of this adoption, our financial statements may not be comparable to companies that comply with the public company effective date; |
| ● | Any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements; and |
| ● | Our ability to furnish two rather than three years of income statements and statements of cash flows in our initial public offering registration statement of our Ordinary Shares. In any other registration statement to be filed with the SEC, an emerging growth company need not present selected financial data for any period prior to the earliest audited period presented in connection with its initial public offering. |
We intend to take advantage of these exemptions until we are no longer an “emerging growth company.” We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, as defined in the rule under the Exchange Act as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We cannot predict if investors will find our Ordinary Shares less attractive because we may rely on these exemptions. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for each such traded security, and the trading price of each may be more volatile and may decline.
29
We may be subject to securities litigation, which is expensive and could divert management attention.
In the past, companies that have experienced volatility in the market price of their shares have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.
Upon the effectiveness of this registration statement and our listing on Nasdaq, we will be required to meet Nasdaq’s continued listing standards which may be subject to change.
Upon completion of our listing on Nasdaq, we will be subject to the continued listing standards and requirements of the Nasdaq Capital Market, which may be subject to change from time to time. On July 22, 2026, the SEC issued an order approving Nasdaq's amendments to its continued listing standards that would require listed companies to maintain a minimum $5.0 million market value of listed securities, or MVLS. On July 29, 2026, in response to notices received for petition for review of the delegated action and in accordance with Rule 431(e) of the SEC’s Rules of Practice, the July 22, 2026 order is stayed until the SEC orders otherwise. If the stay is lifted, and following our listing on Nasdaq, if our MVLS falls below the required threshold for 30 consecutive business days, Nasdaq staff will issue a staff delisting determination, our securities will be immediately suspended from trading, and delisting procedures will commence. Shares will then, generally, begin trading on the over-the-counter market in the United States in addition to our existing listing on TASE. Delisting would likely reduce the liquidity and market price of our ordinary shares, limit investor interest, and impair our ability to raise additional capital. If our ordinary shares were to trade on an over-the-counter market, trading volume and liquidity would likely be significantly lower. Any such delisting could have a material adverse effect on our business, financial condition, and shareholders. The market value of our listed securities depends largely on the trading price of our ordinary shares and the number of publicly held shares, both of which are subject to market volatility and factors beyond our control. Unlike certain other continued listing deficiencies, which afford companies an opportunity to submit a compliance plan or benefit from a cure period, the MVLS requirement provides no such relief. A timely request for a hearing before the Nasdaq Hearings Panel will not automatically stay the suspension of trading. The Hearings Panel may, in its discretion, reverse the delisting determination, only if it was made in error, or grant an exception for up to 180 days for the company to demonstrate compliance with Nasdaq's initial listing standards (which are generally higher than continued listing standards). An adverse decision may be further appealed to the Nasdaq Listing and Hearing Review Council; however, there can be no assurances that an appeal would be successful.
The requirements associated with being a public company require significant company resources and management attention.
Upon the effectiveness this registration statement and completion of our listing on Nasdaq, we will be subject to the reporting requirements of the Exchange Act, Nasdaq listing requirements and other applicable securities rules and regulations. The Exchange Act requires that we would file periodic reports with respect to our business and financial condition and maintain effective disclosure controls and procedures and internal control over financial reporting. In addition, subsequent rules implemented by the SEC and Nasdaq may also impose various additional requirements on public companies. As a result, we would incur significant legal, accounting and other expenses that we did not incur previously, which could increase if we are no longer an “emerging growth company” as defined in the JOBS Act. The need to establish and maintain the corporate infrastructure demanded of a public company may divert management’s attention from implementing our development plans. We have made changes to our corporate governance standards, disclosure controls and financial reporting and accounting systems to meet our reporting obligations. The measures we take, however, may not be sufficient to satisfy our obligations as a public company, which could subject us to delisting of our Ordinary Shares, fines, sanctions and other regulatory action and potentially civil litigation.
Risks Related to Our Incorporation and Our Operations in Israel
Potential political, economic and military instability in the State of Israel, where our headquarters, members of our management team, our production and research and development facilities are located, may adversely affect our results of operations.
Our executive offices and research and development facilities are located in Petah Tikva, Israel. In addition, the majority of our employees, officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and groups in its neighboring countries, Hamas (an Islamist militia and political group that has historically controlled the Gaza Strip) and Hezbollah (an Islamist militia and political group based in Lebanon). In addition, several countries, principally in the Middle East, restrict doing business with Israel, and additional countries may impose restrictions on doing business with Israel and Israeli companies whether as a result of hostilities in the region or otherwise. Any hostilities involving Israel, terrorist activities, political instability or violence in the region or the interruption or curtailment of trade or transport between Israel and its trading partners could adversely affect our operations and results of operations and the market price of our Ordinary Shares.
Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or, if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and results of operations.
In October 2023, Hamas terrorists infiltrated Israel’s border with the Gaza Strip and conducted a series of attacks on civilian and military targets. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign commenced in the Gaza Strip. As of October 9, 2025, Israel and Hamas entered into a ceasefire agreement intended to permanently end the conflict. However, there are no assurances that such an agreement will hold. While the conflict created heightened security concerns, disruptions to business operations, and economic instability, the ceasefire may contribute to improved regional stability and the security situation remains fluid and any renewed military actions, restrictions, or government-imposed measures could adversely affect our operations and financial condition.
30
Following Hamas’s attack on Israel, other regional hostilities concurrently became more pronounced and evolved into a multi-front war. This included a northern front war between Israel and Hezbollah in Lebanon. In November 2024, Israel entered into a ceasefire agreement with Hezbollah, which reduced hostilities along the northern border until early March 2026 when hostilities renewed again as described below. In addition, the Iranian-backed Houthi Movement in Yemen launched direct attacks on Israel involving drones and missiles, and attacked container ships on the Red Sea. Such disruption to our operations previously included certain delays and diversions of the import of certain components for manufacturing and production as a result of reduced air travel and the attacks on container ships on the Red Sea route by the Houthi Movement.
In April 2024 and October 2024, Iran launched direct attacks on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel. In June 2025, Israel and Iran experienced a limited period of direct confrontation, which resulted in heightened security conditions and temporary disruptions to transportation and commercial activity, including the temporary closure of Israeli airspace and ports. More recently, in February 2026, hostilities between Israel and Iran escalated again. In late February 2026, Israel, together with the United States, conducted a major joint military campaign of air and missile strikes against targets in Iran, which triggered a broad Iranian response and contributed to significant regional instability. The situation remains highly fluid, and we are unable to predict when, or on what terms, this escalation will be resolved. Further escalation, whether involving direct confrontation between Israel and Iran or through regional proxy groups, could result in additional mobilization of reserve personnel, further restrictions on movement or commerce, damage to infrastructure, supply chain interruptions, disruptions to global energy markets, and heightened cybersecurity threats. Any of the foregoing could materially and adversely affect our operations, financial condition, and results of operations, particularly if disruptions are prolonged or recur. As of April 8, 2026, a temporary ceasefire has been in place, but there are no assurances to if conflicts in the region will renew.
In connection with the multi-front conflict, Israeli military reservists have been called up to perform military service. Certain of our employees have been called up to military service, none of which are members of our management team or executive officers as of August 21, 2026. All of our employees have returned after completing their reserve duty, but there can be no guarantee that they will not be called up again. Additional employees may be called up, for service, and such persons may be absent for an extended period of time. As a result, our operations may be disrupted by such absences, which in turn may materially and adversely affect our business, prospects, financial condition and results of operations.
Our financial performance is, in part, affected by exchange rate fluctuations between the U.S. dollar and NIS and Euro and NIS.
We are exposed to foreign currency exchange rate volatility with our non-U.S. dollar and Euro denominated sales and operating expenses worldwide. Any weakening of foreign currencies relative to the U.S. dollar or Euro adversely affect the U.S. dollar or Euro value of our foreign currency-denominated sales and earnings, and generally leads us to raise international pricing, which could reduce demand for our products. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the dollar’s strengthening, or at all, which would adversely affect the U.S. dollar or Euro value of our foreign currency denominated sales and earnings. Conversely, any strengthening of the Israeli shekel or foreign currencies relative to the U.S. dollar or Euro will increase our Israeli operations costs and could cause us to increase our international pricing and become less competitive. Additionally, any strengthening of foreign currencies may also increase our cost of product components denominated in those currencies, thus adversely affecting gross margins.
We may not be able to enforce covenants not-to-compete under current Israeli law that might result in added competition for our products.
We have non-competition agreements, governed by Israeli law, with all of our executive officers and the majority of our key employees. These agreements prohibit our employees from competing with or working for our competitors, generally during their employment and for up to 12 months after the termination of their employment. However, Israeli courts are reluctant to enforce non-compete undertakings of former employees and would be inclined, if at all, to enforce those provisions for relatively brief periods of time in restricted geographical areas, and only when the employee has obtained unique value to the employer specific to that employer’s business and not just regarding the professional development of the employee. If we are not able to enforce non-compete covenants, we may be unable to prevent our competitors from benefiting from the expertise of some of our former employees.
31
We received grants from the IIA that require us to pay royalties and restrict our ability to transfer intellectual property or know-how outside of Israel.
We have received government grants from the IIA of the Ministry of Economy and Industry, and other governmental ministries for the financing of a significant portion of our research and development expenditures in Israel. Unless otherwise agreed by the applicable authority of the IIA, we must nevertheless continue to comply with the requirements of Israeli Law for the Encouragement of Industrial Research and Development, 1984 and regulations promulgated thereunder, or the R&D Law, with respect to technologies that were developed using such grants, or financed know-how, including an obligation to repay such grants from consideration received from sales of products which are based on the financed know-how, if and when such sales occur and if applicable in accordance with the grant plan.
We may be required to remunerate our Israeli employees for their inventions, even if the rights to such inventions have been duly assigned to us.
We enter into agreements with our Israeli employees pursuant to which such individuals agree that any inventions created in the scope of their employment are either owned exclusively by us or are assigned to us, depending on the jurisdiction, without the employee retaining any rights. A portion of our intellectual property has been developed by our Israeli employees during their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the course of his or her employment and within the scope of said employment are considered “service inventions.” Service inventions belong to the employer by default, absent a specific agreement between the employee and employer otherwise. The Patent Law also provides that if there is no agreement regarding the remuneration for the service inventions, even if the ownership rights were assigned to the employer, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for these inventions. The Committee has not yet determined the method for calculating this Committee-enforced remuneration. Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Although our Israeli employees have agreed that we exclusively own any rights related to their inventions, we may face claims demanding remuneration in consideration for employee service inventions. As a result, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negatively affect our business.
It may be difficult to enforce a judgment of a U.S. court against us and our executive officers and directors and the Israeli experts named in this prospectus in Israel or the United States, to assert U.S. securities laws claims in Israel or to serve process on our executive officers and directors and these experts.
We are incorporated in Israel. All of our executive officers and directors reside outside of the United States, and all of our assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the United States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an action with respect to U.S. securities laws in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court (see “Enforceability of Civil Liabilities” for additional information on your ability to enforce a civil claim against us and our executive officers or directors named in this prospectus).
Provisions of Israeli law and our Articles of Association may delay, prevent or otherwise impede a merger with, or an acquisition of, us, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.
Israeli law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. For example, a merger may not be consummated unless at least 50 days have passed from the date on which a merger proposal is filed by each merging company with the Israel Registrar of Companies and at least 30 days have passed from the date on which the shareholders of both merging companies have approved the merger. In addition, a majority of each class of securities of the target company must approve a merger. Moreover, a tender offer for all of a company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the tender offer, unless, following consummation of the tender offer, the acquirer would hold at least 98% of our outstanding shares. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, claim that the consideration for the acquisition of the shares does not reflect their fair market value, and petition an Israeli court to alter the consideration for the acquisition accordingly, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisal rights, and the acquirer or the company published all required information with respect to the tender offer prior to the tender offer’s response date.
32
Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfilment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. These provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.
Our Articles of Association may be deemed to have an anti-takeover effect.
Certain provisions of our Articles of Association may make a change in control of us more difficult to affect. Our Articles of Association provides for a staggered board of directors consisting of three classes of directors. Directors of each class are chosen for three-year terms upon the expiration of their current terms and each year one class of our directors are elected by our shareholders. This classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of our board of directors. Thus, the classified board provision could increase the likelihood that incumbent directors will retain their positions. The staggered terms of directors may delay, defer or prevent an attempt to change control of us, even though a change in control might be considered by our shareholders to be in their best interest.
Your rights and responsibilities as a shareholder will be governed in key respects by Israeli laws, which differ in some material respects from the rights and responsibilities of shareholders of U.S. companies.
The rights and responsibilities of the holders of our Ordinary Shares are governed by our Articles of Association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in U.S. companies. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders, and to refrain from abusing its power in such company, including, among other things, in voting at a general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and related party transactions requiring shareholder approval, as well as a general duty to refrain from discriminating against other shareholders. In addition, a shareholder who is aware that it possesses the power to determine the outcome of a vote at a meeting of the shareholders or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the nature of these duties or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our Ordinary Shares that are not typically imposed on shareholders of U.S. companies.
The termination or reduction of tax and other incentives that the Israeli government provides to Israeli companies may increase our costs and taxes.
The Israeli government currently provides tax and capital investment incentives to Israeli companies, as well as grant and loan programs relating to research and development and marketing and export activities. In recent years, the Israeli government has reduced the benefits available under these programs and the Israeli governmental authorities may in the future further reduce or eliminate the benefits of these programs. We may take advantage of these benefits and programs in the future; however, there can be no assurance that such benefits and programs will be available to us. If we qualify for such benefits and programs and fail to meet the conditions thereof, the benefits could be cancelled, and we could be required to refund any benefits we might already have enjoyed and become subject to penalties. Additionally, if we qualify for such benefits and programs and they are subsequently terminated or reduced, it could have an adverse effect on our financial condition and results of operations.
33
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements made under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” “intends” or “continue,” or the negative of these terms or other comparable terminology.
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 forecasted level of revenues and capital expenditures; | |
| ● | our ability to market and sell our products; | |
| ● | our ability to meet our targets for production and revenue; |
| ● | our plans to continue to invest in research and development to develop technology for both existing and new technology; | |
| ● | our ability to maintain our relationships with suppliers, manufacturers, and other partners; | |
| ● | our ability to maintain or protect the validity of our patents and other intellectual property; | |
| ● | our ability to internally develop and protect new inventions and intellectual property; | |
| ● | our ability to retain key executive members; | |
| ● | our ability to educate the industry on our microturbine technology; | |
| ● | interpretations of current laws and the passages of future laws; 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. We discuss many of these risks in this prospectus in greater detail under the heading “Risk Factors” and elsewhere in this prospectus. You should not rely upon forward-looking statements as predictions of future events.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. 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.
34
Our Ordinary Shares have been trading on the TASE under the symbol “TURB” since November 2021. We have applied to list the Ordinary Shares on Nasdaq under the symbol “TRBG.” This offering is contingent upon the Ordinary Shares being listed on Nasdaq; however, there no assurance can be given that our listing application will be approved by Nasdaq or that a liquid trading market for our Ordinary Shares will materialize. As of the date of this prospectus, our only listed class of securities will be Ordinary Shares outstanding. All of the Ordinary Shares confer the same rights and privileges. See “Description of Share Capital and Governing Documents.”
We will not receive any proceeds from the sale of the Ordinary Shares by the Selling Shareholders. All net proceeds from the sale of the Ordinary Shares covered by this prospectus will go to the Selling shareholders. However, we will receive cash proceeds from the exercise price of the Warrants that are exercised.
We intend to use the proceeds from the exercise of the Warrants for general corporate purposes and working capital.
We have never declared or paid any cash dividends on our Ordinary Shares and do not anticipate paying any cash dividends in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Under the Companies Law, the repurchase of shares is treated as a dividend distribution.
The Companies Law imposes further restrictions on our ability to declare and pay dividends. Under the Companies Law, we may declare and pay dividends only if, upon the determination of our board of directors, there is no reasonable concern that the distribution will prevent us from being able to meet the terms of our existing and foreseeable obligations as they become due, generally referred to as the Solvency Criteria. Under the Companies Law, the distribution amount is further limited to the greater of retained earnings or earnings generated over the two most recent years legally available for distribution according to our then last reviewed or audited financial statements, provided that the end of the period to which the financial statements relate is not more than six months prior to the date of distribution, generally referred to as the Earnings Criteria. In the event that we do not meet such Earnings Criteria, we may seek the approval of the court in order to distribute a dividend. The court may approve our request if it is convinced that we comply with the Solvency Criteria.
However, pursuant to regulations promulgated under the Companies Law applicable for Israeli companies whose shares are listed on stock exchanges outside of Israel, or the Exemptions Regulations, an Israeli company whose shares are listed outside Israel is permitted to execute distributions through repurchasing its own shares, even if Earnings Criteria are not met, without the need for a court’s approval. This exemption is subject to certain conditions, including, among others: (i) the distribution meets the Solvency Criteria; and (ii) there had not been any objection filed by any of the Company’s creditors to the relevant court. If any creditor objects to such distribution, the Company will be required to obtain the court’s approval for such distribution.
Payment of dividends may be subject to Israeli withholding taxes. See “Taxation — Israeli Tax Considerations and Government Programs” for additional information.
35
The following table sets forth our cash and cash equivalents and our capitalization as of December 31, 2025:
| ● | on an actual basis; |
| ● | on a pro forma basis to give effect to the receipt of $2.7 million from Mr. Alex Katz and the Tenenbaum Group in connection with the 2025 Warrant Inducement Agreements and the issuance of Ordinary Shares upon the exercise of certain options and warrants from January 2026 through August 2026; and, |
| ● | on a pro forma as adjusted basis to give further effect to (i) the receipt of $5 million from the issuance of 1,131,616 Ordinary Shares to be issued in connection with the August 2026 Private Placement and (ii) the exercise of 934,627 Warrants to be issued in connection with the 2025 Warrant Inducement Agreement. |
You should read this table in conjunction with the sections titled “Summary Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.
| As of December 31, 2025 | ||||||||||||
| U.S. dollars in thousands | Actual | Pro forma | Pro forma as adjusted | |||||||||
| Cash and cash equivalents | $ | 3,942 | $ | 10,177 | $ | 14,119 | ||||||
| Restricted cash | $ | 36 | $ | $ | 36 | |||||||
| Shareholders’ equity: | ||||||||||||
| Ordinary shares and Additional Paid in Capital | 40,367 | 16,602 | 56,969 | |||||||||
| Accumulated deficit | (43,482 | ) | (43,482 | ) | ||||||||
| Total shareholders’ equity (deficit) | $ | (3,115 | ) | $ | 16,602 | $ | 13,487 | |||||
| Total capitalization | $ | 863 | $ | 26,779 | $ | 27,642 | ||||||
36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” elsewhere in this prospectus.
Overview
Founded in 2014 in response to the need to technologically address the threat of climate change, we develop CHP systems based on microturbines. The application of these microturbines is for the local production of electricity, energy, and heat for the built environment.
Upon completion of our research and development, we will transition to manufacturing and installing our first developed microturbine system, the TG-40, which produces up to 40 KW of electrical energy and up to 60 KW of heat. We are designing the TG-40 prototype to be highly efficient at producing energy. We are currently developing the TG-40 for the purpose of lowering production, assembly, and maintenance costs, which will enable us to increase the number of potential installation sites, in part due to its low weight and agile modularity, compared to existing solutions in the 40 KW to 1 MW range. In December 2025, we entered into a supplier agreement with a European company for the planned scaled production of our TR3200 microturbine system. As of the date of this prospectus, we have placed an order for twelve systems, three of which are expected to be installed in fourth quarter of 2026, and an additional nine over the next twelve months. In addition, we are in the process of negotiations with one European Union-based company and one United States-based company for research and development stage of a range of technologies related to our CHP systems.
In addition to our TG-40 system and TR3200 system, we completed the assembly of our first TR8000 system, an 80 KW system designed for large buildings and micro data centers, and are developing new mobile and stationary microturbine systems ranging from 28 KW to 100 KW as later described in this prospectus.
As of the date of this prospectus, we are a development stage company that possesses production capacity intended solely for demonstration purposes and we have not generated any revenues. However, we are in the process of transitioning from development to commercial production and are preparing for commercialization of our products.
As part of our transition into scaled production, we are refining and adapting our systems to the requirements of the production lines, assembly capabilities, and the applicable standards and regulations in the United States and Europe. Accordingly, the technical data of our systems, including power output, weight, and efficiency rates, may change and be updated compared to the initial development specifications, depending on the model produced, its type, and additional requirements.
We believe that our microturbine technology can address four main interconnected challenges: the increasing difficulty in maintaining legacy energy infrastructures, including electrical transmission grids; the increasing demand for electricity, the rising importance in highly energy-intensive infrastructure projects such as building, small server farms or small data centers and maintaining their operational resiliency, and the increasing electrification of power sources; the demand for cost efficiency in energy sources; and the reduction of carbon emissions.
We expect to market and sell our microturbines to owners and developers of building clusters, such as office buildings, residential buildings, hospitality buildings, “off-grid consumers,” and server farms. Our primary target markets are those that possess advanced natural gas grids, such as the United States and countries in the European Union.
We aim to become a global leader in the field of local generation of energy, electricity, and heat, as well as in the EMS management. Our systems are designed to incorporate natural gas, landfill gas, diesel and hydrogen in varying compositions to produce energy.
We intend to continue differentiating our products by leveraging our multi-fuel combustion capabilities, high-efficiency turbine compressor units, enhanced modularity, relatively low weight, and reduced operation and maintenance costs. We are offering an EaaS model, under which customers enter long-term agreements to purchase the electricity and heat our systems generate with little to no upfront cost, or, alternatively, may purchase an installed unit at full cost along with a service contract.
Additionally, we plan to offer on-demand integration of our products with existing off-the-shelf market solutions, such as energy storage , heat storage enabling the deployment of a localized micro-grid. This will include comprehensive energy management capabilities that cover both electricity and heat supply to a designated area from multiple sources.
37
Components of our Operating Results
Our operating expenses consist of three components:
| ● | Research and Development Expenses, net. Our net research and development expenses consist primarily of salary and compensatory expenses related to our research and development personnel, raw materials, contractors, consultants, travel expenses and depreciation costs. | |
| ● | Sales and Marketing Expenses. Our marketing expenses consist primarily of salary and compensatory expenses for our sales and marketing personnel, travel expenses and consultants. |
| ● | General and Administrative Expenses. General and administrative expenses consist primarily of salary and compensatory expenses, consultants, professional services, and travel expenses. |
Results of Operations
To date, we have not generated revenue from the sales of any of our systems, and we do not expect to generate significant revenue until the end of 2026, at the earliest.
The following table sets forth our results of operations for the periods presented:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| U.S. dollars in thousands | ||||||||
| Research and development expenses, net | 946 | 1,192 | ||||||
| Sales and marketing expenses | 1,265 | 273 | ||||||
| General and administrative expenses | 6,894 | 1,366 | ||||||
| Loss from operations | 9,105 | 2,831 | ||||||
| Changes in fair value of warrants liabilities and extinguishment of debt | 10,666 | 82 | ||||||
| Other financing (income) expenses, net | (286 | ) | 85 | |||||
| Net loss and comprehensive loss | 19,485 | 2,998 | ||||||
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
Research and Development Expenses, net
Research and development expenses, net, decreased by 21% to $946 thousand for the year ended December 31, 2025, compared to $1,192 thousand for the year ended December 31, 2024. This decrease was primarily attributable to increase in IIA grants for new and existing projects, which was partially offset by an increase in research and development expenses.
38
Sales and Marketing Expenses
Sales and marketing expenses increased by 363% to $1,265 thousand for the year ended December 31, 2025, compared to $273 thousand for the year ended December 31, 2024. This increase was primarily attributable to an increase in share-based compensation expenses to an officer of the Company.
General and Administrative Expenses
General and administrative expenses increased by 405% to $6,894 thousand for the year ended December 31, 2025, compared to $1,366 thousand for the year ended December 31, 2024. This increase was primarily attributable to an increase in share-based compensation related to options granted to members of management in 2025 in an amount totaling $4,944 thousand.
Loss from Operations
Operating loss for the year ended December 31, 2025 was $9,105 thousand, compared to $2,831 thousand for the year ended December 31, 2024. The increase in operating loss for the year ended December 31, 2025 was primarily attributable to an increase in share-based compensation expenses mainly related to options granted to members of management in the year ended December 31, 2025.
Changes in fair value of warrants liabilities and extinguishment of debt
Changes in fair value of warrants liabilities and extinguishment of debt for the year ended December 31, 2025 was $10,666 thousand compared to $82 thousand for the year ended December 31, 2024. The increase was related to an increase in the number of warrants outstanding as well as increase in our share price as of December 31, 2025 compared to December 31, 2024.
Other Financing (Income) expenses, net
Other financing (income) expenses, net, for the year ended December 31, 2025 was primarily composed of income, compared to the year ended December 31, 2024, which was primarily composed of expenses.
Net Loss
Net loss for the year ended December 31, 2025 increased to $19,485 thousand, compared to net loss of $2,998 thousand for the year ended December 31, 2024. The increase in net loss was primarily attributable to an increase in share-based compensation expenses mainly related to options granted to members of management in the year ended December 31, 2025, as well as increase in finance expenses, net.
Liquidity and Capital Resources
Overview
Since our inception through December 31, 2025, we have funded our operations primarily through fund raisings, convertible loans and grants from the IIA. As of December 31, 2025, we had $3,942 thousand in cash and cash equivalents.
The table below presents our cash flows for the periods indicated:
| Year Ended December 31, | ||||||||
| U.S. dollars in thousands | 2025 | 2024 | ||||||
| Net cash used in operating activities | (4,560 | ) | (1,718 | ) | ||||
| Net cash used in investing activities | (2 | ) | ||||||
| Net cash provided by financing activities | 7,488 | 1,635 | ||||||
| Effects on cash and cash equivalents from changes in foreign currency rates | 697 | (26 | ) | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 3,625 | (111 | ) | |||||
39
Operating Activities
During the year ended December 31, 2025, net cash used in operating activities was $4,560 thousand, compared to $1,718 thousand for the year ended December 31, 2024, primarily due to increase in other current assets and decrease in other payables.
Investing Activities
Net cash used in investing activities was $0 thousand during the year ended December 31, 2025, compared to $2 thousand during the year ended December 31, 2024.
Financing Activities
Net cash flow provided by financing activities was $7,488 thousand for the year ended December 31, 2025, compared to $1,635 thousand during the year ended December 31, 2024. This increase was primarily attributable to an increase in capital raises, as well as options and warrants exercises.
Financial Arrangements
Since our inception, we have financed our operations primarily through proceeds from sales of Ordinary Shares, warrants, and long-term loans from shareholders. Since February 2023, we have financed our operations primarily through a series of convertible loan arrangements with existing shareholders, directors, and other investors.
General Terms of Convertible Loans
The convertible loan agreements entered into by us since December 2022 generally share the following material terms:
| ● | Each loan is repayable in a single bullet payment at maturity, unless converted earlier. | |
| ● | The loans bear fixed annual interest of 10%, which accrues over the term and is added to the outstanding principal balance. |
| ● | The outstanding principal and accrued interest are convertible, at the lender’s option, into Ordinary Shares, at an initial conversion price of NIS 12.00 (approximately $3.30) per share. As of the conversion date, the Adjusted Conversion Price was NIS 6.58 ($1.80) per share. |
| ● | If conversion occurs more than six months after the loan issuance date, the number of shares issued upon conversion is calculated based on the principal plus accrued interest over the full contractual term. |
| ● | The conversion price is subject to customary anti-dilution adjustments if the we issue equity securities at a price below the initial conversion price | |
| ● | In connection with the issuance of each convertible loan, we issued detachable warrants to purchase ordinary shares. |
| ● | The warrants are unlisted and exercisable during the loan term, subject to price-based adjustment mechanisms tied to subsequent equity issuances. |
40
Loans Issued During 2022
In December 2022, our Board of Directors approved a convertible loan agreement with Mr. Alex Katz, pursuant to which the lender provided proceeds of NIS 3.5 million (approximately $1,032,000). The loan had an initial maturity date of December 1, 2024. In connection with the loan, we also issued 250,000 warrants to purchase 250,000 ordinary shares, exercisable until December 1, 2024. For additional information regarding this loan, see “Related Party Transactions — Shareholder Loans — Alex Katz”
During the same period, we entered into an additional convertible loan agreement with Mr. Yoav Sharon, pursuant to which we received proceeds of NIS 1.0 million (approximately $295,000). In connection with the loan, we also issued 71,429 warrants to purchase 71,429 Ordinary Shares, exercisable until December 1, 2024.
Loans Issued During 2023
In February 2023, we approved a convertible loan framework with Mr. Zohar Rappaport, pursuant to which Mr. Rappaport committed to provide up to NIS 2.5 million (approximately $695,000). In February 2023, we received an initial tranche of NIS 1.0 million (approximately $273,00). The loan had an initial maturity date of February 26, 2025. In connection with this loan, we issued 71,429 warrants to purchase 71,429 Ordinary Shares exercisable until February 26, 2025. For additional information regarding this loan, see “Related Party Transactions — Related Party Loans — Zohar Rappaport and Maayan Zvi.”
In April 2023, we entered into a convertible loan agreement with Ms. Maayan Zvi, under which we received gross proceeds of NIS 1 million (approximately $273,000). The loan had an initial maturity date of October 3, 2024. In connection with this loan, we issued 71,429 warrants to purchase 71,429 Ordinary Shares, exercisable until October 3, 2024. For additional information regarding this loan, see “Related Party Transactions — Related Party Loans — Zohar Rappaport and Maayan Zvi.”
In May 2023, we approved a convertible loan agreement with Mr. Pinhas Hertz, pursuant to which we received proceeds of NIS 1.0 million (approximately $273,000). The loan had an initial maturity date of May 3, 2025. In connection with this loan, we issued 71,429 warrants to purchase up to 71,429 Ordinary Shares, exercisable until May 3, 2025.
In July 2023, we entered into an additional convertible loan agreement with a group of lenders including Mr. Alex Katz, Mr. Eliot Tannenbaum, Mr. Dov Tannenbaum, and Mr. David Binyamin Greenberg, or the Tannenbaum Group, pursuant to which we received aggregate proceeds of NIS 4.0 million (approximately $1,079,000), split among the lenders. The maturity date of this loan was originally on July 2, 2025. In connection with this loan, we issued an aggregate of 285,714 warrants to purchase 285,714 Ordinary Shares, exercisable until July 2, 2025. For additional information regarding this loan, see “Related Party Transactions — Shareholder Loans — Alex Katz.”
Loans Issued During 2024
In May 2024, we entered into a convertible loan agreement with Mr. Ofer Eytan, Mr. Moshe Danino, Mr. Micha Pegasus, and Mr. Tal Levinson, pursuant to which we received aggregate gross proceeds of NIS 2.0 million (approximately $535,000), split among the lenders. The maturity date of this loan was May 19, 2026. In connection with the loan, we issued 142,857 warrants to purchase up to 142,857 Ordinary Shares, exercisable until May 19, 2026.
Loan Conversions and Amendments
Beginning in July 2024, we entered into several conversion and amendment agreements with lenders to convert outstanding principal and accrued interest into equity, modify warrant terms, and restructure obligations approaching maturity.
In July 2024, we converted loans from Mr. Yoav Sharon and Mr. Pinhas Hertz with an aggregate balance of approximately $649,000 into 367,738 ordinary shares. As part of the conversion, the exercise price of 142,858 existing warrants was adjusted to NIS 7.68 (approximately $2.10) per warrant, and we issued an additional 180,000 warrants at an exercise price of NIS 10.50 (approximately $2.90) per warrant.
41
In September 2024, we converted loans from Mr. Micha Pegasus and Mr. Tal Levinson with an aggregate balance of approximately $102,000 into 110,320 Ordinary Shares. The exercise price of 32,142 outstanding warrants was adjusted to NIS 7.68 (approximately $2.10) per warrant.
In December 2024, we converted loans from Mr. Ofer Eytan and Mr. Moshe Danino with an aggregate balance of approximately $383,000 into 566,990 Ordinary Shares. The exercise prices of outstanding warrants were revised to NIS 3.73 (approximately $1.00) and NIS 4.51 (approximately $1.20) per warrant, respectively.
Subsequent Restructuring and Settlement Agreements
Between February and November 2025, we entered into multiple restructuring and settlement agreements, or the Settlement Agreement, with Mr. Rappaport, Ms. Zvi, Mr. Hertz, and certain assignees. These arrangements provided for revised conversion mechanics, conditional price adjustments tied to the effectiveness of a registration statement on Form F-1, and contingent issuances of shares or warrants depending on the achievement of specified milestones by June 30, 2026.
In February 2025, pursuant to the original loan framework agreement, Mr. Rappaport provided the Company with an additional loan in the amount of $211,000 and opted to assign his right to provide an additional loan of approximately $211,000 to Mr. Hertz.
In October 2025, we entered into a settlement and conversion agreement with Mr. Rappaport, Ms. Zvi, and certain assignees for the conversion of outstanding loan balances. Under these agreements, we agreed to issue 595,744 Ordinary Shares at a conversion price of NIS 6.58 (approximately $1.80) per share, provided that we receive approval of the Ordinary Shares for listing on a tier of The Nasdaq Stock Market and the effectiveness of a registration statement covering the resale of the Ordinary Shares, or the Nasdaq Milestones. Because we did not achieve the milestone relating to the receipt of Nasdaq approval by June 30, 2026, the effective conversion price of these Ordinary Shares was reduced to NIS 2.91 (or approximately $0.88).
In addition, we agreed to allocate to one of the lenders, Mr. Eytan, 1,200,000 warrants to purchase up to 1,200,000 Ordinary Shares exercisable for a period of 12 months from the effective date of this registration statement at an exercise price of $2.00 per share, provided that we achieve the Nasdaq Milestones by June 30, 2026. Because we did not achieve the milestone relating to the receipt of Nasdaq approval by June 30, 2026, pursuant to the agreement with Mr. Eytan, we instead issued 750,000 share rights to Mr. Eytan. On July 1, 2026, the share rights were converted into 750,000 Ordinary Shares following TASE approval.
Equity Related Transactions
On February 14, 2024, we conducted a securities offering in which we issued 262,064 Ordinary Shares for total gross proceeds of approximately $447 thousand.
On October 22, 2024, we entered into an investment agreement with Amalul Investments Ltd., pursuant to which we issued 167,173 Ordinary Shares for a total gross proceeds of $291 thousand. In addition, we issued 167,173 warrants to purchase up to 167,173 Ordinary Shares with an exercise price of NIS 7.68 (approximately $2.11) per share and 334,346 warrants to purchase up to 334,346 with an exercise price of NIS 10.50 (approximately $2.89). The warrants are exercisable until March 21, 2026.
On December 8, 2024, we entered into an investment agreement with Flash Projects K.E. Ltd., or Flash, pursuant to which we issued 60,790 Ordinary Shares for a total gross proceeds of $112 thousand. In addition, we issued 60,790 warrants to purchase up to 60,790 Ordinary Shares at an exercise price of NIS 7.68 (approximately $2.11) per share, and 110,265 warrants to purchase up to 110,265 ordinary shares at an exercise price of NIS 10.50 (approximately $2.89) per share. The warrants are exercisable until May 7, 2026.
On December 21, 2024, we entered into an investment agreement with Ms. Vivian Trau pursuant to which we issued 135,597 Ordinary Shares for a total gross proceeds of $249 thousand. In addition, we also issued to her 135,598 warrants to purchase up to 135,598 Ordinary Shares at an exercise price of NIS 10.50 (approximately $2.89) per share. The warrants are exercisable until May 20, 2026.
On December 26, 2024, our Board of Directors approved the issuance to Flash of 157,400 Ordinary Shares in settlement of an underwriting advisory services of $116 thousand.
In March, 2025 we issued to Mr. Alex Katz, in connection with a private placement, 74,627 Ordinary Shares and 74,627 warrants to purchase up to 74,627 Ordinary Shares at an exercise price of NIS 10.50 ($2.90) per share for total gross proceeds of $140 thousand.
On April 6, 2025, we entered into an investment agreement with A.I. Azimuth Capital, Limited Partnership, or Azimuth, pursuant to which we issued 1,118,163 Ordinary Shares for total gross proceeds of $2.9 million. In connection with the transaction, we issued to Flash, 78,252 Ordinary Shares and 200,000 warrants to purchase up to 200,000 Ordinary Shares at an exercise price of NIS 14.00 (approximately $4.20) per share, and 150,000 warrants to purchase up to 150,000 Ordinary Shares at an exercise price of NIS 10.50 (approximately $3.10) per share, as consideration for services rendered in introducing Azimuth to us and facilitating the investment transaction. The warrants are exercisable until October 5, 2026.
42
On May 13, 2025, we entered into separate investment agreements with two investors, pursuant to which we agreed to issue, by way of private placement, an aggregate of 480,000 Ordinary Shares for total gross proceeds of $2 million. Under the terms of the investment agreements, if we conduct an additional equity financing at an effective share price below NIS 9.42 (approximately $2.80) per share, each investor will be entitled to receive additional Ordinary Shares pursuant to the adjustment mechanism specified therein. In addition, we issued to the investors (i) warrants to purchase up to 200,000 Ordinary Shares at an exercise price of NIS 18.00 (approximately $5.35) per share and (ii) warrants to purchase up to 160,000 Ordinary Shares at an exercise price of NIS 22.50 (approximately $6.70) per share. The warrants are exercisable until November 6, 2026.
On August 21, 2025, our audit committee and board of directors approved, and on November 26, 2025, our shareholders approved, our entry into the 2025 Warrant Inducement Agreement with Mr. Katz and the Tannenbaum Group pursuant to Section 270(4) of the Israeli Companies Law. Under the 2025 Warrant Inducement Agreement, Mr. Katz and the Tannenbaum Group separately agreed to exercise all warrants held by them no later than two business days following the date on which we inform them that we received approval to list our Ordinary Shares on Nasdaq. In consideration for this commitment, we agreed to register with the SEC 934,627 Ordinary Shares underlying the warrants. On March 24, 2026, the investors under 2025 Warrant Inducement Agreement transferred to us a total amount of $2.7 million on account of the commitment to exercise all warrants held by them.
On August 23, 2025, we entered into a securities purchase agreement with Mr. Alex Katz, or the August 2025 SPA, for the issuance of 921,621 ordinary shares in a private placement of up to $5 million in aggregate gross proceeds, subject to the satisfaction of certain conditions, including the receipt of approval to list our Ordinary Shares on Nasdaq. In connection with the August 2025 SPA, we agreed to grant Mr. Katz registration rights with respect to the resale of the Ordinary Shares. On August 21, 2026, following the passage of the nine-month termination period without receiving approval to list our Ordinary Shares on Nasdaq, or the consummation of the closing, Mr. Katz terminated the August 2025 SPA.
On October 22, 2025, following the approval of our audit committee and board of directors, and on November 26, 2025, following the approval of our shareholders, we entered into the Settlement Agreement with certain lenders and assignees, including Mr. Zohar Rappaport, Ms. Maayan Zvi, Mr. Pinhas Hertz, and Mr. Ofer Eytan, to settle our obligations under previously issued convertible loan agreements. Under the Settlement Agreement, we agreed to allocate 595,744 Ordinary Shares to the relevant assignees at a conversion price of NIS 6.58 (approximately $2.01) per share, subject to reduction to NIS 2.91 (approximately $0.91) per share if we do not receive Nasdaq listing approval by June 30, 2026. Because we did not achieve the milestone relating to the receipt of Nasdaq approval by June 30, 2026, the effective conversion price of these Ordinary Shares was reduced to NIS 2.91 (or approximately $0.91).
In addition, we agreed to allocate to Mr. Eytan, 1,200,000 warrants to purchase up to 1,200,000 Ordinary Shares exercisable for a period of 12 months from the effective date of this registration statement at an exercise price of $2.00 per share, provided that we achieve the Nasdaq Milestones by June 30, 2026. Because we did not achieve the milestone relating to the receipt of Nasdaq approval by June 30, 2026, pursuant to the agreement with Mr. Eytan, we instead issued 750,000 share rights to Mr. Eytan. On July 1, 2026, the share rights were converted into 750,000 Ordinary Shares following TASE approval.
All participating lenders and assignees irrevocably waived any claims relating to the original loan agreements. Depending on subsequent exercises or allocations, the securities issued under the Settlement Agreement may represent approximately 4% of our fully diluted share capital as of the date of the arrangement.
On August 21, 2026, we entered into the August 2026 Private Placement. Pursuant to the securities purchase agreements, each purchaser, agreed to purchase, and we agreed to issue and sell to such purchaser, Ordinary Shares in a private placement in reliance on Regulation S under the Securities Act and, to the extent applicable, Section 4(a)(2) of the Securities Act. In connection with the August 2026 Private Placement, the purchasers separately agreed to purchase, and we separately agreed to issue and sell in private placements, an aggregate of 1,131,616 Ordinary Shares at a purchase price of NIS 13.22 ($4.42) per Ordinary Share, subject to customary adjustments for share splits, share dividends, share combinations and similar transactions, for aggregate gross proceeds of $5 million. The August 2026 Private Placement is subject to the achievement of a specified milestone, or the Milestone, and the receipt of the SEC’s approval of the Registration Statement and Nasdaq’s approval for the listing of the Company’s securities for trading on Nasdaq. The Milestone will be achieved when both (i) the SEC has completed its review of this registration statement on Form F-1 and has indicated that it has no further comments and (ii) Nasdaq has completed its substantive review of our listing application and has indicated that no further comments or substantive conditions remain outstanding, other than the consummation of the applicable closing and other customary conditions required for final listing approval.
Upon achievement of the Milestone, we are required to notify the purchasers, and each purchaser will be required, within one Business Day following such notice, to pay its applicable purchase price to us by wire transfer of immediately available funds. Immediately upon effectiveness of this registration statement, we are required to deliver to each purchaser the Ordinary Shares purchased by such purchaser.
However, if following a purchaser’s payment of its applicable purchase price, Nasdaq’s final approval for the listing of the Ordinary Shares on Nasdaq has not been obtained and the listing process has not been completed within seven business days, we will be required to return the full amount funded by the applicable purchaser.
The securities purchase agreements may be terminated by each purchaser, solely with respect to such purchaser’s obligations thereunder and without affecting the obligations of the other purchasers, if the applicable Closing has not occurred within 14 days after the date of the applicable securities purchase agreement. Such 14-day period may be extended for an additional 14 days by mutual consent of the applicable parties.
43
Share-Based Compensation
Since our inception, we have granted equity grants to our employees, officers, directors, consultants and service providers to purchase our Ordinary Shares under our 2020 Plan. For a description of the equity grants to see “Management — Equity Incentive Plan” above.
Grants and other Funding Arrangements
The following table sets forth a summary of grants we have received from various institutions and government authorities as of the year ended December 31, 2025.
| Institution/Government Authority | Approved Grant | Aggregate Amount received up to December 31, 2025 | Total liabilities in respect of grants received (including interest) included in financial statements | |||||||||
| (U.S. dollars, thousands) | ||||||||||||
| IIA | $ | 4,323 | $ | 3,045 | $ | 3,409 | ||||||
| BIRD Energy | 665 | 665 | 665 | |||||||||
| Total | $ | 4,988 | $ | 3,710 | $ | 4,074 | ||||||
Current Outlook
As of December 31, 2025, our cash and cash equivalents were approximately $3,942 thousand, and we had a working capital deficit of $3,182 thousand and an accumulated deficit of $43,482 thousand Based upon our currently expected level of operating expenditures and the anticipated proceeds from the August 2026 Private Placement and 2025 Warrant Inducement Agreement, we expect that our existing cash and cash equivalents will be sufficient to fund operations through the next 24 months.
We have financed our operations to date primarily through funds raising, convertible loans, grants from the IIA and exercise of options from investors.
We expect to generate revenues from the sale of our products and other revenues in the future. However, we do not expect these revenues to support all of our operations in the near future. We expect our expenses to increase in connection with our activities, particularly as we continue the development and manufacturing of our products, and continue our commercialization efforts. Accordingly, we expect that we will require substantial additional funding in connection with the growth of our operations, continuing our research and development activity, and commercializing our products. Until we can generate recurring revenues and profit, we expect to satisfy our future cash needs through debt and equity financings. However, there is no assurance that we will be successful in accomplishing these plans. If we are unable to obtain sufficient capital, we may need to reduce, delay, or adjust our operating expenses, including commercialization of our products or be unable to expand our operations, as desired. We expect to continue incurring losses and negative cash flows from operations until our products reach profitability. Even if we raise the proceeds from this offering, we do not believe that such proceeds will be sufficient to complete all research and development activities necessary to commercialize our products. See also “Risk Factors – Risks Related to Our Financial Condition and Capital Requirements — We have not generated any revenue and there can be no assurance that we will ever be profitable.”
Off-Balance Sheet Arrangements
We have off-balance sheet arrangements in connection with grants received from IIA and BIRD. As of December 31, 2025, we had received aggregate grants of approximately $3 million from the IIA and approximately $0.7 million from BIRD. With respect to the royalty-bearing grants, we are required to pay annual royalties to the Israeli government at rates ranging from 3% to 5% on revenues derived from the use of technologies developed under IIA, the Israeli Ministry of Economy and Industry, and the Israeli Ministry of Energy programs. Royalty payments are required only to the extent that revenues are generated from the funded technologies and are payable up to the total amount of grants received, together with interest. Grants approved prior to June 30, 2017 bear the annual interest rate applicable at the time of approval. Grants approved thereafter generally bear interest based on the 12-month Secured Overnight Financing Rate (SOFR) (or an alternative rate published by the Bank of Israel) plus 0.72%, and grants approved after January 1, 2024 bear the higher of (i) 12-month SOFR plus 1% or (ii) a fixed annual interest rate of 4%. In addition, under the BIRD Energy program, we are obligated to pay annual royalties at a rate of 5% of revenues derived from technologies developed under that program, up to a maximum repayment cap of 150% of the grant amount, subject to the terms of the applicable agreement with the BIRD Foundation. Our obligations to repay grants received under the IIA and BIRD Energy programs are contingent upon the generation of revenues from the funded technologies, and no repayment obligation is required in the absence of such revenues.
We do not believe that off-balance sheet arrangements and commitments are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
44
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. We evaluate on an ongoing basis its assumptions. Our management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates
We believe the following assumptions and estimates are most critical to understanding and evaluating our reported financial results.
Share-based compensation
We measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include options, and performance-based awards. We amortize such compensation amounts, if any, over the respective service periods of the award, or based on the performance conditions, or immediately in some cases. We use the Black-Scholes Model, an acceptable model in accordance with ASC 718, Compensation-Stock Compensation, to value options. Option valuation models require the input of assumptions, including the expected life of the stock-based awards, the estimated stock price volatility, the risk-free interest rate, and the expected dividend yield. The risk-free interest rate assumption is based upon the yield from Israel Treasury zero-coupon bonds with an equivalent term. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the term of the award. Our calculation of estimated volatility is based on historical stock prices over a period equal to the expected term of the awards. The average expected life of options was based on the contractual terms of the stock option using the simplified method. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention to pay cash dividends. The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future. We recognize the compensation expense for share-based compensation granted based on the grant date fair value estimated in accordance with ASC 718. We generally recognize the compensation expense over the employee’s requisite service period. We account for forfeitures when they occur.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our current investment policy is to invest available cash in bank deposits with banks that have a credit rating of at least A-minus. Accordingly, some of our cash and cash equivalents are held in short term deposits that bear interest. Given the current low rates of interest we receive, we will not be adversely affected if such rates are reduced. Our market risk exposure is primarily a result of U.S. dollar/NIS/Euro exchange rates.
JOBS Act Accounting Election
We are an “emerging growth company.” Under the JOBS Act, an emerging growth company can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will not be subject to the same new or revised accounting standards as public companies that are not emerging growth companies.
45
Overview
Founded in 2014 in response to technologically address the threat of climate change and the lack of grid capacity, we develop combined heat and power, or CHP, systems based on multifuel microturbines, or microturbines. These microturbines are used for local electricity, energy, and heat production.
Upon completion of our research and development, we will transition to manufacturing and installing our first developed microturbine system, the TG-40, which produces up to 40 KW of electrical energy and up to 60 KW of heat. We are designing the TG-40 prototype to be highly efficient at producing energy. We are currently developing the TG-40 for the purpose of lowering production, assembly, and maintenance costs, which will enable us to increase the number of potential installation sites, in part due to its low weight and agile modularity, compared to existing solutions in the 40 KW to 1 MW range. In December 2025, we entered into a supplier agreement with a European company for the planned scaled production of our TR3200 microturbine system. As of the date of this prospectus, we have placed an order for twelve systems, three of which are expected to be installed in fourth quarter of 2026, and an additional nine over the next twelve months. In addition, we are in the process of negotiations with one European Union-based company and one United States-based company for research and development stage of a range of technologies related to our CHP systems.
In addition to our TG-40 system and TR3200 system, we completed the assembly of our first TR8000 system, an 80 KW system designed for large buildings and micro data centers, and are developing new mobile and stationary microturbine systems ranging from 20 KW to 100 KW as further described below in the section entitled “Our Technology”.
As of the date of this prospectus, we are a development stage company that possesses production capacity intended solely for demonstration purposes and we have not generated any revenues. However, we are in the process of transitioning from development to commercial production and are preparing for commercialization of our products.
As part of our transition into scaled production, we are refining and adapting our systems to the requirements of the production lines, assembly capabilities, and the applicable standards and regulations in the United States and Europe. Accordingly, the technical data of our systems, including power output, weight, and efficiency rates, may change and be updated compared to the initial development specifications, depending on the model produced, its type, and additional requirements.
We believe that our microturbine technology can address four main interconnected challenges: the increasing difficulty in maintaining legacy energy infrastructures, including electrical transmission grids; the increasing demand for electricity, the rising importance in highly energy-intensive infrastructure projects such as building, small server farms or small data centers and maintaining their operational resiliency, and the increasing electrification of power sources; the demand for cost efficiency in energy sources; and the reduction of carbon emissions.
We expect to market and sell our microturbines to owners and developers of building clusters, such as office buildings, residential buildings, hospitality buildings, “off-grid consumers,” and server farms. Our primary target markets are those that possess advanced natural gas grids, such as the United States and countries in the European Union.
We aim to become a global leader in the field of local generation of energy, electricity, and heat, as well as in EMS management. Our systems are designed to incorporate natural gas, landfill gas, diesel and hydrogen in varying compositions to produce energy.
We intend to continue differentiating our products by leveraging our multi-fuel combustion capabilities, high-efficiency turbine compressor units, enhanced modularity, relatively low weight, and reduced operation and maintenance costs. We are offering an EaaS model, under which customers enter long-term agreements to purchase the electricity and heat our systems generate with little to no upfront cost, or, alternatively, may purchase an installed unit at full cost along with a service contract.
Additionally, we plan to offer on-demand integration of our products with existing off-the-shelf market solutions, such as energy storage , heat storage enabling the deployment of a localized micro-grid. This will include comprehensive energy management capabilities that cover both electricity and heat supply to a designated area from multiple sources.
46
The Need
Rapid urban expansion in recent years has increased energy consumption worldwide, placing greater strain on existing power grids. In New York City, for example, approximately 70% of carbon emissions originate from buildings. A 2024 review based on United Nations urbanization data indicates that approximately 55% of the global population currently resides in urban areas, with projections estimating an increase to 68% by 2050. In light of these megatrends, the need for technologies that enable reliable local electricity generation has increased significantly, making microturbines an attractive solution. Businesses, residential complexes, and commercial buildings in urban areas are investing in local energy production to ensure a continuous power supply while reducing reliance on centralized grids. These systems provide efficient CHP solutions, allowing urban facilities to generate electricity and useful thermal energy from a single fuel source. Urban areas focus on sustainable energy generation, which microturbines enable by integrating with renewable energy sources such as biogas and hydrogen. Moreover, their compact size and ability to operate in space-constrained environments make micro turbines ideal for dense urban areas. Therefore, as urbanization worldwide increases, demand for micro-grid solutions, such as microturbines, is also rising.
Increasing construction in urban areas and rising energy demand have become a challenge for governments, utility companies, and energy companies. Ensuring that industries, businesses, and private citizens have a constant, economic, and plentiful supply of energy is important. Our microturbine technology, if implemented at scale, can supplement or even substitute existing energy infrastructure by acting as local on-site microgrid energy sources. Policymakers globally have called for clean energy solutions with the stated aims of reducing carbon emissions and increasing local energy production, particularly for power and heating.
We believe that our CHP technology is more efficient than traditional methods, such as power grid and boiler sources, and has the potential to reduce costs, contribute to energy security and make energy usage more efficient. The need for our microturbine technology is highlighted in the following categories: energy demand, the limitations of the electric grid, and responding to the incentives provided by governing bodies.
Challenges of Increasing Energy Demand
Certain trends in the global economy, such as the rise in usage and demand for computing power, have led to increasing energy demand.
Our range of products has the potential to respond to these energy demands through our effective and scalable technology. We believe that our products have certain advantages over other energy companies, including the ability of the CHP systems to contribute to peak shaving and adjust to changes in demand on existing energy systems and the future possibility to sell electricity back to the electrical grid.
Challenges of Updating Electric Grids and Renewable Energy Integration
There are certain challenges related to electric grids in developed nations. In the United States, much of the electricity transmission infrastructure is more than 40 years old, reflecting a greater need for maintenance. Moreover, older infrastructure may not be suited to meet current and future energy demands, especially with the increase in renewable energy sources that require grid modernization. As a result of costs and budget shortfalls, maintenance on several electric grids has been deferred, leading to the deterioration of the infrastructure, making it more susceptible to regular failures and outages. In addition to the wear and tear accumulated over the years, climate change and the increase in extreme weather events cause ongoing damage to the infrastructure and frequent power outages. Furthermore, the transition to renewable energy sources requires significant upgrades to the electricity grid to manage the variability and distribution of these energy sources. Energy storage solutions and smart grid technologies are needed to integrate renewable energy efficiently, which requires investment. According to a 2020 study by faculty and researchers at the Andlinger Center for Energy and Environment and the High Meadows Environmental Institute, the U.S. would need to spend at least $2.4 trillion by 2050 to expand transmission systems to handle the increase in renewables. Integrating renewable energy into the electricity grid is, therefore, a long-term project that may not meet immediate energy needs.
47
According to a Long-Term Reliability Assessment published by the North American Electric Reliability Corporation in December 2023, renewable energy generation will have an output of 330 GW by 2033, based on ongoing assessment of the energy transition and reliability of the bulk power system, considering the increasing integration of energy sources such as wind and solar into the electricity grid. This requires the requisite infrastructure.
We believe that our microturbines can play a fundamental role in complementing and easing pressure on electrical grids by acting as on-site CHP sources, thereby facilitating peak saving, load management, backup power, and energy resiliency.
Rising Use of Electric Vehicles
According to International Energy Agency Global EV Outlook 2025, approximately 17.29 million electric vehicles were sold worldwide in 2024. This represents a growth rate of about 26.1% compared to 2023. According to estimates, the expected future demand for electric vehicles in the U.S. alone is projected to increase by approximately 45%, and an additional investment of around $1 trillion in infrastructure will be required by 2050.
Energy Regulatory Regimes
Major economies, such as the European Union and the United States, have begun implementing regulations on energy performance in buildings.
European Union
As part of the Renewable Energy Directive legal framework, the European Commission implemented the “Clean Energy for All Europeans” package, which imposes energy-efficiency regulations on buildings, as buildings account for 35% of carbon emissions in the European Union. We believe our microturbine technology aligns with the goals of these regulatory regimes regarding energy efficiency.
With the European Union considering investment in natural gas and nuclear energy under the Commission Delegated Regulation (EU) 2022/1214, we have seen an increase in queries from potential customers and investors in Europe.
Germany
Under the supervisory regulation of the Federal Officer for Economic Affairs and Export Control in Germany, operators of CHP plants receive funding based on the power share, provided that the CHP plant fulfils certain efficiency and modern technology requirements. Figure 1 below illustrates an example of the calculation of the CHP surcharge pursuant to the German Combined Heat and Power Act (Kraft-Wärme-Kopplungsgesetz) 2020, or the 2020 CHP Act.
Figure 1: Calculation of the CHP Surcharge Pursuant to the 2020 CHP Act.
United States
New York City passed into law Local Law 97 that imposes strict energy efficiency and greenhouse gas emission limits, having estimated that buildings account for approximately two-thirds of greenhouse gas emissions in New York City.
48
Energy Subsidies
The federal government opened applications in July 2023, 8-year program, for states and territories to implement $8.5 billion for home energy rebates.
Our Technology
We are developing a multifuel microturbine for on-site, local production of electricity and heat in buildings, which operates on natural gas derived from natural sources such as biogas, landfill gas, and renewable sources, and is primarily intended for the CHP markets in the U.S. and Europe, where advanced natural gas distribution infrastructure is in place, as well as for off-grid applications. The microturbine’s outputs – combined heat and power – are used to heat water in buildings, thereby increasing total energy efficiency. The microturbine is either integrated into below-grade spaces or affixed to rooftop structures. We have completed development of the TG-40. In addition to our TG-40 and TR3200, we are developing new mobile and stationary microturbine systems ranging from 20 KW to 80-100 KW, as further described below.
Figure 2 below illustrates the distribution of fuel input and the corresponding electrical and thermal outputs of a typical CHP system.
Figure 2: Example of CHP Power and Heat Output Distribution
Our multifuel microturbine is designed to generate energy from a range of energy sources, including natural gas and, a mix of hydrogen and landfill gas, Landfill gas is produced by the decomposition of organic waste in landfills and consists primarily of a mixture of methane and carbon dioxide. When captured, the methane can be used to generate electricity, heat, or be purified into renewable natural gas. Using landfill gas as a fuel source reduces potent greenhouse gas emissions while displacing the use of fossil fuels. We design and manufacture multiple sizes of microturbines to generate electricity and heat using a range of energy sources.
TG-40
We have completed development of the TG-40 and are currently conducting commissioning for testing purposes, including subsystem and integration tests, as well as multi-fuel combustion tests, including operation using hydrogen. The TG-40 is designed to generate electricity and heat in medium sized residential buildings with 60 to 80 housing units, with up to 33% efficiency and an overall efficiency of up to 90%, and is designed to emit 25 parts per million of carbon oxide. Technical specifications for commercial production version of the TG-40, including power output, weight, and efficiency, are subject to change as we adapt the system to production line and regulatory requirements.
In May 2024, the TG-40 microturbine was installed at the first demonstration site and began operation in accordance with the provisions of the agreement. For more information regarding the negotiations, see “Business – Our Agreements – ENPG Agreement.” Following the commencement of operation, we expect to complete the process of meeting the required UL1 standards for commercial installations in the United States.
| 1 | Underwriters Laboratories Inc., which to the best of the company’s knowledge is an independent accredited safety laboratory approved by the U.S. federal agency OSHA (Occupational Safety and Health Administration) (UL). |
49
TR3200
The TR3200 is a 32 KW microturbine system designed for the local production of electricity and heat in various types of buildings, with high energy efficiency of approximately 33%, and a combined efficiency of up to 90%, and an estimated weight of approximately 1,500 kilograms. As of the date of this prospectus, we have produced the first three TR3200 systems and are working toward initial installations. In connection with the Supplier Agreement (as defined below), we have ordered base systems from the Supplier, a European company operating in the turbine industry, and incorporate our technology on the TR3200 system. For more information regarding the negotiations, see “Business – Our Agreements – Supplier Agreement with a European Turbine Industry Supplier.” Technical specifications for the TR3200, including power output, weight, and efficiency, are subject to change as we adapt the system to production line and regulatory requirements.
We intend to complete the production and assembly of a total of 12 TR3200 systems and carry out initial installations of at least three systems in the fourth quarter of 2026.
TG-120
The TG-120 is a microturbine under development that is designed to generate 120 KW of energy, and is being designed to generate energy in larger residential buildings numbering 120 to 160 housing units. The TG-120 is designed to operate up to 90% efficiency for electric and heat energy output, an estimated weight of 1,800 kilograms. The TG-120 is based on the TG-40 core technology. The TG-120 is a scaled version of the TG-40, with the increased output based on jet engine technology.
We received approval for a grant of NIS 2 million (approximately $570,000) from the IIA to develop the TG-120 with a capability to operate on a mixture of up to 50% hydrogen and 50% natural gas. The development includes adapting the combustor to operate on hydrogen including the required technological improvements to the microturbine. In March 2024, we began modifying the combusting system of this microturbine. As of the date of this prospectus, we are currently focusing on the completion and testing of the TG-120, while simultaneously proceeding with the procurement of components for an additional ten systems. We are targeting the completion of the system certification review and the commencement of initial installations in the fourth quarter of 2026.
TR8000 System
The TR8000 is an 80 KW microturbine system designed for large buildings, either as a standalone unit or in combination of several units, to reach high electricity production capacities, including for micro data centers. The TR8000 has energy efficiency of up to 88% and an estimated weight of 1,800 kilograms. The system is based on components developed in cooperation with a U.S.-based company.
In July 2026, we completed assembly of our first TR8000 system and commenced internal test runs. We expect to transfer the system to a demonstration site in Israel for continuous test runs prior to commercialization and, thereafter, to ship the system for installation outside Israel. We estimate that installation of the system will begin in the fourth quarter of 2026.
By the end of 2026, with the commencement of our scaled production line, we expect to have installed at least four systems, ranging from our 32 KW systems to our 80-100 KW systems, in the U.S. and Europe. By the end of 2027, we expect to have installed six more systems in the U.S., with some installations in Europe.
Our Microturbines
Below is a conceptual diagram of the design of the microturbine for all kilowatt ranges:
Figure 3: Conceptual Diagram of Microturbine Design Across Kilowatt Ranges.
50
Below is a diagram rendering the exterior of the microturbine:
Figure 4: Diagram of the Microturbine Exterior.
We are currently developing and implementing a system that includes an option for remote command and control, including a control cabinet that monitors system energy production and performance. The system, which could be operated remotely, is also being designed to generate analyses from the microturbine’s live performance data.
Energy Management System
We are integrating our EMS with our microturbine, enabling the management of energy sources for both production and storage, with the goal of creating a localized microgrid that optimizes energy production and reduces costs. We are currently preparing the infrastructure for connecting all system models for data reading for the EMS, and intend to present a first version of the EMS adapted for building applications in the fourth quarter of 2026. According to our assessment, the EMS will be available for commercial sales beginning in the first half of 2027.
Our products are distinct from the existing technology currently available in the CHP market. The advantages of our microturbines include:
| 1. | The patented cooling technology of the internal components that enables the microturbine to operate at higher temperatures and, therefore, increases energy efficiency. |
| 2. | The use of alloys, MARM 247 and Hastelloy X, in the microturbines and all thermodynamic components which are built to withstand high temperatures and extend the lifespan and increases the efficiency of the system. |
| 3. | The microturbines’ modular system architecture enables optimization of each sub-system separately and increases efficiency. This allows for the maintenance and service of the microturbines in a fast and accessible manner, thus shortening maintenance times, resulting in shorter downtime. The modularity enables the microturbine to adapt to different fuels and configurations, including hybrid configurations with renewable energy sources. |
| 4. | Our fuel injector enables an instant switch between liquid and gas fuels. This enables end users to flexibly utilize various fuel sources based on availability and cost. This feature would be useful in the case of a seismic event, whereby the user could replace gas with liquid fuel as backup in case of an emergency. |
| 5. | Our future lubricant-free bearing system improves system performance and reduces production, assembly and maintenance costs. |
51
Business Strategy and Addressable Markets
We aim to pursue an EaaS sales model where customers would enter into long term agreements with us and purchase the CHP-generated energy, with little to no fixed costs or down payment paid by the customer. Additionally, we will offer customers the option to purchase systems accompanied by a service contract. In the EaaS model, the installation and maintenance of our microturbine as well as the installation would be self-financed. We intend to generate revenue from the paid energy usage of our systems installed at the customers’ chosen building designations. In addition to the system, we will offer EMS, which will manage and reduce energy consumption and cost. To demonstrate our capabilities, we intend to deploy demonstration units at selected locations, to showcase the efficiency of our systems and highlight potential energy cost savings of up to 15% achievable due to our microturbine technology.
On January 20, 2025, we announced an update to our business model, intended to enhance flexibility in the services and products offered to customers by adding, alongside our core EaaS model, an option to sell systems to customers who prefer such an arrangement. Our core business model remains EaaS model which, according to our assessment, is expected to continue serving as a central component of its operations in the coming years. Our long-term vision is to become a micro-grid global supplier of electricity, heat, and energy management systems in the urban market, offering a comprehensive energy management tools, and a supplier of electricity and heat from multiple sources by teaming up with energy service companies, such as EnPower Group, or ENPG, and energy companies active in the market to promote our solutions in the designated markets both in the U.S. and in the EU.
Our addressable markets are buildings in urban areas, especially, but not limited to office buildings, nursing homes, hospitality buildings, and data centers. We seek to engage in long-term business relationships based on multi-year framework agreements.
The table below shows on-site electricity generation among select end-use sectors, in 2021-2050 billion KW hours:
Figure 5: One-Site Electricity Generation Among Select End-Use Sectors, 2021-2050
Turbine manufacturers primarily develop CHP systems with a capacity in the range of MW. We, in contrast, develop microturbines with outputs of 40 KW to 1 MW to fit in existing and new buildings in urban settings.
52
In the U.S., the Department of Energy has stated in its report titled “Combined Heat and Power (CHP) Technical Potential in the United States” as of March 2016 that in the 50 KW to 500 KW category, there is a consumption potential of 26,422 MW per year in CHP and in the 500 KW to 1 MW category, there is a consumption potential of 22,543 MW per year in CHP in the United States.
On the basis of this data, we believe that the market for residential and commercial buildings in which the installation of CHP systems is economically feasible amounts to 517,517 residential sites and 291,902 commercial sites in the United States, as outlined below:
| Residential | Our Potential Market |
Large Buildings | Total Potential Accessible Market | |||||||||
| Size of Buildings (in Units) | 100-199 | 200-299 | 300-499 | 500-799 | Over 800 | |||||||
| Total sites | 281,359 | 106,451 | 76,158 | 30,554 | 22,449 | 517,517 | ||||||
| Our Potential Market |
Large CHP Systems | Total Potential Accessible Market | ||||||||||
| Commercial CHP Supplier |
50-500 KW | 0.5-1 MW |
1-5 MW |
Up to 20 MW | Over 20 MW | |||||||
| Total sites | 220,459 | 44,140 | 23,305 | 3,197 | 800 | 291,902 | ||||||
As of December 31, 2024, the average cost of one KW per hour in the United States was $0.1626, based on the U.S. Energy Information Administration’s report titled “Electric Power Monthly,” last updated as of July 2025. Therefore, based on the average cost as of December 31, 2024, we estimate that the total accessible market in the U.S. amounts to $36 billion per year.
Our Agreements
ENPG Agreement
In January 2021, and as amended in November 2023, we entered into an agreement with ENPG outlining the parties’ collaboration on our first demonstration site in New York. Under the agreement, we are responsible for developing high-performance microturbines, while ENPG will facilitate the adaptation of the microturbines for the U.S. market. ENPG will oversee the system at the first demonstration site, including all commissioning tasks, following our installation guide and under the supervision of our representatives. If the first demonstration site does not cover construction costs, we will compensate ENPG up to $82,500. Under the agreement. we and ENPG will divide revenues and commissions on an equal basis. We shall pay for 70% of the project budget and ENPG shall pay for the balance. Each party will retain intellectual property rights to their respective products: the microturbine technology for us and the command and control of energy consumption in the structures for ENPG.
53
In connection with the agreement with ENPG, on March 17, 2021 we also entered into an agreement with the BIRD Energy Fund, or the BIRD Agreement, for the receipt of a grant in the amount of approximately $950 thousand or an amount equal to 50% of the total operating expenses of the project. The BIRD Agreement, and as amended on August 24, 2021, sets forth the terms and conditions for funding by the BIRD Energy Fund to the parties in connection with the project, under which the parties will complete the development of the TG-40, including the establishment of the first demonstration site and adaptation to local regulations.
The grant approved by the BIRD Energy Fund is divided between the Company and ENPG, with the Company’s share being 70% and ENPG’s share being 30%. On July 28, 2024, the installation was completed, and the Company received $665,000, which constitutes the 70% share of the grant.
One Hanson Place Condominium Agreement
In connection with the ENPG agreement, in December 2022, we entered into a memorandum of understanding with ENPG and the One Hanson Place Condominium, the owner of the multi-story building which hosts our first demonstration site, or the Property Owner. The memorandum of understanding sets out the terms regarding the installation of the microturbine and the option of expanding the engagement to the installation of five additional microturbines. In September 2023, ENPG entered into a binding agreement with the Property Owner, regarding the conditions and terms of installation, supervision, service, maintenance, repair and control of the TG-40. The agreement outlined ENPG’s supervision terms and stated that the Property Owner would pay ENPG 75% of the savings originating from the system. The agreement terms remain in effect for one year from the start of the system’s activation and will be renewed automatically for successive one-year terms unless one party terminates it with at least ninety days’ notice. In May 2024, the TG-40 microturbine was successfully installed at the first demonstration site and began initial testing under the supervision of our team. We are continuing to operate and test the system in order to reach full production and to complete the U.S. regulatory procedures, which is required for installment in the United States. Additionally, we intend to replace the system with our first commercial system produced with our commercial line, which we believe will allow us to complete the U.S. regulatory process as described above.
Coin World Server Farm Agreement
In February 2022, we entered into an agreement with Coin World LLC, or Coin World, a U.S.-based cryptocurrency mining company that operates high-energy-consumption server rooms. We agreed to provide and install microturbines with a total electricity production of up to 500 KW per hour, comprising thirteen TG-40 units. Under the agreement, we will retain ownership of the systems and are responsible for installation, supply, and maintenance, while Coin World will pay for energy generated based on consumption. The agreement has a ten-year initial term and is automatically renewable for an additional ten years. As of the date of this prospectus, installation under this agreement has not yet commenced. We intend to initiate the supply and installation of the system during the course of 2026.
54
CSA 8411 LLC Letter of Intent
On August 29, 2024, we entered into a letter of intent, or the CSA LOI, with CSA 8411 LLC, a private company based in Florida, United States, or CSA. The CSA LOI sets forth our mutual intent to collaborate in connection with the installation of our microturbine systems in CSA’s buildings located in Miami, Florida, beginning with a pilot building.
The CSA LOI is valid until February 4, 2027. During this time, the parties intend to negotiate and enter into a detailed definitive agreement, or the Detailed Agreement. Under the contemplated arrangement, we would design, install, and maintain our microturbine systems in each of the pilot buildings at our own expense, and CSA would provide suitable areas within its buildings for the installation of the systems. In addition, CSA would purchase from us the electrical energy and heat produced by the microturbine systems during the term of the Detailed Agreement, or under another commercial model to be agreed upon by the parties in the Detailed Agreement. The specific commercial terms, including pricing, compensation structure, and payment terms, have not yet been determined and are subject to negotiation. As of the date of this prospectus, we have not signed a definitive agreement with CSA.
Agreement with Subsidiary of a Leading Multinational Defense Corporation
On May 22, 2025, we entered into a binding agreement for the development and delivery of engine-generator energy production systems, based on a multi-fuel microturbine technology, with a subsidiary of a leading multinational defense company engaged in the development of mobile energy production systems in both civilian and military settings, or the Defense Company. Under the agreement, which amended on January 30, 2026, we agreed to cooperate in the development and production of a laboratory demonstrator of a turbo-generator for a governmental entity, based on our TG-40 system technology. In addition, we and the Defense Company agreed to cooperate in the development and scaled production of a APU/PU engine-generator system based on a multi-fuel microturbine, or the Product, in response to potential future customer orders, based on another system of the Company, which is intended for dual-use markets (military and civilian), and to jointly collaborate in the development, marketing, and promotion of the Product to customers in Israel and worldwide. The original agreement required us to obtain consent from Rafael, which was subsequently obtained through a license agreement entered into between us and Rafael on December 25, 2025, as described below.
The agreement includes a revenue-sharing model between us and the Defense Company for product sales, considering the relevant customer market, whereby the Defense Company will exclusively market and serve as the prime contractor for any project or sale of the Product in the defense market, and we will exclusively market and serve as the prime contractor for any project and/or sale of the Product in the civilian market. The agreement entered into force on May 22, 2025, and will remain in effect for a period of ten (10) years. In addition, each party may terminate the agreement, subject to the occurrence of certain events as defined in the agreement with the Defense Company.
Furthermore, on June 22, 2025, we announced that we received an order from the Defense Company for the production of the demonstrator and approval for a downpayment out of a total of NIS 2 million (approximately $570,000). As of the date of this prospectus, we have received NIS 836,000 (approximately $280,000) of the downpayment. We believe this demonstration turbo-generator system unit will lead to the marketing, development, and scaled production of systems based on the demonstrator, and is expected to address a significant market for us in both the defense and civilian sectors.
License Agreement with Rafael in Connection with our Agreement with the Defense Company
On December 25, 2025, we entered into a license agreement with Rafael in order to complete and enable our engagement under the agreement with the Defense Company. The license agreement was required in order to obtain Rafael’s consent for our use of certain microturbine technology in connection with the development, production, and commercialization of the demonstrator and the Product under the agreement with the Defense Company.
Pursuant to the terms of the license agreement, Rafael granted us a limited-use license for military purposes in the microturbine, including the rights, know-how, and technology embodied in the Company’s TG-40 microturbine system, for the purpose of developing, adapting, manufacturing, marketing, and selling the demonstrator and/or the Product developed based on the TG-40, and in accordance with the agreement with the Defense Company. Such activities are to be conducted by the Defense Company’s parent company for delivery to the Israel Defense Forces, the Israeli Ministry of Defense, or the IMD, or the IMD’s Directorate of Defense, Research, & Development, as applicable.
55
In consideration for the grant of the license, we agreed to pay Rafael royalties in the amount of ten percent (10%) of the consideration received by us in connection with the license agreement relating to the demonstrator and/or the Product.
The license agreement entered into force on December 25, 2025 and will remain in effect until the later of a period of three (3) years, or completion of the project. The license agreement includes customary provisions for agreements of this type, including provisions regarding immediate termination in customary circumstances, as well as provisions relating to intellectual property, liability, and the protection of intellectual property rights in the event of a merger or sale.
1229 Trumansburg Road LLC Agreement
In January 2025, we entered into a preliminary sales agreement, the Pre-Sale Agreement, with 1229 Trumansburg Road LLC, which, operates several nursing homes in the Northeastern United States, or Trumansburg. Under the Pre-Sale Agreement, in the first stage, we will sell and install several systems for a total amount of up to approximately $2.25 million.
In addition, under the Pre-Sale Agreement, we agreed that within 60 days from the signing date, Trumansburg will pay us an advance payment of $50,000, on account of the total consideration payable to us for the systems. The advanced payment will be refunded to Trumansburg if its properties are not suitable for the installation of the systems and/or if we do not deliver the systems to Trumansburg within 24 months from the agreed delivery date as set forth in the timelines to be agreed upon in a final agreement once executed by the parties. Details regarding the future order of the systems, including the final timelines for delivery and installation of the systems, will be determined in a detailed agreement to be signed by the parties.
In May 2025, the Pre-Sale Agreement was amended to increase the pre-order from five to eight TG-40 units under the same terms, for a total of approximately $3.6 million.
Laconia NH Realty Agreement
In February 2025, we entered into a preliminary sale agreement, or the Laconia Pre-Sale Agreement with Laconia NH Realty LLC, or Laconia, which operates properties in the Northeastern United States. Under the Laconia Pre-Sale Agreement, Locania agrees to purchase a minimum of four Microturbine units at $450,000 per unit for a total consideration of $1,800,000.
In addition, under the Laconia Pre-Sale Agreement, we agreed that within 60 days from the signing date, Laconia will pay us an advance payment of $40,000, on account of the total consideration payable to us for the systems. The advanced payment will be refunded to Laconia if it is determined that Laconia’s properties are not suitable for the installation of the systems and/or if we do not deliver the systems to Laconia within 24 months from the agreed delivery date as set forth in the timelines to be agreed upon in a final agreement once executed by both parties. Details regarding the future order of the systems, including the final timelines for delivery and installation, will be set forth in a detailed agreement to be signed by the parties. For further discussion of the risks related to our entry into non-binding memorandum and letters of intent, see “Risk Factors—Risks Related to Our Business and Industry—From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. There can be no assurance that we will enter into any such definitive agreements.”
Supplier Agreement with a European Turbine Industry Supplier
On December 22, 2025, as part of our planned transition from development to production, we entered into a supply agreement, or the Supplier Agreement, with a European-based international company operating in the turbine industry, or the Supplier. Pursuant to the Supplier Agreement, the Supplier will manufacture and supply stationary microturbine systems into which we will integrate our multi-fuel microturbine-based CHP systems, ranging from 32KW to 40KW, for commercial operations.
Pursuant to the Supplier Agreement, the Supplier will initially provide three prototype systems and an additional nine systems, in accordance with agreed-upon delivery schedules, and will provide related engineering and technical support services. We will integrate our microturbine technology into the prototype systems provided by the Supplier for commercial operations.
The specific pricing and order schedules for the production of the microturbine systems will be decided at later date by us and the Supplier. The Supplier Agreement will be in effect for five years from December 22, 2025. During the term of the Supplier Agreement, the Supplier will serve as our exclusive manufacturer of the systems. Either we or the Supplier may terminate the agreement by providing 90 days’ prior written notice.
Sunflower Memorandum of Understanding
On January 19, 2026, we entered into a non-binding memorandum of understanding, or the Sunflower MOU, with Sunflower GmbH & Co. KG Management, an affiliate of a European hospitality group operating a network of over 200 hotels across the EU, or Sunflower, for the purpose of conducting a pilot installation of our microturbine system at a hotel of the group in Germany.
56
The purpose of this pilot project is to evaluate the implementation of our CHP microturbine technology in the hospitality sector, with the objective of improving energy efficiency, reducing energy costs and ensuring energy continuity. Pursuant to the Sunflower MOU, we will supply and install the microturbine unit at our own expense, subject to receipt of the required regulatory approvals.
Following a period of 90 days after the completion, and subject to its successful completion, the parties intend to negotiate a definitive agreement for the planning, installation and operation of our systems in additional hotels of the hospitality group. For further discussion of the risks related to our entry into non-binding memorandum and letters of intent, see “Risk Factors—Risks Related to Our Business and Industry—From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. There can be no assurance that we will enter into any such definitive agreements.”
Business Arrangements and Proposed Transaction Relating to Elbatech
Elbatech Properties Ltd. System Evaluation Agreement
On April 16, 2026, we entered into an agreement with Elbatech Properties Ltd., a private subsidiary of Israel Aerospace Industries Ltd., or Elbatech, for the purpose of conducting a system evaluation of our systems at Elbatech’s facility, or the Systems and the Elbatech Agreement, respectively. Pursuant to the Elbatech Agreement, we will install a microturbine-based power generation system and evaluate the system’s performance at a capacity of 40 KVA, with an option to install additional of our systems at various capacities for testing purposes, or the System Evaluation. The system will be installed in a new facility currently being built by Elbatech in Ashdod, Israel, which is in the final stages of construction.
The Elbatech Agreement is for a term of 24 months, commencing on the date an occupancy permit is received for the facility. We hold an option to extend the term of the agreement for two additional periods of one year each, by providing prior notice of the option exercise to Elbatech. The Elbatech Agreement includes representations and warranties by the Company as is customary in agreements of this nature, including provisions regarding insurance and indemnification for damages.
Following and subject to the successful completion of the System Evaluation, we intend to discuss potential future engagements with Elbatech for the installation of our other systems under terms to be agreed upon in a separate agreement.
Proposed Acquisition of a 50% Interest in Elbatech Ltd.
On May 26, 2026, we announced that we were conducting negotiations with Abu Yehiel – Construction Company Ltd., or Abu Yehiel, a company controlled by Mr. Tzachi Abu, regarding the potential acquisition of Abu Yehiel’s 50% interest in Elbatech Ltd., or the Proposed Elbatech Acquisition. Elbatech Ltd. is indirectly held in equal proportions by Israel Aerospace Industries Ltd. and Abu Yehiel and provides development, engineering, manufacturing and logistics services to customers in the defense, aerospace, high-technology and civilian industries.
The Proposed Elbatech Acquisition reflects an implied valuation of approximately NIS 1.2 billion for Elbatech Ltd. and a value of approximately NIS 600 million for the 50% interest proposed to be acquired by us. Pursuant to the proposed transaction structure, the consideration would be paid through the issuance of our ordinary shares to Abu Yehiel rather than in cash. Upon completion of the Proposed Elbatech Acquisition, Mr. Abu is expected to beneficially own approximately 55% of our share capital and become our controlling shareholder.
Following and subject to the execution of a binding agreement and the completion of the Proposed Elbatech Acquisition, we expect to reorganize our operations into two principal divisions consisting of our existing operations and the Elbatech business. The Proposed Elbatech Acquisition remains subject to the negotiation and execution of a binding agreement, and there can be no assurance that a binding agreement will be entered into or that the Proposed Elbatech Acquisition will be completed on the terms currently contemplated or at all.
Raw Material Sourcing and Suppliers
We source our components and materials from multiple suppliers located in Israel, Europe, and the United States and we are not dependent on any single supplier, as alternative sources are readily available. We manufacture our products for research, development, and prototype production, including various purchased components such as recuperators, bearings, housings, valves, alternators, and output converters as well as specialty metals including high-temperature alloys and aluminum.
Seasonality
Our business model is not based on nor susceptible to seasonality.
Research and Development
Our research and development strategy is focused on creating new products and enhancing existing technology. The development process for key components starts at the concept analysis stage, progresses through the feasibility stage, and then moves to the initial design stage, where several options are considered. This process culminates in the design of a selected option. In each stage, key components undergo rigorous testing according to a detailed test plan, which includes quality tests for components used and the outcomes obtained, ensuring that they meet the relevant specifications.
Preparations for Scaling Production
We are preparing to scale production by planning to manufacture approximately ten demonstration systems. These systems will be installed at various sites across the United States. Additionally, we intend to collaborate with relevant manufacturing companies, specializing in scaling up production. These collaborations will focus on increasing production, marketing and the deployment of local microgrid infrastructure. These collaborations may involve a royalty model, a customer-tailored finance model, or other suitable arrangement. Our aim of these collaborations is to leverage the experience and capabilities of potential partners in production, installation, and customer service, including interactions with end customers.
57
Multifuel Combustor
We are developing a multi-fuel combustor system for both liquid and gaseous propellants. This project is supported by the IIA grant and is being carried out in collaboration with the Technion University. The purpose of this project is to develop a unique solution that enables switching between gaseous to liquid propellants without requiring any hardware modifications.
Hydrogen
We engage in research and development for the use of hydrogen as an energy source. Initial tests suggest that energy can be generated using microturbines through combustion of 50% hydrogen and 50% natural gas. To support our research and development of a 40 KW per hour hybrid microturbine that generates energy using up to 100% hydrogen or a mix of hydrogen and natural gas, we received an approval for a grant of NIS 2,967,000 ($841,000) from the IIA, constituting a grant of 30% of the budget of the project, of which we have so far received NIS 2,670,000 ($753,000). We completed the 50% hydrogen system in 2025 and expect to complete the 100% hydrogen system in early 2026. We expect to execute the initial installation of our hybrid system in buildings by the end of 2026, followed by additional installations during 2027. Development would include improving the TG-40, conducting numerical analyses, and testing, as described below. Future development is expected to include designing a multi-fuel combustion chamber capable of operating on up to 100% hydrogen and ammonia, and other types of fuels, involving prototype production, lab experiments, and other mechanical improvements and increased energy output.
As of the date of this prospectus, the development of a micro-turbine that operates on hydrogen combined with a fuel cell system is not part of our core activities and the efficiency calculations presented above are preliminary only.
Southwest Research Institute
We entered into an agreement in June 2022 with Southwest Research Institute, or SwRI, to conduct a three-dimensional flow simulation using computational fluid dynamics. The purpose of this simulation was to test and confirm how different mixtures of hydrogen and natural gas burn inside the combustor.
In January 2023, SwRI completed the research simulation and confirmed that it is feasible to use the TG-40 microturbine combustor to generate energy using a mixture of 50% hydrogen 50% natural gas. In September 2023, SwRI submitted a final report in which one of the findings was that the simulation produced optimal results on burning stability in the combustor and high burning stability of gaseous mixture, hydrogen, and natural gas. We may utilize these findings into further research simulations and we may incorporate SwRI in the continuation of our research simulations.
Technion Research and Development Ltd.
In July 2022, we entered into an agreement with the aeronautical combustion lab at the Technion to conduct empirical research on combustion performance in the combustion chamber of the TG-40 for various compositions of hydrogen and natural gas.
In December 2022, we completed the 40 KW combustor test run stage at the Technion University. In May 2024, the Technion submitted its report to us which detailed that in the experiments conducted in connection with combustion performance under controlled conditions, at atmospheric pressure and at 400 degrees Celsius, the results showed that the TG-40 combustor can operate stably at high performance levels using hydrogen and nature gas mixtures through several combinations of blends, such as 100% methane and up to a combination of 50% methane and 50% hydrogen, with performance metrics matching those calculated by SwRI. On February 12, 2026, we successfully completed experiments on the combustion chamber using natural gas and hydrogen combinations, with 100% hydrogen.
Intellectual Property
Protection of our intellectual property is important to our business. We seek to protect our intellectual property through a combination of patents, trademarks, and confidentiality agreements with our employees and certain of our contractors and confidentiality agreements with certain of our consultants, scientific advisors, vendors and contractors. In addition, we rely on trade secrets law to protect our existing products and products in development.
We believe our patented technology is unique and it affords us a significant competitive advantage. We may apply to register additional patents in the future based on the technology developed alongside or in addition to our already patented technology.
We plan to license the usage of the technology we have developed to our prospective strategic partners. We expect to bundle the licensing of the technology with the offering of our prospective strategic partners’ products and services.
No assurance can be given that our intellectual property will provide us with a competitive advantage or that we will not infringe on the intellectual property rights of others. In addition, we cannot be sure that any trademarks will be granted in a timely manner or at all with respect to any of our pending applications. For further discussion of the risks related to our intellectual property, see “Risk Factors—Risks Related to Our Intellectual Property.”
58
| Patent Title | Registration
or Submission Date |
Jurisdiction | Status | Renewal
or Expiration Date |
||||||
| Cooling System for Recuperated Gas Turbine Engines | August 15, 2023 | U.S. | Granted | February 15, 2027 | ||||||
| Boosting CCHP Gas Turbine System | November 14, 2023 | U.S. | Granted | May 14, 2027 | ||||||
| Cooling Method for a High-Temperature Radial Gas Turbine Engine | December 19, 2023 | U.S. | Granted | June 19, 2027 | ||||||
| Atomizer for Gas Turbine Engine | February 6, 2024 | U.S. | Granted | August 6, 2027 | ||||||
| Reconfigurable Hybrid Solar Gas Turbine System Operating in a Semi-Open Cycle | February 18, 2025 | U.S. | Granted | August 18, 2028 | ||||||
| Cooling system for Recuperated Gas Turbine System | May 8, 2024 | Europe | Granted | - | ||||||
| Boosting CCHP Gas Turbine System | August 13, 2025 | Europe | Granted | - | ||||||
| Cooling Method for a High-Temperature Radial Gas Turbine Engine | Submitted February 24, 2020 | Europe | Pending | - | ||||||
| Atomizer for Gas Turbine Engine | July 23, 2025 | Europe | Granted | - | ||||||
| Microturbine Air-Cooled Hollow Shaft Support System | March 25, 2025 | International / Patent Cooperation Treaty | Pending (Patent Cooperation Treaty Stage) | September 3, 2027 |
Competition
We operate as a developer, manufacturer and supplier of CHP microturbines. Both the energy and CHP markets are broad and contain many segments.
The current standard technologies similar to CHP are:
| ● | Fuel cells, that are less efficient for local electricity and heat generation in buildings. Investment in this technology, however, may make it economically viable to compete with CHP systems; and |
| ● | internal combustion engine -based generators, which pollute more and are noisier, meaning that they require special measures for adhering to residential structure codes. Internal combustion-based generators require more maintenance than our microturbines. |
The current competition within the CHP market, in particular with those that develop generators in the 2 KW to 200 KW range, is comprised of two companies: Capstone Green Energy, or Capstone, and Tecogen, Inc., or Tecogen.
We believe our advantage over Capstone is higher energy efficiency – 33% in the 80 to 100 KW system against 31% in Capstone’s equivalent system and lower maintenance costs.
We believe that our advantage over Tecogen is that we have higher energy efficiency – 33% in the 80 to 100 KW system versus 31% in Tecogen’s equivalent system – and our system has a longer lifespan and lower maintenance costs, meaning less frequent repairs or engine replacement.
Organizational Structure
In May 2014, Turbo-Gas Clean Power Company Ltd. was incorporated in Israel. We changed our name to TurboGen Ltd. in May 2019.
In November 2021, we completed our initial public offering on TASE.
Properties and Facilities
Our warehouse and executive offices are located at Efal Street 22, Petah Tikvah, Israel 4951122, comprising of 495 square meters. Our lease agreement in Petah Tikva will expire on March 31, 2027. We pay a monthly fee of NIS 53,000 (approximately $16,000) for our lease.
On March 1, 2026, we entered into a lease agreement for an additional warehouse near our executive offices, comprising of 290 square meters. The lease will expire on March 31, 2027. We pay a monthly fee of NIS 27,000 (approximately $8,500) for this lease.
We consider that our current office space is sufficient to meet our anticipated needs for the foreseeable future and is suitable for the conduct of our business.
Efficiency Plan
On October 11, 2023, our board of directors adopted the Efficiency Plan, the main points of which include a reduction in our workforce and a significant salary reduction for our officeholders, in light of the financial situation. As of the date of this prospectus, the Efficiency Plan is no longer formally in effect, but the board of directors continues to convene periodically to monitor our financial position, evaluate our efficiency, and make further decisions as needed.
59
Employees
As of the date of this prospectus, we have 19 full-time employees and two consultants who provide us with various services from time to time. All of these employees are located in Israel. We believe that our future success will depend in part on our continued ability to attract, hire and retain qualified personnel. None of our employees is represented by a labor union, and we believe our employee relations are good.
Legal Proceedings
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations.
On June 15, 2026, we entered into an administrative enforcement settlement with the ISA relating to certain information included in an investor presentation published through an immediate report in Israel. Pursuant to the settlement, we admitted the facts described therein and accepted responsibility for misleading information in the immediate report. On August 3, 2026, a panel of the ISA Administrative Enforcement Committee approved the settlement. Under the settlement, we are required to pay a monetary penalty of NIS 550,000, which was paid on August 6, 2026, and are subject to an additional conditional penalty of NIS 550,000, payable if we commit the same type of reporting violation during the two-year period following approval of the settlement. Subject to limited exceptions relating to a breach of the settlement or fraud in obtaining it, the ISA agreed not to initiate further enforcement proceedings against us or our controlling shareholders, officers, employees or agents based on the facts underlying the settlement.
As of the date of this prospectus, the administrative enforcement matter described above has been resolved and we are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Regulation
Our business includes the development, manufacturing, installation, maintenance, and operation of CHP microturbines. For each of these installations, a set of industry regulations, codes, and standards, is defined. These regulations relate to the specific installed built environment. These codes and standards are related to the microturbines. The regulations and standards vary by jurisdiction, according to the installation site. For each new installation, the set of required codes and standards is defined as part of the contract for the installation site. The system parts need to be designed, manufactured, and built in accordance with applicable local regulations and codes in force.
In the United States, our business in influenced by regulations administered by federal, state, and local authorities, including, but not exclusive to:
| ● | product safety certifications and interconnection requirements, administered by third-party certification bodies including Underwriters Laboratories, or UL, and applicable state public utility commissions; |
| ● | air pollution regulations which govern the emissions allowed in engine exhaust, administered by the U.S. Environmental Protection Agency, or EPA, and applicable state environmental agencies pursuant to the Clean Air Act; |
| ● | state and federal incentives for CHP technology, administered by the U.S. Department of Energy, or DOE, and applicable state energy offices; |
| ● | various local building and permitting codes and third-party certifications, administered by state and local building departments and fire marshals; and, |
| ● | electric utility pricing and related regulations, administered by the Federal Energy Regulatory Commission, or FERC, and applicable state public utility commissions. |
To comply with U.S. regulations and enable market access, our systems are designed to meet key technical and safety standards, including:
| ● | UL Standard 2200 Listed (which addresses the design, construction, and performance of generator sets) |
| ● | UL 1741-SA and UL 1741-SB Listed (which address inverters, converters, charge controllers, and grid interconnection compliance) |
Our systems are designed in accordance with international regulatory standards commonly required for market access, including the following, even where we are not presently operating in all such jurisdictions:
| ● | Conformité Européenne, or CE, Certification (indicates conformity with health, safety, and environmental protection standards required for commercial sale within the EU) |
| ● | VDE, BDEW, and TÜV Standards (govern grid interconnection and operational safety for distributed generation systems in Germany) | |
| ● | CEI 0-16 (sets technical requirements for connection to medium-voltage electric networks in Italy) | |
| ● | AS4447 (establishes interconnection and performance standards for microturbines and other distributed energy systems in Australia) |
We continue to monitor and engage with regulatory developments in our core markets. Changes in energy policy, emissions regulation, or grid access rules could materially affect our growth strategy, product roadmap, and customer adoption.
60
Directors and Senior Management
The following table sets forth information regarding our executive officers, key employees and directors as of August 21, 2026:
| Name | Age | Position | ||
| Yaron Gilboa | 73 | Chief Executive Officer and President | ||
| Neta Zruya Hashai | 50 | Chief Financial Officer | ||
| Itzhak Natan Even Ari | 61 | Chairman of the Board of Directors | ||
| Dan Katz | 83 | Vice President of Manufacturing | ||
| Ziv Nir | 62 | Chief Operating Officer | ||
| Dov Friedman | 46 | Director and Chief Strategic and Business Development Officer | ||
| David Deri(5) | 62 | Director | ||
| Ziv Gafni(5) | 44 | Director | ||
| Ethy Levy (1)(2)(3)(5) | 49 | Director | ||
| Eli Zooker (1)(2)(3)(4)(5) | 64 | Director | ||
| Idan Ben Shitrit (1)(2)(4)(5) | 52 | Director | ||
| Alex Katz(7) | 45 | Director |
| (1) | Member of the Compensation Committee |
| (2) | Member of the Audit and Financial Statement Committee |
| (3) | External Director (as defined under Israeli law) |
| (4) | Independent Director (as defined under Israeli law) |
| (5) | Independent Director (as defined under Nasdaq rules) |
| (6) | Class I directors shall hold office until the annual general meeting to be held in 2029 and until their successors shall have been elected and qualified. |
| (7) | Class II directors shall hold office until the annual general meeting to be held in 2027 and until their successors shall have been elected and qualified. |
| (8) | Class III directors shall hold office until the annual general meeting to be held in 2028 and until their successors shall have been elected and qualified. |
61
Yaron Gilboa, Chief Executive Officer and President
Mr. Yaron Gilboa has served as our Chief Executive Officer since June 2018. From January 2025 to September 2025, Mr. Gilboa additionally served as our Chief Financial Officer. Mr. Gilboa has served in multiple senior leadership roles across the defense, aerospace, and industrial filtration sectors for more than 30 years. From 2008 to 2018, he served as Vice President of Marketing and Business Development at Ashot Ashkelon Industries Ltd., following his tenure as Vice President and Director of its Commercial Products Division from 2000 to 2007. While at Ashot, Mr. Gilboa managed multiple projects and collaborations with industry leaders. He previously served as President and Chief Executive Officer of Filtomat Inc. from 1996 to 1998, where he managed operations across the United States, Mexico and Canada. Over the course of his career, he has worked with a number of private companies across these sectors, including those engaged in advanced manufacturing, aerospace components, and industrial water technologies. Mr. Gilboa holds a Bachelor of Science in Mechanical Engineering from the Technion.
Neta Zruya Hashai, Chief Financial Officer
Mrs. Neta Zruya Hashai, CPA, has served as our Chief Financial Officer since September 2025. Prior to that, Mrs. Zruya Hashai served as our consultant in finance from May to August 2025. Mrs. Zruya Hashai served as Chief Executive Officer of ESOP Management and Trust Services Ltd. from January 2023 to April 2025. Before that, she served as a Chief Financial Officer of Raphael Hospitals Ltd. from January 2021 to January 2023. Mrs. Zruya Hashai worked as an auditor, including as an audit partner, at PwC Israel, a member of PricewaterhouseCoopers International Ltd., from 2000 to December 2020. She has been serving as a director on the board of directors of Sarine Technologies Ltd. since June 2020. Mrs. Zruya Hashai holds a Bachelor of Arts in Accounting and Communications, and a Masters in Business Administration with a specialization in Financial Management, both from Tel Aviv University.
Itzhak Natan Even Ari, Chairman of the Board of Directors
Mr. Itzhak Natan Even Ari has served as our Chairman of our board of directors since January 2018. On November 26, 2025, Mr. Even Ari entered into an agreement with the Company to provide services as Chairman of the Board of Directors for a term of three years. Mr. Even Ari holds a Bachelor of Laws from Bar-Ilan University in Israel and a Master in Law from Tel-Aviv University in Israel. Mr. Even Ari serves as a director and chief executive officer at the following companies: Anglo L Group Ltd., Anglo Everst Properties Ltd., Castlerock Investments (Israel) Ltd. and as a director at the following companies: Abirim Castlerock Ben Gurion Kfar Saba Ltd., Abirim Castlerock Agolan 96 Tel Aviv Ltd., Abirim Castlerock Maharal 8 Tel Aviv Ltd., Anglo Eliyaho Ltd., Anglo Energy Micro Turbine Ltd., Ha’bait in Einstein Street Ltd., and Ha’bait in Nachlieli Street Ltd.
Dan Katz, Vice President of Production
Mr. Dan Katz has served as our Vice President of Manufacturing since June 2019. From October 2017 until April 2024, Mr. Katz served as public representative on the support committee at the Israeli Ministry of Economy and Industry. Mr. Katz holds a Bachelor of Science in Mechanical Engineering from the Technion in Israel and a certificate in Business Administration from the Hebrew University of Jerusalem in Israel.
Ziv Nir, Chief Operating Officer
Mr. Ziv Nir has served as our Chief Operating Officer. Mr. Nir has also served as Chief Operating Officer since May 2025. Mr. Nir holds a Bachelor of Science in Aerospace Engineering from the Technion in Israel and a Master in Business Administration from the University of Manchester. From March 2017 to May 2022, Mr. Nir served as Vice President of Marketing and Business Development for Carmel Forge Ltd.
Dov Friedman, Director and Chief Strategic and Business Development Officer
Mr. Dov Friedman has served as a member of our board of directors since January 2018 and as of November 26, 2025, also serves as the Chief Strategic and Business Development Officer. Mr. Friedman currently serves as a director at Anglo Energy Micro Turbine Ltd, Dov Friedman Investments Ltd., Pirla Investments Ltd., Ram-Center (2013) Ltd., Anglo Sheva Ltd. and Anglo Energy Micro Turbine Ltd.
62
David Deri, Director
Mr. David Deri has served as a member of our board of directors since February 2022. Mr. Deri holds a Bachelor of Arts in Accounting and Economics from Bar-Ilan University and is a chartered public accountant. Mr. Deri currently serves as chief financial officer at Var Capital. Additionally, Mr. Deri serves as an external director, as defined under the Companies Law, at Meitav Trade and Meitav Trade Investments. From 2014 to 2018, Mr. Deri served as chief financial officer and executive manager of the TASE.
Ziv Gafni, Director
Mr. Ziv Gafni has served as a member of our board of directors since January 2024. Mr. Gafni holds a dual Bachelor of Arts in Accounting and Management and in Economics from Tel-Aviv University. In addition, Mr. Gafni up until recently served as the president and Global CFO of Fetcherr. From July 2022 to October 2023, Mr. Gafni served as EMEA head of technological strategy, innovation and partnerships at J.P Morgan Chase Bank National Association. Mr. Gafni has also served as the Global Head of Capital Markets and Investment Banking Tech Innovation at J.P. Morgan Chase from December 2019 to July 2022 and prior to that from May 2018 to December 2019 as EMEA head of digital strategy and financial technology for the Corporate and Investment Bank of J.P. Morgan Chase.
Ethy Levy, External Director
Mrs. Ethy Levy has served as a member of our board of directors since March 2023. Mrs. Levy holds a Bachelor of Arts in Economics and a Bachelor of Laws from Tel-Aviv University. Additionally, she holds a certificate of the Israeli Ministry of Economy’s Economic Cadets Course and a certificate of a Directors and Senior Executive in Government Companies Course. Mrs. Levy is the founder and chief executive officer of Impact Innovation Israel, having founded it in August 2017, a co-founder of The Bridge Hub, a member of the Global Advisory Board of the Western Growers Association, and a director in Springboard Enterprises. From June 2021 to September 2023, Mrs. Levy was managing partner at Kinneret Impact Ventures. Mrs. Levy has served as a member of our board of directors since March 2023 and is an external director as defined under the Companies Law.
Eli Zooker, External Director
Mr. Eli Zooker has served as a member of our board of directors since February 2023. Mr. Zooker holds a Bachelor of Arts in Accounting and Economics and holds a Master of Business Administration, with a concentration in finance, from Tel-Aviv University. Mr. Zooker has served as deputy chief executive officer and as chief financial officer at Energy Infrastructures Ltd. Mr. Zooker has served as a member of our board of directors since February 2023 and is an external director, as defined under the Companies Law.
Idan Ben Shitrit, Independent Director
Mr. Idan Ben Shitrit has served as a member of our board of directors since November 2021. Mr. Shitrit holds a Bachelor of Arts in Mathematics and Economics from Tel-Aviv University and a Master in Business Administration from Reichman University. Additionally, Mr. Ben Shitrit holds an investor manager certificate. Mr. Ben Shitrit also currently serves as a director at Tedea Technological Development & Automotion Ltd. (TASE:TEDE). From 2006 to 2008, Mr. Ben Shitrit served as an external director at G. Willifood International Ltd. Since January2020, Mr. Ben Shitrit has been providing consultation and guidance to private and public companies, respectively. Mr. Ben Shitrit has served as a member of our board of directors since November 2021 and is an independent director, as defined under the Companies Law.
Alex Katz, Director
Alex Katz has served as a member of our board of directors since November 2025, and previously served as a consultant since July 2023. In this role, Mr. Katz focused on facilitating introductions within the United States market to prospective investors and customers, leveraging extensive experience in business development and strategic relationships. Since 2010, he has served as President and Manager of Castlerock Enterprises. Since 2015, he has also served as a Partner of Castlerock Investments Israel Ltd. and Castlerock Renewal Israel Ltd., where he participates in investment strategy, management oversight, and related business activities. Mr. Katz received a Juris Doctor degree from Seton Hall University School of Law and holds a Bachelor’s degree in Economics from Yeshiva University.
63
Family Relationships
There are no family relationships between any members of our executive management and our directors.
Arrangements for Election of Directors and Members of Management
There are no arrangements or understandings with controlling shareholders, prospective customers, suppliers, or others pursuant to which any of our executive management or our directors were other than a shareholders’ agreement entered into among Anglo Turbo and Mr. Emil Katan, or the Shareholders Agreement.
Upon the completion of the Company’s initial public offering in Israel on December 31, 2021, the Shareholders Agreement became effective. The Shareholders Agreement provides, among other things, that in any vote at the general meeting of the Company’s shareholders, the parties to the Shareholders Agreement will exercise their voting rights and vote in the same manner as determined at the sole discretion of Anglo Turbo.
Directors’ Service Contracts
Other than with respect to our directors that are also executive officers, we do not have written agreements with any director providing for benefits upon the termination of his employment with the Company. Our directors collectively earned approximately NIS 255,000 (approximately $79,937) for their services as directors in the year ended December 31, 2025.
Compensation
The following table sets forth information concerning the compensation of our five highly most compensated named executive officers for the year ended December 31, 2025. The table does not include any amounts we paid to reimburse any of such persons for costs incurred in providing us with services during this period.
All amounts reported in the tables below reflect the cost to us, in thousands of dollars upon a conversation rate of 3.19 NIS/USD, for the year ended December 31, 2025.
| Name and Principal Position | Salary, Pension, Retirement and Other Similar Benefits (Management) | Share Based Compensation | Total | |||||||||
| Yaron Gilboa, Chief Executive Officer and President | $ | 370 | $ | 2,036 | $ | 2,406 | ||||||
| Yitzhak Nathan Even Ari, Chairman of the Board(1) | $ | 9 | $ | 1,145 | $ | 1,154 | ||||||
| Dov Friedman, Director and Chief Strategic and Business Development Officer (2) | $ | 9 | $ | 1,145 | $ | 1,154 | ||||||
| Neta Zruya Hashai, Chief Financial Officer(3) | $ | 92 | $ | 390 | $ | 482 | ||||||
| Ziv Nir, Chief Operating Officer | $ | 202 | $ | 81 | $ | 283 | ||||||
| (1) | The management fees refer to a period of only one month, as the services agreement was approved on November 26, 2025, and has been in effect since such date. |
| (2) | Mr. Friedman began serving as Chief Strategic and Business Development Officer on November 26, 2025. Accordingly, the reported management fees represent a period of only one month. |
| (3) | Mrs. Zruya Hashai commenced employment as Chief Financial Officer on September 1, 2025. |
64
Employment and Advisory Agreements with Executive Officers
We have entered into written employment, services and advisory agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors’ and officers’ insurance.
Services Agreement with Mr. Yaron Gilboa, our Chief Executive Officer and President
In August 2021, we entered into an agreement with Mr. Yaron Gilboa, pursuant to which Mr. Gilboa shall provide us with services as our Chief Executive Officer and President. Pursuant to the terms of the services agreement, Mr. Gilboa was entitled to a gross monthly salary in the amount of NIS 70,000 (approximately $21,800). The services agreement also provided for other benefits such as reimbursement of expenses and certain bonus payments. On October 11, 2023, Mr. Gilboa agreed to a voluntary reduction of 50% of his monthly salary to NIS 35,000 (approximately $9,600). The reduction ended on January 11, 2024, and Mr. Gilboa’s monthly consideration was subsequently restored to its previous level. On March 9, 2025, the Company’s shareholders approved an increase of NIS 14,000 (approximately $3,800) to Mr. Gilboa’s monthly consideration for his role as senior financial officer, which was effective as of January 1, 2025.
On November 26, 2025, we updated the terms of Mr. Gilboa’s agreement, effective as of September 1, 2025. Pursuant to the terms of the updated services agreement, Mr. Gilboa is entitled to NIS 84,000, plus VAT (approximately $25,600). The services agreement also provides for other benefits, such as reimbursement of expenses and certain bonus payments as follows: (i) special bonus in case of sale of all or part of the Company’s assets or shares in an amount according to the Company’s compensation policy; and (ii) annual bonus based on measurable targets (as shall be determined for each year) up to the maximum amount as described in the Company’s compensation policy, as shall be from time to time. In addition, under the updated services agreement, Mr. Gilboa may be entitled to additional equity-based compensation, as shall be determined in the future by the compensation committee and the board of directors, up to the maximum annual value described in the Company’s compensation policy as shall be from time to time. Moreover, Mr. Gilboa is entitled to full acceleration of all previously granted unvested equity-based compensation in case of change of control (as determined in the Company’s compensation policy), and may be entitled to partial or full acceleration, in case of termination without cause (as such term is defined in this services agreement) of his services or downgrade in his role in the Company. In addition, both parties may terminate the services agreement for any reason subject to giving a prior written notice of nine months.
Pursuant to an option agreement entered into in January 2021, Mr. Gilboa was granted 33,300 options, with a grant date of January 3, 2021 to purchase up to 33,300 Ordinary Shares under the 2020 Share Incentive Plan at an exercise price of $12.01, vesting over a period of 48 months commencing on June 1, 2018. Mr. Gilboa was granted an additional 5,125 options, with a granted as of January 3, 2021, to purchase up to 5,125 Ordinary Shares under the 2020 Share Incentive Plan, at an exercise price of $12.01, vesting immediately on January 1, 2021.
Pursuant to subsequent equity awards granted to Mr. Gilboa, on January 26, 2023, he was granted 130,248 options to purchase up to 130,248 Ordinary Shares and 43,272 RSUs which may be settled into 43,272 Ordinary Shares, subject to time-based vesting conditions. On December 31, 2023, Mr. Gilboa was granted with 398,076 options to purchase up to 398,076 Ordinary Shares and 143,316 RSUs which may be settled into 143,316 Ordinary Shares.
On November 26, 2025, the Company’s shareholders approved granting Mr. Gilboa additional 398,076 options to purchase up to 398,076 Ordinary Shares and 143,316 RSUs which may be settled into 143,316 Ordinary Shares.
On April 29, 2026, the Company’s board of directors approved a grant to Mr. Gilboa of an additional 165,000 options to purchase up to 165,000 Ordinary Shares and 165,000 RSUs, which may be settled into 165,000 Ordinary Shares, subject to approval by the Company’s shareholders and from TASE. The grant was subsequently approved by the Company’s shareholders and by TASE on June 11, 2026 and June 15, 2026, respectively.
Services Agreement with Mr. Dan Katz, Vice President of Production
On June 10, 2019, we entered into an agreement with Mr. Dan Katz, pursuant to which Mr. Katz shall provide us with services as our Vice President of Production. Pursuant to the terms of the services agreement, Mr. Katz is entitled to an hourly-based salary of NIS 250, which was increased to a monthly salary in the amount of NIS 22,000, reflecting a 50% position (approximately $6,040), on August 1, 2020 per an amendment to the services agreement. Between October 11, 2023 and January 6, 2024, as part of our Efficiency Plan, Mr. Katz was on unpaid leave. On January 7, 2024, Mr. Katz agreed to a reduction in his monthly salary to NIS 11,000 (approximately $3,020), due to the Streamlining Plan. The reduction ended on January 11, 2024, and Mr. Katz’s monthly consideration was subsequently restored to its previous level. The services agreement also provides for other benefits such as reimbursement of expenses and certain bonus payments, including a one-time bonus payment of NIS 7,500 ($2,060), approved by the compensation committee and the board of directors on February 14, 2022 and February 15, 2022, respectively, for his contribution in 2021. On December 9, 2025, our board of directors approved, effective January 1, 2026, an increase of NIS 3,000 (approximately $934) to Mr. Katz’s monthly salary, to an aggregate amount of NIS 25,000 (approximately $7,780). Both parties may terminate the services agreement for any reason with 30 days’ written notice.
65
In addition, pursuant to an option agreement entered into on January 2021, Mr. Katz was granted 1,000 options, with a grant date of August 9, 2021 to purchase up to 10,000 Ordinary Shares under the 2020 Share Incentive Plan, at an exercise price of NIS 98.4 (approximately $27), vesting over a period of 48 months commencing on July 1, 2022. On January 26, 2023, Mr. Katz was granted an additional 8,400 options, with a grant date as of January 26, 2023, to purchase up to 8,400 Ordinary Shares under the 2020 Share Incentive Plan, at an exercise price of NIS 10.35 (approximately $2.84), vesting over a period of 48 months commencing on January 26, 2025, and was granted 2,784, RSUs to be converted to 2,784 Ordinary Shares, with the same vesting schedule as options. On December 31, 2023, Mr. Katz was granted an additional 9,776 options, with a grant date as of December 31, 2025, to purchase up to 9,776 Ordinary Shares, at an exercise price of NIS 5.38 (approximately $1.48), vesting over a period of 48 months commencing on December 31, 2025, and was granted 3,520 RSUs to be converted to 3,520 Ordinary Shares, vesting in accordance with the same vesting schedule as the options.
On March 30, 2025, Mr. Katz was granted an additional 9,776 options, to purchase up to 9,776 Ordinary Shares, at an exercise price of NIS 10.16 (approximately $2.73), vesting over a period of 48 months, and was granted 3,520 RSUs to be converted to 3,520 Ordinary Shares, vesting in accordance with the same vesting schedule as the options.
On April 29, 2026, the Company’s board of directors approved a grant to Mr. Katz of an additional 16,000 options to purchase up to 16,000 Ordinary Shares, at an exercise price of NIS 18.50 (approximately $6.25), vesting over a period of 24 months. In addition, he was granted 16,000 RSUs, which may be settled into 16,000 Ordinary Shares, vesting in accordance with the same vesting schedule as the options. The grant received approval from TASE on May 12, 2026.
Employment Agreement with Mr. Ziv Nir, Chief Operating Officer
On February 15, 2022, we entered into an employment agreement with Mr. Ziv Nir, pursuant to which Mr. Nir provides us with services as our Vice President of Business Development. Pursuant to the terms of the agreement, Mr. Nir is entitled to a monthly salary in the amount of NIS 36,500 (approximately $10,030). The agreement also provides for other benefits such as reimbursement of expenses, and special payment, granted in consideration of confidentiality and agreement to a non-compete clause. Both parties may terminate the services agreement for any reason with 30 days’ written notice. On October 11, 2023, Mr. Nir agreed to a voluntary reduction of 50% of his monthly salary to NIS 18,250 (approximately $5,015) pursuant to the Streamlining Plan. The reduction ended on January 11, 2024, and Mr. Nir’s monthly consideration was subsequently restored to its previous level. On December 9, 2025, our board of directors approved an increase of NIS 10,000 (approximately $3,110) to Mr. Nir’s monthly salary, to an aggregate amount of NIS 46,500 (approximately $14,500), effective retroactively as of October 1, 2025.
In addition, pursuant to an option agreement entered into on August 9, 2021 , Mr. Nir was granted 58,816 options, with a grant date of January 26, 2023 to purchase up to 58,816 Ordinary Shares under the 2020 Share Incentive Plan, at exercise price of NIS 10.35 (approximately $2.84), vesting over a period of 48 months commencing on May 15, 2022, and was granted 19,536, RSUs with the same grant date, to be converted to 19,536 Ordinary Shares, vesting in accordance with the same vesting schedule as the options. On December 31, 2023, Mr. Nir was granted an additional 28,848 options, to purchase up to 28,848 Ordinary Shares, at an exercise price of NIS 5.38 (approximately $1.48), vesting over a period of 48 months, and was granted 10,384 RSUs to be converted to 10,384 Ordinary Shares, subject to the same vesting schedule as described above.
On March 30, 2025, Mr. Nir was granted an additional 28,848 options, to purchase up to 28,848 Ordinary Shares, at an exercise price of NIS 10.16 (approximately $2.73), vesting over a period of 48 months, and was granted 10,384 RSUs, vesting in accordance with the same vesting schedule as the options.
On April 29, 2026, the Company’s board of directors approved a grant to Mr. Nir of an additional 85,000 options to purchase up to 85,000 Ordinary Shares, at an exercise price of NIS 18.50 (approximately $6.25), vesting over a period of 48 months. In addition, he was granted 85,000 RSUs, which may be settled into 85,000 Ordinary Shares, vesting in accordance with the same vesting schedule as the options. The grant received approval from TASE on May 12, 2026.
Employment Agreement with Mrs. Neta Zruya Hashai, Chief Financial Officer
On September 1, 2025, we entered into an employment agreement with Mrs. Neta Zruya Hashai, pursuant to which Mrs. Zruya Hashai provides us with services as our Chief Financial Officer. Pursuant to the terms of the agreement, Mrs. Zruya Hashai is entitled to a monthly salary in the amount of NIS 56,000 (approximately $17,555). The agreement also provides for customary social benefits and reimbursement of additional expenses, including car maintenance and usage, in the amount of NIS 4,000 (approximately $1,254) per month.
The term of Mrs. Zruya Hashai’s employment is indefinite, and both parties may terminate the employment agreement for any reason with 90 days’ prior written notice. Notwithstanding the foregoing, the Company is entitled to terminate Mrs. Zruya Hashai’s employment immediately for cause, in circumstances justifying the denial of severance pay under applicable law and/or similar circumstances.
In addition, pursuant to an option agreement entered into on October 5, 2025, Mrs. Zruya Hashai was granted 150,000 options, with a grant date of October 5, 2025 to purchase up to 150,000 Ordinary Shares under the 2020 Share Incentive Plan, at exercise price of NIS 16.60 (approximately $5.20), vesting over a period of 48 months commencing on May 2025, and was also granted 70,000 RSUs with the grant date of October 5, 2025, vesting in accordance with the same vesting schedule as the options.
On April 29, 2026, the Company’s board of directors approved a grant to Mrs. Zruya Hashai of an additional 85,000 options to purchase up to 85,000 Ordinary Shares at an exercise price of NIS 18.50 (approximately $6.25), vesting over a period of 48 months. In addition, she was granted 85,000 RSUs, which may be settled into 85,000 Ordinary Shares, vesting in accordance with the same vesting schedule as the options. The grant received approval from TASE on May 12, 2026.
66
Services Agreement with Mr. Yitzhak Natan Even Ari, Executive Chairman
On November 26, 2025, the Company entered into a Chairman services agreement with Mr. Yitzhak Natan Even Ari, who serves as the Chairman of the Board of Directors and is also one of the Company’s controlling shareholders. Under the terms of the agreement, for his services at approximately 30% capacity, the Company will pay Mr. Even Ari a monthly fee of NIS 30,000 and will grant him options exercisable into up to 397,215 ordinary shares of the Company at an exercise price of NIS 0.30 ($0.09) per share. The options shall vest in two equal tranches: half of the options vested immediately upon grant, and the remaining half will vest upon the completion of the Company’s listing on Nasdaq. Mr. Even Ari is also eligible to receive additional equity-based compensation with a maximum annual value, subject to the discretion and approval of the Company’s Compensation Committee and Board of Directors, in accordance with the Company’s compensation policy. Furthermore, Mr. Even Ari shall be eligible to an annual bonus, contingent upon the prior determination of measurable targets by the Compensation Committee and the Board of Directors, in accordance with the Company’s compensation policy. Mr. Even Ari shall also be eligible for a bonus of up to three monthly salaries, subject to the discretion of the Compensation Committee and the Board of Directors. In addition, Mr. Even Ari shall be entitled to a special bonus in the event of a sale of the Company or a material part thereof, in an amount to be determined by the Company and in accordance with the Company’s compensation policy. Either party may terminate the agreement by providing 90 days’ prior written notice. The agreement is for a term of three years from its effective date.
Services Agreement with Mr. Dov Friedman, Director and Chief Strategic and Business Development Officer
On November 26, 2025, the Company entered into a VP of Strategy and Business Development services agreement with Mr. Dov Friedman, who also serves as a director of the Company and is one of its controlling shareholders. Under the terms of the agreement, for his services at approximately 30% capacity, the Company will pay Mr. Friedman a monthly fee of NIS 30,000 and will grant him options exercisable into up to 397,215 ordinary shares of the Company at an exercise price of NIS 0.30 ($0.09) per share. The options shall vest in two equal tranches: half of the options vested immediately upon grant, and the remaining half will vest upon the completion of the Company’s listing on Nasdaq. Mr. Friedman is also eligible to receive additional equity-based compensation with a maximum annual economic value, subject to the discretion and approval of the Company’s Compensation Committee and Board of Directors, in accordance with the Company’s compensation policy. Furthermore, Mr. Friedman shall be eligible to an annual bonus, contingent upon the prior determination of measurable targets by the Compensation Committee and the Board of Directors, in accordance with the Company’s compensation policy. Mr. Friedman shall also be eligible for a bonus of up to three monthly salaries, subject to the discretion of the Compensation Committee and the Board of Directors. In addition, Mr. Friedman shall be entitled to a special bonus in the event of a sale of the Company or a material part thereof, in an amount to be determined by the Company and in accordance with the Company’s compensation policy. Either party may terminate the agreement by providing 90 days’ prior written notice. The agreement is for a term of three years from its effective date.
Service Agreement with Mr. Ziv Gafni
In November 2023, our board of directors appointed Mr. Ziv Gafni as a director and to enter into a service agreement with him for strategic consulting and fundraising advisory services, subject to shareholder approval. The shareholders’ general meeting subsequently approved the appointment and agreement on January 11, 2024. Pursuant to the service agreement, which had a six-month term ending on May 31, 2024, we granted Mr. Gafni 17,715 options to purchase up to 17,715 Ordinary Shares of the Company at an exercise price of NIS 0.3 (approximately $0.08) per share. On December 1, 2025, Mr. Gafni exercised all 17,715 options. Mr. Gafni’s total compensation for his services was valued at NIS 54,000 ($14,500), paid in equity.
Service Agreement with Mr. Alex Katz
On July 19, 2023, we entered into a consulting services agreement with Mr. Alex Katz, one of our major shareholders, pursuant to which he provided advisory services to us, including assistance in expanding our operations in the United States, introducing us to potential U.S. contacts, assisting in negotiations with U.S. parties, and representing the Company in meetings in the United States.
The consulting agreement commenced on July 1, 2023, for a term of up to 24 months and provided for a fixed monthly fee of NIS 45,000 (approximately $12,000), plus applicable VAT. In addition, we granted Mr. Katz 58,816 non-tradable options, exercisable into up to 58,816 Ordinary Shares of the Company. The agreement was terminated by mutual consent on December 26, 2024.
As of December 26, 2024, Mr. Katz had an unpaid consulting-fee balance of NIS 675,000 (approximately $185,000). Pursuant to a conversion notice dated December 25, 2024, and following shareholder approval on March 9, 2025, such unpaid balance was converted into equity. Under the conversion, Mr. Katz was issued 150,000 Ordinary Shares at a conversion price of NIS 5.31 (approximately $1.46) per share and 260,000 non-tradable options, each exercisable into one Ordinary Share at an exercise price of NIS 11 (approximately $3.03) per share, expiring on December 24, 2025. On November 25, 2025, Mr. Katz was appointed as a director of the Company, and on November 26, 2025, our shareholders approved the reimbursement of reasonable expenses incurred by him in connection with his service as a director, all in accordance with the Company’s compensation policy as in effect from time to time. For additional information regarding Mr. Katz’s consulting arrangements and equity conversion agreements, see “Related Party Transactions.”
67
Equity Incentive Plan
Our 2020 Share Incentive Plan, or the 2020 Plan, was adopted by our board of directors in November 2020. The 2020 Plan provides for the grant of options, restricted shares and other equity-based awards to our directors, officers, employees, office holders, service providers and suppliers. On August 9, 2021, our board of directors approved an amendment to the 2020 Plan allowing for a net exercise mechanism for equity awards. The 2020 Plan is administered by our board of directors; however, the board of directors may, by unanimous vote and subject to applicable law, delegate its authority to administer the 2020 Plan to its compensation committee.
Subject to the terms and conditions of the 2020 Plan and any mandatory provisions of applicable law, and in addition to the powers set forth elsewhere in the plan, the compensation committee (if appointed), or otherwise the board of directors, has full discretionary authority to determine, among other things: the individuals eligible to receive awards; the granting of awards and the terms and conditions thereof, including the number of shares underlying each award; the time or times at which awards shall be granted; vesting schedules and conditions; the exercise price of options; the interpretation of the 2020 Plan; the adoption, amendment or rescission of rules and regulations relating to the administration of the plan; the determination of the fair market value of the Company’s ordinary shares; the applicable tax track for awards intended to qualify under Section 102 of the Israeli Income Tax Ordinance [New Version], 1961, or the Tax Ordinance, and any other action necessary or advisable for the administration of the 2020 Plan and any award granted thereunder.
Eligible Israeli-resident employees, officers and directors who are not controlling shareholders may be granted awards intended to qualify for favorable tax treatment under Section 102 of the Tax Ordinance. Section 102 provides alternative tax tracks for equity awards granted through a trustee for the benefit of the grantee, including the capital gains track and the ordinary income track, as well as an alternative for grants made directly to the grantee without a trustee. Awards intended to qualify under Section 102(b)(2) of the Tax Ordinance, the capital gains track, are deposited with a trustee and may not be released to the grantee for a minimum holding period of two years from the date of grant. Under this track, gains recognized upon the sale of shares may be subject to capital gains tax at a rate of 25%, subject to compliance with applicable conditions, and the Company is not entitled to a tax deduction with respect to such awards. Non-employee service providers, as well as controlling shareholders, may only be granted awards under Section 3(i) of the Tax Ordinance, which does not provide similar tax benefits.
Unless otherwise determined by the compensation committee or the board of directors, subject to applicable law and as set forth in the applicable award or option agreement, options granted under the 2020 Plan generally vest over a four-year period, with 25% of the options vesting on the first anniversary of the grant date and the remaining options vesting in equal quarterly installments of 6.25% on the last day of each three-month period thereafter, provided that the grantee remains continuously employed by or engaged in service with the Company or any of its affiliates through each applicable vesting date.
As a default, the 2020 Plan provides that upon termination of an optionee’s employment or service with the Company or any of its affiliates for any reason other than death, disability or cause, all unvested options shall terminate and expire immediately, and all vested options shall generally remain exercisable for a period of 90 days following such termination (or such other period applicable in the case of retirement), in each case subject to the terms of the 2020 Plan and the applicable option agreement.
Notwithstanding the foregoing, if an optionee’s employment or service is terminated for cause, all options granted to such optionee, whether vested or unvested, shall immediately terminate and shall not be exercisable as of the date of termination. In the event of termination of employment or service due to death or disability, all options that have vested as of the date of termination shall generally remain exercisable for a period of six (6) months, subject to the terms of the 2020 Plan and the applicable option agreement.
68
Options
In January 2021, we granted options under our 2020 Plan to certain of our officers. The grant consisted of 9,866 options to purchase 98,660 Ordinary Shares. The options are exercisable for a period of 10 years from their date of issuance, at an exercise price ranging between NIS 38.61 (approximately $12.04) to NIS 83.59 (approximately $25.95) per Ordinary Share, with some vesting immediately, and others up to four years. The exercise price is also adjusted to a ratio of the exercise of 1-to-10 options.
In March 2021, we approved the grant of options to our directors and controlling shareholders, Mr. Yitzhak Natan Even Ari and Mr. Dov Friedman. Each controlling shareholder was granted 33,519 options to purchase 335,190 Ordinary Shares. The options expired on March 24, 2024, and no options remain outstanding under this grant following the expiration.
In August 2021, we granted 23,544 options to purchase into 235,440 Ordinary Shares to certain of our employees. These options vest over a four-year period from the grant date and have an exercise price of NIS 98.40 (approximately $27.04) per option. The exercise price is also adjusted to a ratio of the exercise of 1-to-10 options.
In May 2022, our board of directors approved a grant of equity awards to an employee, consisting of (i) 116,512 options to purchase up to 116,512 Ordinary Shares at an exercise price of NIS 15.34 (approximately $4.49) and (i) 34,544 RSUs. Both the options and the RSUs vest over a four-year period.
In January 2023, our board of directors approved a grant of equity awards to officers and employees of the Company under its 2020 Plan, consisting of (i) options to purchase an aggregate of 384,360 Ordinary Shares at an exercise price of NIS 10.35 (approximately $3.05) per option, including 130,248 options granted and (ii) 182,248 RSUs, including 43,272 RSUs granted to Yaron Gilboa, our Chief Executive Officer. The options and RSUs granted to officers and employees vest over a four-year period, while the Chief Executive Officer’s awards vest over a three-year period.
In December 2023, our board of directors approved an additional grant of equity awards to officers and employees of the Company, consisting of (i) options to purchase an aggregate of 654,348 Ordinary Shares at an exercise price of NIS 5.38 (approximately $1.49), including 398,076 options granted to our Chief Executive Officer, and (ii) 266,260 RSUs, including 143,316 RSUs granted to Mr. Gilboa. In January 2024, our shareholders approved the specific allocation of the options and RSUs to the Chief Executive Officer pursuant to this grant.
In January 2024, our shareholders approved the grant of options to director Mr. Ziv Gafni, consisting of options to purchase 17,715 Ordinary Shares. The options vest over a six-month period and are exercisable until December 2025 at an exercise price of NIS 0.30 (approximately $0.08). As of the date of this prospectus, all 17,715 options have been exercised and none remain outstanding.
In January 2025, our board of directors approved the grant of 150,885 options to purchase 150,885 Ordinary Shares to five directors (30,177 options to each), under our 2020 Plan. The options have an exercise price of NIS 8.95 (approximately $2.65) per share and will vest over a two-year period.
In March 2025, our board of directors approved the grant of 485,812 options to purchase 485,812 Ordinary Shares at an exercise price of NIS 10.16 (approximately $3.01) to certain of our officers and employees. This equity grant was subject to shareholder approval, which was subsequently obtained in November 2025. Of the 485,812 options issued, 398,076 options were issued to Mr. Gilboa, our Chief Executive Officer, 61,728 options were issued to three officers, and 26,008 options were issued to three employees. In addition, 181,134 RSUs were issued to certain of our officers and employees. Of the 181,134 RSUs, 143,316 RSUs were issued to Mr. Gilboa, our Chief Executive Officer, 22,224 RSUs to three of our officers, and 15,594 RSUs to three employees. The vesting period for the employees and officers of the Company is four years, except for Mr. Gilboa’s equity grants, for which the vesting period is three years. Further, our board of directors approved the grant of 19,696 options to purchase 19,696 Ordinary Shares to a service provider. The options vest immediately and have an exercise price of NIS 10.50 (approximately $3.10) per share.
69
In August 2025, our board of directors approved the grant of 27,200 Ordinary Shares of the Company to a service provider. Our Board also approved the grant of 45,000 options to purchase 45,000 Ordinary Shares to another service provider. The options vested immediately and have an exercise price of NIS 10.50 (approximately $3.11) per share, vesting immediately. Our Board also approved the grant of 12,500 options to purchase 12,500 Ordinary Shares to another service provider. The shares vest over a two-year period and have an exercise price of NIS 0.30 (approximately $0.09) per share.
In October 2025, our board of directors approved the grant of 150,000 options to purchase 150,000 Ordinary Shares and 70,000 RSUs to Mrs. Neta Zruya Hashai, our Chief Financial Officer. The options vest over a four-year period and have an exercise price of NIS 16.60 (approximately $4.93) per share. The RSUs also have a vesting period of four years.
On April 29, 2026, our board of directors approved a grant of 489,000 options to purchase up to 489,000 Ordinary Shares and 489,000 RSUs to certain employees and officers. The options vest over a four-year period (except for the options granted to our CEO and one of the officers, for whom the vesting period is two years) and have an exercise price of NIS 18.50 (approximately $6.25) per share. The RSUs have the same vesting period as the options. In addition, on this date, our Board approved the grant of 24,000 options to purchase up to 24,000 Ordinary Shares to three service providers. These options vest over a two-year period on an annual basis and have an exercise price of NIS 18.50 (approximately $6.25) per share. The aforementioned grant of options and RSUs to certain employees and officers was approved by TASE on May 12, 2026. The aforementioned grant of 165,000 options and 165,000 RSUs to our CEO was approved by our shareholders and by TASE on June 11, 2026 and June 15, 2026, respectively.
Differences between the Companies Law and Nasdaq Requirements
Companies incorporated under the laws of the State of Israel whose shares are publicly traded, including companies with shares listed on Nasdaq, are considered public companies under Israeli law and are required to comply with various corporate governance requirements under Israeli law relating, among others, to such matters as the composition and responsibilities of the audit committee and the compensation committee (subject to certain exceptions that we intend to utilize), and a requirement to have an internal auditor. These requirements are in addition to the corporate governance requirements imposed by the rules of the Nasdaq Stock Market, or Nasdaq, and other applicable provisions of U.S. securities laws to which we are subject as a foreign private issuer. Under Nasdaq Rules, a foreign private issuer may generally follow its home country rules of corporate governance in lieu of the comparable requirements of the Nasdaq Rules, except for certain matters including the composition and responsibilities of the audit committee.
In accordance with Israeli law and practice and subject to the exemption set forth in Rule 5615 of the Nasdaq rules, we have elected to follow the provisions of the Companies Law, rather than Nasdaq rules, with respect to the following requirements:
| ● | Distribution of periodic reports to shareholders; proxy solicitation. As opposed to Nasdaq rules, which require listed issuers to make such reports available to shareholders in one of a number of specific manners, Israeli law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. In addition to making such reports available on a public website, we currently make our audited financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC’s proxy solicitation rules. | |
| ● | Quorum. While Nasdaq rules require that the quorum for purposes of any meeting of the holders of a listed company’s common voting stock, as specified in the company’s bylaws, be no less than 33 1/3% of the company’s outstanding common voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles of Association provide that a quorum of two (2) or more shareholders, in person or by proxy, holding at least 25% of the voting rights is required for commencement of business at a general meeting. However, the quorum set forth in our Articles of Association with respect to an adjourned meeting consists of any shareholder present in person or by proxy. | |
| ● | Nomination of our directors. With the exception of directors elected by our board of directors and external directors, our directors are elected by an annual or special meeting of our shareholders (i) to hold office until the next annual meeting following his or her election (or until the next annual meeting that will reappoint the relevant class in which such director is a part of, as described below under “Management-Board Practices- Introduction”); or (ii) for three-year term, as described below under “Management—Board Practices—External Directors.” The nominations for directors, which are presented to our shareholders by our board of directors, are generally made by the board of directors itself, in accordance with the provisions of our Articles of Association and the Companies Law. Nominations need not be made by a nominating committee of our board of directors consisting solely of independent directors, as required under Nasdaq rules. |
70
| ● | Compensation of officers. Israeli law and our Articles of Association do not require that the independent members of our board of directors (or a compensation committee composed solely of independent members of our board of directors) determine an executive officer’s compensation, as is generally required under Nasdaq rules with respect to the chief executive officer and all other executive officers. Instead, compensation of executive officers is determined and approved by our compensation committee and our board of directors, and in certain circumstances by our shareholders, either in consistency with our office holder compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations stated in the Companies Law. See “Management—Approval of Related Party Transactions under Israeli Law” for additional information. | |
| ● | Independent directors. Israeli law does not require that a majority of the directors serving on our board of directors be “independent,” as defined under Nasdaq Listing Rule 5605(a)(2), and rather requires we have at least two external directors who meet the requirements of the Companies Law, as described above under “Management—Board Practices—External Directors.” We are required, however, to ensure that all members of our audit committee are “independent” under the applicable Nasdaq and SEC criteria for independence (as we cannot exempt ourselves from compliance with that SEC independence requirement, despite our status as a foreign private issuer), and we must also ensure that a majority of the members of our audit committee are “independent directors” as defined in the Companies Law. Furthermore, Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present, which Nasdaq otherwise requires. | |
| ● | Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporation actions in accordance with Nasdaq Listing Rule 5635. In particular, under this Nasdaq rule, shareholder approval is generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of equity compensation arrangements (although under the provisions of the Companies Law there is no requirement for shareholder approval for the adoption/amendment of the equity compensation plan); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among other things: (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required, (ii) extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval, and (iii) terms of employment or other engagement of the controlling shareholder of us or such controlling shareholder’s relative, which require special approval. In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies. |
| ● | Approval of Related Party Transactions. All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transaction as set forth in the Companies Law, which requires the approval of the audit committee, or the compensation committee, as the case may be, the board of directors and shareholders, as may be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our board of directors as required under Nasdaq rules. See “Management—Approval of Related Party Transactions under Israeli Law” for additional information. | |
| ● | Annual Shareholders Meeting. As opposed to Nasdaq Rule 5620(a), which mandates that a listed company hold its annual shareholders meeting within one year of the company’s fiscal year-end, we are required, under the Companies Law, to hold an annual shareholder meeting each calendar year and within 15 months of the last annual shareholders meeting. |
71
Board Practices
Introduction
Our board of directors presently consists of eight members, including two external directors required to be appointed under the Companies Law. We believe that Mr. Zooker, Mrs. Levy, Mr. Gafni, Mr. Deri, and Mr. Ben Shitrit are “independent” for purposes of the Nasdaq rules.
Under our Articles of Association, the board of directors is to consist of not fewer than (3) and not more than eleven (11) directors, including external directors, as described below.
Our business and affairs are managed under the direction of our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or executive management. Our Chief Executive Officer is responsible for our day-to-day management and has individual responsibilities established by our board of directors. The Chief Executive Officer is appointed by and serves at the discretion of our board of directors, subject to the employment agreement that we have entered into with him.
All other executive officers are appointed by the Chief Executive Officer, subject to applicable corporate approvals, and are subject to the terms of any applicable employment or consulting agreements that we may enter into with them.
Our Articles of Association provide for a split of the board of directors into three classes with staggered three-year terms (excluding external directors). At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on the third annual general meeting following such election or re-election, such that each year the term of office of only one class of directors will expire. The directors who will be brought for re-election shall be the directors that served the longest period since their appointment or last re-appointment.
Each director, except external directors, will hold office until the next annual general meeting in which their class will be brought for re-appointment, or until he or she resigns or unless he or she is removed by a majority vote of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and our Articles of Association.
In addition, under certain circumstances, our Articles of Association allow our board of directors to appoint directors to fill vacancies on our board of directors, due to a director no longer serving or due to the number of directors serving being less than the maximum amount, for the remaining term of the director whose service has ended (in case the appointment is due to a director no longer serving) or for a period in accordance with the class to which the director was appointed by our board of directors (in case the appointment is in addition to the acting directors), subject to the limitation on the number of directors. External directors, if applicable, may be elected for up to two additional three-year terms after their initial three-year term under certain circumstances and may be removed from office only under the limited circumstances set forth in the Companies Law (see “Management—Board Practices—External Directors” below).
Under the Companies Law, nominations for directors may be made by any shareholder holding at least one percent (1%) of our outstanding voting power. However, any such shareholder may make such a nomination only if a written notice of such shareholder’s intent to make such nomination has been given to our board of directors. Any such notice must include certain information, the consent of the proposed director nominee(s) to serve as our director(s) if elected and a declaration signed by the nominee(s) declaring that there is no limitation under the Companies Law preventing their election and that all of the information that is required to be provided to us in connection with such election under the Companies Law and our Articles of Association has been provided.
72
However, under the Exemptions Regulations, one or more shareholders of an Israeli company whose shares are listed outside of Israel, such as on Nasdaq, may request its company’s board of directors to include an appointment of a candidate for a position on the board of directors or the termination of a board member as an item on the agenda of a future general meeting, provided that the shareholder hold at least five percent (5%) of the voting rights of the company, instead of the one percent (1%) required in the past. The decision whether to include the suggested item on the agenda is subject to the Company’s discretion, under the provisions of Companies Law.
Under the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. In determining the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that the minimum number of directors of the Company who are required to have accounting and financial expertise is two (2). Accordingly, we have determined that Mr. Deri, Mr. Gafni, Mr. Zooker, Mr. Ben Shitrit and Ms. Levy have accounting and financial expertise.
The board of directors must elect one director to serve as the chairman of the board of directors to preside at the meetings of the board of directors and may also remove that director as chairman. Pursuant to the Companies Law, neither the chief executive officer nor any of his or her relatives is permitted to serve as the chairman of the board of directors, and a company may not vest the chairman or any of his or her relatives with the chief executive officer’s authorities. In addition, a person who reports, directly or indirectly, to the chief executive officer may not serve as the chairman of the board of directors; the chairman may not be vested with authorities of a person who reports, directly or indirectly, to the chief executive officer; and the chairman may not serve in any other position in the company or a controlled company, but he or she may serve as a director or chairman of a controlled company. However, the Companies Law permits a company’s shareholders to determine, for a period not exceeding three years from each such determination, that the chairman or his or her relative may serve as chief executive officer or be vested with the chief executive officer’s authorities, and that the chief executive officer or his or her relative may serve as chairman or be vested with the chairman’s authorities. Such determination of a company’s shareholders requires either: (1) the approval of at least a majority of the shares of those shareholders present and voting on the matter (other than controlling shareholders and those having a personal interest in the determination) (shares held by abstaining shareholders shall not be considered); or (2) that the total number of shares opposing such determination does not exceed two percent (2%) of the total voting power in the company.
The board of directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the board, and it may, from time to time, revoke such delegation or alter the composition of any such committees, subject to certain limitations. Notwithstanding the foregoing and subject to the provisions of the Companies Law, the Board may, at any time, amend, restate or cancel the delegation of any of its powers to any of its committees. Unless otherwise expressly provided by the board of directors, the committees shall not be empowered to further delegate such powers. The composition and duties of our audit committee, financial statement committee and compensation committee are described below.
Minutes of the board meetings are recorded and kept at our offices.
The board of directors oversees how management monitors compliance with our risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by us. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to our audit committee.
The quorum for starting a meeting of the board of directors is majority of the members of the board of directors holding office at the time of the meeting. The board of directors may demand that another quorum will be determined for starting a meeting of the board of directors. Resolutions of the board of directors are adopted by a majority of the directors present and voting at the meeting, without taking into account the votes of abstainers.
According to the Companies Law, a person who does not possess the skills required and the ability to devote the appropriate time to the performance of the office of director in a company, taking into consideration, among other things, the special requirements and size of that company, shall neither be appointed as a director nor serve as a director in a public company. A public company shall not convene a general meeting the agenda of which includes the appointment of a director, and a director shall not be appointed unless the candidate has submitted a declaration that he or she possesses the skills required and the ability to devote the appropriate time to the performance of the office of director in the company, that sets forth the aforementioned skills and further states that the limitations set forth in the Companies Law regarding the appointment of a director do not apply in respect of such candidate.
A director who ceases to possess any qualification required under the Companies Law for holding the office of director or who becomes subject to any ground for termination of his/her office must inform the company immediately and his/her office shall terminate upon such notice.
73
External Directors
Under the Companies Law, an Israeli company whose shares have been offered to the public or whose shares are listed for trading on a stock exchange in or outside of Israel is required to appoint at least two external directors to serve on its board of directors. External directors must meet stringent standards of independence. As of the date hereof, our external directors are Mr. Zooker and Mrs. Levy.
According to regulations promulgated under the Companies law, at least one of the external directors is required to have “accounting and financial expertise,” unless another member of the audit committee, who is an independent director under Nasdaq rules, has “accounting and financial expertise,” and the other external director or directors are required to have “professional expertise.” An external director may not be appointed to an additional term unless: (1) such director has “accounting and financial expertise;” or (2) he or she has “professional expertise,” and on the date of appointment for another term there is another external director who has “financial expertise” and the number of “accounting and financial experts” on the board of directors is at least equal to the minimum number determined appropriate by the board of directors. We have determined that Mr. Deri, Mr. Gafni, Mr. Zooker, Ms. Levy and Mr. Ben Shitrit have accounting and financial expertise.
A director with accounting and financial expertise is a director who, due to his or her education, experience and skills, possesses a high degree of proficiency in, and an understanding of, business – accounting matters and financial statements, such that he or she is able to understand the financial statements of the company in depth and initiate a discussion about the manner in which financial data is presented. A director is deemed to have “professional expertise” if he or she holds an academic degree in certain fields or has at least five years of experience in one of the said fields or in certain senior positions.
Pursuant to regulations under the Companies Law, the board of directors of a company is not required to have external directors if: (i) the company does not have a controlling shareholder (as such term is defined in the Companies Law); (ii) a majority of the directors serving on the board of directors are “independent,” as defined under Nasdaq Rule 5605(a)(2); and (iii) the company follows Nasdaq Rule 5605(e)(1), which requires that the nomination of directors be made, or recommended to the board of directors, by a nominating committee of the board of directors consisting solely of independent directors, or by a majority of independent directors. The Company does not meet all these requirements and therefore may not adopt this corporate governance exemption as of the date hereof.
External directors are elected by a majority vote at a shareholders’ meeting, as long as either:
| ● | at least a majority of the shares held by shareholders who are not controlling shareholders and do not have a personal interest in the appointment (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder) have voted in favor of the proposal (shares held by abstaining shareholders shall not be considered); or |
| ● | the total number of shares voted against the election of the external director, does not exceed 2% of the aggregate voting rights of the company. |
The term “control” is defined in the Companies Law as the ability to direct the activities of the company, other than by virtue of being an officeholder. A shareholder is presumed to be a controlling shareholder if the shareholder “holds” (within the meaning of the Companies Law) 50% or more of the voting rights in a company or has the right to appoint 50% or more of the directors of the company or its general manager. With respect to certain matters (for example interested party transactions), a controlling shareholder is deemed to include a shareholder that holds 25% or more of the voting rights in a public company if no other shareholder holds more than 50% of the voting rights in the company but excludes a shareholder whose power derives solely from his or her position as a director of the company or any other position with the company.
74
The Companies Law provides for an initial three-year term for an external director. Thereafter, an external director may be reelected by shareholders to serve in that capacity for up to two additional three-year terms, provided that:
| (1) | his or her service for each such additional term is recommended by one or more shareholders holding at least one percent of the company’s voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholders voting for such reelection exceeds two percent of the aggregate voting rights in the company and subject to additional restrictions set forth in the Companies Law with respect to the affiliation of the external director nominee as described below; | |
| (2) | his or her service for each such additional term is recommended by the board of directors and is approved at a shareholders meeting by the same disinterested majority required for the initial election of an external director (as described above); or | |
| (3) | the external director offered his or her service for each such additional term and was approved in accordance with the provisions of section (1) above. |
Notwithstanding the above, the term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including Nasdaq, may be extended indefinitely in increments of additional three-year terms, in each case provided that the audit committee and the board of directors of the company confirmed that, in light of the external director’s expertise and special contribution to the work of the board of directors and its committees, the reelection for such additional period(s) is beneficial to the company, and provided that the external director is reelected subject to the same shareholder vote requirements as if elected for the first time (as described above). Prior to the approval of the reelection of the external director at a general shareholders meeting, the company’s shareholders must be informed of the term previously served by him or her and of the reasons why the board of directors and audit committee recommended the extension of his or her term.
The Companies Law provides that a person is not qualified to serve as an external director if (i) the person is a relative of a controlling shareholder of the company, or (ii) if that person or his or her relative, partner, employer, another person to whom he or she was directly or indirectly subordinate, or any entity under the person’s control, has or had, during the two years preceding the date of appointment as an external director: (a) any affiliation or other disqualifying relationship with the company, with any person or entity controlling the company or a relative of such person, or with any entity controlled by or under common control with the company; or (b) in the case of a company with no shareholder holding 25% or more of its voting rights, had at the date of appointment as an external director, any affiliation or other disqualifying relationship with a person then serving as chairman of the board or chief executive officer, with a holder of 5% or more of the issued share capital or voting power in the company or with the most senior financial officer.
The term “relative” is defined under the Companies Law as a spouse, sibling, parent, grandparent or descendant; spouse’s sibling, parent or descendant; and the spouse of each of the foregoing persons.
Under the Companies Law, the term “affiliation” and the similar types of disqualifying relationships include (subject to certain exceptions):
| ● | an employment relationship; | |
| ● | a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships); |
75
| ● | control; and | |
| ● | service as an officeholder, excluding service as a director in a private company prior to the initial public offering of its shares, if such director was appointed as a director of the private company in order to serve as an external director following the initial public offering. |
The term “officeholder” is defined under the Companies Law as a general manager/chief executive officer, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of that person’s title, a director and any other manager directly subordinate to the general manager.
In addition, no person may serve as an external director if that person’s position or professional or other activities create, or may create, a conflict of interest with that person’s responsibilities as a director or otherwise interfere with that person’s ability to serve as a director or if the person is an employee of the ISA or of an Israeli stock exchange. A person may furthermore not continue to serve as an external director if he or she received direct or indirect compensation from the company including amounts paid pursuant to indemnification and/or exemption contracts or commitments and insurance coverage, other than for his or her service as an external director as permitted by the Companies Law and the regulations promulgated thereunder.
Following the termination of an external director’s service on a board of directors, such former external director and his or her spouse and children may not be provided a direct or indirect benefit by the company, its controlling shareholder or any entity under its controlling shareholder’s control. This includes engagement as an officeholder or director of the company or a company controlled by its controlling shareholder or employment by, or provision of services to, any such company for consideration, either directly or indirectly, including through a corporation controlled by the former external director. This restriction extends for a period of two years with regard to the former external director and his or her spouse or child and one year with respect to other relatives of the former external director.
External directors may be removed only by a special general meeting of shareholders called by the board of directors after the board has determined the occurrence of circumstances allow such dismissal, at the same special majority of shareholders required for their election or by a court, and in both cases only if the external directors cease to meet the statutory qualifications for their appointment or if they violate their duty of loyalty to the Company. In the event of a vacancy created by an external director which causes the company to have fewer than two external directors, the board of directors is required under the Companies Law to call a shareholders meeting as soon as possible to appoint such number of new external directors in order that the company thereafter has two external directors.
External directors may be compensated only in accordance with regulations adopted under the Companies Law.
If at the time at which an external director is appointed all members of the board of directors who are not controlling shareholders or relatives of controlling shareholders of the company are of the same gender, the external director to be appointed must be of the other gender. A director of a company may not be appointed as an external director of another company if at the same time a director of such other company is acting as an external director of the first company.
Under regulations promulgated pursuant to the Companies Law, a company with no controlling shareholder whose shares are listed for trading on specified exchanges outside of Israel, including Nasdaq, may adopt exemptions from various corporate governance requirements of the Companies Law, so long as such company satisfies the requirements of applicable foreign country laws and regulations, including applicable stock exchange rules, that apply to companies organized in that country and relating to the appointment of independent directors and the composition of audit and compensation committees. Such exemptions include an exemption from the requirement to appoint external directors and the requirement that an external director be a member of certain committees, as well as exemption from limitations on directors’ compensation. As of the date hereof, the Company has a controlling shareholder and therefore cannot use such exemptions.
In 2025, the general meeting of shareholders approved the re-appointment of Mr. Zooker as an external director for a three-year period as of March 9, 2025. On March 24, 2026, the general meeting of shareholders approved the re-appointment of Mrs. Levy as an external director for an additional three-year period effective as of March 23, 2026.
76
Independent Directors Under the Companies Law
An “independent director” is either an external director or a director who meets the same non-affiliation criteria as an external director (except for (i) the requirement that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed outside of Israel) and (ii) the requirement for accounting and financial expertise or professional qualifications), as determined by the audit committee, and who has not served as a director of the company for more than nine consecutive years. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature of such director’s service.
Regulations promulgated pursuant to the Companies Law provide that a director in a public company whose shares are listed for trading on specified exchanges outside of Israel, including Nasdaq, who qualifies as an independent director under the relevant non-Israeli rules and who meets certain non-affiliation criteria, which are less stringent than those applicable to independent directors as set forth above, would be deemed an “independent” director pursuant to the Companies Law provided: (i) he or she has not served as a director for more than nine consecutive years; (ii) he or she has been approved as such by the audit committee; and (iii) his or her remuneration shall be in accordance with the Companies Law and the regulations promulgated thereunder. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature of such director’s service.
The company may extend the office of an independent director for more than nine consecutive years, for period(s) which do not exceed three years each, provided that the audit committee and the board of directors of the company confirmed and presented to the general meeting of shareholders that, in light of the independent director’s expertise and special contribution to the board of directors and its committees, the re-election for such additional period(s) is in the company’s best interest.
Alternate Directors
Our Articles of Association provide, as allowed by the Companies Law, that any director may, subject to the conditions set thereto including approval of the nominee by our Board, appoint a person as an alternate to act in his place, to remove the alternate and appoint another in his place and to alternate in place of and alternate whose office is vacated for any reason whatsoever. Under the Companies Law, a person who is not qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving as an alternate director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is not already serving as a member of such committee, and if the alternate director is to replace an external director, he or she is required to be an external director and to have either “accounting and financial expertise” or “professional expertise,” depending on the qualifications of the external director he or she is replacing. A person who does not have the requisite “accounting and financial experience” or the “professional expertise,” depending on the qualifications of the external director he or she is replacing, may not be appointed as an alternate director for an external director. A person who is not qualified to be appointed as an independent director, pursuant to the Companies Law, may not be appointed as an alternate director of an independent director qualified as such under the Companies Law. Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes until the appointing director ceases to be a director or terminates the appointment.
Committees of the Board of Directors
Our board of directors has established three statutory standing committees: the audit committee; the financial statement examination committee and the compensation committee.
77
Audit Committee
Under the Companies Law, we are required to appoint an audit committee. The audit committee must be comprised of at least three directors, including all of the external directors (one of whom must serve as chair of the committee). The audit committee may not include the chairman of the board; a controlling shareholder of the company or a relative of a controlling shareholder; a director employed by or providing services on a regular basis to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder; or a director who derives most of his or her income from a controlling shareholder.
In addition, a majority of the members of the audit committee of a publicly traded company must be independent directors under the Companies Law. However, under the Exemptions Regulations, a company with no controlling shareholder may be exempted from certain obligations mentioned above.
Our audit committee is comprised of Mr. Zooker, Mrs. Levy and Mr. Ben Shitrit. Mr. Zooker serves as the chairperson of our audit committee.
Under the Companies Law, our audit committee is responsible for:
| (i) | determining whether there are deficiencies in the business management practices of the Company, and making recommendations to the board of directors to improve such practices; | |
| (ii) | determining whether to approve certain related party transactions (including transactions in which an officeholder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see “Management—Approval of Related Party Transactions under Israeli law”); | |
| (iii) | determining the approval process for transactions that are “non-negligible” (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee; | |
| (iv) | examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities; | |
| (v) | examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; | |
| (vi) | establishing procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and | |
| (vii) | where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto. |
Our audit committee may not conduct any discussions or approve any actions requiring its approval (see “Management—Approval of Related Party Transactions under Israeli law”), unless at the time of the approval a majority of the committee’s members are present, which majority consists of independent directors under the Companies Law, including at least one external director.
78
Our board of directors intends to adopt an audit committee charter to be effective upon the listing of the Ordinary Shares on Nasdaq setting forth, among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq Listing Rules (in addition to the requirements for such committee under the Companies Law), including, among others, the following:
| ● | oversight of our independent registered public accounting firm and recommending the engagement, compensation, or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law; | |
| ● | recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor, and reviewing the effectiveness of our system of internal control over financial reporting; | |
| ● | recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and | |
| ● | reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities’ findings, receiving reports regarding irregularities and legal compliance, acting according to “whistleblower policy” and recommending to our board of directors if so required. |
Nasdaq Requirements for Audit Committee
Under Nasdaq rules, we are required to maintain an audit committee consisting of at least three members, all of whom are independent and are financially literate, and one of whom has accounting or related financial management expertise.
As noted above, the members of our audit committee currently include Mr. Zooker and Mrs. Levy, who are external directors, and Mr. Ben Shitrit, who is an independent director (as such term is defined under the Companies Law), each of whom is “independent,” as such term is defined in under Nasdaq rules. Mr. Zooker serves as the Chairperson of our audit committee. All members of our audit committee meet the requirements for financial literacy under Nasdaq rules. Our board of directors has determined that each member of our audit committee is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by Nasdaq rules.
Financial Statement Examination Committee
Under the Companies Law, the board of directors of a public company in Israel must appoint a financial statement examination committee, which consists of members with accounting and financial expertise or the ability to read and understand financial statements. Our financial statement examination committee is comprised of Mr. Zooker, Mrs. Levy and Mr. Ben Shitrit. The function of a financial statements examination committee is to discuss and provide recommendations to its board of directors (including the report of any deficiency found) with respect to the following issues: (i) estimations and assessments made in connection with the preparation of financial statements; (ii) internal controls related to the financial statements; (iii) completeness and propriety of the disclosure in the financial statements; (iv) the accounting policies adopted and the accounting treatments implemented in material matters of the company; and (v) value evaluations, including the assumptions and assessments on which evaluations are based and the supporting data in the financial statements. Our independent registered public accounting firm and our internal auditor shall be invited to attend all meetings of our financial statements examination committee.
Compensation Committee
Under the Companies Law, the board of directors of any public company must establish a compensation committee. The compensation committee must be comprised of at least three directors, including all of the external directors, who must constitute a majority of the members of the compensation committee. Each compensation committee member that is not an external director must be a director whose compensation does not exceed an amount that may be paid to an external director. The compensation committee is subject to the same Companies Law restrictions as the audit committee as to (i) who may not be a member of the committee; and (ii) who may not be present during committee deliberations as described above.
Our compensation committee consists of Mr. Zooker, Mrs. Levy and Mr. Ben Shitrit. The Chairperson of our compensation committee is Mr. Zooker. Our compensation committee complies with the provisions of the Companies Law, the regulations promulgated thereunder, and our Articles of Association, on all aspects referring to its independence, authorities, and practice. Our compensation committee follows home country practice as opposed to complying with the compensation committee membership and charter requirements prescribed under Nasdaq rules.
79
Our compensation committee is responsible for, inter alia:
(a) reviewing and making recommendations to the board of directors with respect to the approval of the compensation policy with respect to the terms of office and employment of officeholders and (please see below for details on compensation policy under Israeli law);
(b) periodically reviewing the implementation of the compensation policy and providing the board of directors with recommendations with respect to any amendments or updates thereto;
(c) reviewing and resolving whether or not to approve arrangements with respect to the terms of office and employment of officeholders;
(d) determining whether or not to exempt a transaction with a candidate for chief executive officer from shareholder approval because such approval would preclude the engagement with such candidate, provided that such transaction is consistent with the compensation policy;
(e) overriding a determination of the shareholders in relation to certain compensation-related issues, subject to the approval of the board of directors and under special circumstances, such as, the approval of our compensation policy, after such compensation policy was reconsidered by the committee and on the basis of detailed reasons, the committee and thereafter the board of directors determined that the adoption of the compensation policy is in the best interests of the Company despite the objection of the general meeting;
Compensation Policy
Under the Companies Law, a compensation policy with respect to the terms of office and employment of officeholders must be adopted by the company’s board of directors, after considering the recommendations of the compensation committee. The compensation policy is then brought for approval by our shareholders, which requires a special majority (see “Management—Board Practices—Approval of Related Party Transactions under Israeli law”). Under the Companies Law, the board of directors may adopt the compensation policy if it is not approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and the board of directors revisit the matter and determine that adopting the compensation policy would be in the best interests of the company.
The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of executive officers and directors, including exemption, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation policy must relate to certain factors, including the advancement of the company’s objectives, the company’s business, and its long-term strategy, and the creation of appropriate incentives for executives. It must also consider, among other things, the company’s risk management, size, and the nature of its operations. The compensation policy must furthermore consider the following additional factors:
| ● | the education, skills, expertise, and accomplishments of the relevant director or executive; | |
| ● | the director’s or executive’s roles and responsibilities and prior compensation agreements with him or her; | |
| ● | the relationship between the cost of the terms of service of an officeholder and the average median compensation of the other employees of the company (including those employed through manpower companies), including the impact of disparities in salary upon work relationships in the company; | |
| ● | the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and | |
| ● | as to severance compensation, the period of service of the director or executive, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals, and the maximization of its profits, and the circumstances under which the person is leaving the company. |
80
The compensation policy must also include the following principles:
| ● | with the exception of officeholders who report directly to the chief executive officer, the link between variable compensation and long-term performance and measurable criteria; | |
| ● | the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation at the time of its grant; | |
| ● | the conditions under which a director or executive would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements; | |
| ● | the minimum holding or vesting period for variable, equity-based compensation; and | |
| ● | maximum limits for severance compensation. |
The compensation policy must also consider appropriate incentives from a long-term perspective.
The compensation committee is responsible for: (1) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by the shareholders); and (2) duties related to the compensation policy and to the compensation of a company’s office holders, including:
| ● | recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); | |
| ● | recommending to the board of directors periodic updates to the compensation policy; | |
| ● | administering the clawback policy; | |
| ● | assessing implementation of the compensation policy; | |
| ● | determining whether the terms of compensation of certain office holders of the company need not be brought to approval of the shareholders; and | |
| ● | determining whether to approve the terms of compensation of office holders that require the committee’s approval. |
Our compensation policy is designed to promote our long-term goals, work plan and policy, retain, motivate and incentivize our directors and executive officers while considering the risks that our activities involve, our size, the nature and scope of our activities, and the contribution of an officer to the achievement of our goals and maximization of profits, and align the interests of our directors and executive officers with our long-term performance. On the other hand, our compensation policy includes measures designed to reduce the executive officer’s incentives to take excessive risks that may harm us in the long-term, such as limits on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of an executive officer and minimum vesting periods for equity-based compensation.
Our compensation policy also addresses our executive officer’s individual characteristics (such as his or her respective position, education, scope of responsibilities, and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers, and considers the internal ratios between compensation of our executive officers and directors and other employees. Pursuant to our compensation policy, the compensation that may be granted to an executive officer may include: base salary, annual bonuses, equity-based compensation, benefits and retirement and termination of service arrangements. All cash bonuses (including annual, special bonus and signing or retention bonus) are limited to a maximum amount. In addition, our compensation policy provides for a recommended maximum ratio between the total variable (cash bonuses and equity-based compensation) and non-variable (base salary) compensation components, in accordance with an officer’s respective position with the company.
81
An annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. Our Chief Executive Officer will be entitled to recommend performance objectives to such executive officers, and such performance objectives will be approved by our compensation committee (and if required by law, by our board of directors).
The performance measurable objectives of our Chief Executive Officer will be determined annually by our compensation committee and board of directors. A less significant portion of Chief Executive Officer’s annual cash bonus may be based on a discretionary evaluation of the Chief Executive Officer’s respective overall performance by the compensation committee and the board of directors and require shareholder approval for such payment in the event the Chief Executive Officer is also a controlling shareholder of the company.
The equity-based compensation under our compensation policy for our executive officers is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the alignment between the executive officers’ interests with our long-term interests and those of our shareholders and to strengthen the retention and the motivation of executive officers in the long term. Our compensation policy provides for executive officer compensation in the form of share options or other equity-based compensation such as restricted share unit or restricted unit in accordance with our equity plan then in place. Share options granted to executive officers shall be subject to vesting periods in order to promote long-term retention of the awarded executive officers. The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the executive officer.
In addition, our compensation policy contains compensation recovery provisions which allows us under certain conditions to recover bonuses paid in excess, enables our Chief Executive Officer to approve an immaterial change in the terms of employment of a subordinate executive officer (provided that the changes of the terms of employment are in accordance our compensation policy) and allows us to exempt, indemnify and insure our executive officers and directors subject to certain limitations set forth thereto.
Our compensation policy also provides for compensation to the members of our board of directors as follows: (i) cash payment in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time; and (ii) equity-based compensation in an annual value as determined in our compensation policy.
Our current compensation policy was approved by our shareholders in November 2025 and is in effect for a period of three years.
Internal Auditor
Under the Companies Law, the board of directors of an Israeli public company must appoint an internal auditor nominated by the audit committee. Our internal auditor is Mr. Doron Cohen (Fahn Kanne Control Management Ltd, Grant Thornton). The role of the internal auditor is to examine, among other things, whether a company’s actions comply with the law and proper business procedure. The audit committee is required to oversee the activities, to assess the performance of the internal auditor as well as to review the internal auditor’s work plan. An internal auditor may not be an interested party or officeholder, or a relative of any interested party or officeholder, and may not be a member of the company’s independent accounting firm or its representative. The Companies Law defines an interested party as a holder of 5% or more of the outstanding shares or voting rights of a company, any person or entity that has the right to appoint at least one director or the general manager of the company or any person who serves as a director or as the general manager of a company. Our internal auditor is not an interested party in the Company and not our employee.
82
Remuneration of Directors
Under the Companies Law, remuneration of directors is subject to the approval of the compensation committee, thereafter by the board of directors, and thereafter, unless exempted under the regulations promulgated under the Companies Law, by the general meeting of the shareholders. According to the regulations, directors who are being compensated in accordance with such regulations are generally entitled to an annual fee, a participation fee for board or committee meetings and reimbursement of travel expenses for participation in a meeting which is held outside of the director’s place of residence. The minimum, fixed and maximum amounts of the annual and participation fees are set forth in the regulations and are based on the classification of the Company according to the size of its capital. Remuneration of a director who is compensated in accordance with the regulations, in an amount which is less than the fixed annual fee or the fixed participation fee, requires the approval of the compensation committee, the board of directors and the shareholders (in that order). A company may compensate a director (who is compensated in accordance with the regulations) in shares or rights to purchase shares, in addition to the annual and the participation fees, and the reimbursement of expenses, subject to certain limitations set forth in the regulations. Additionally, according to the regulations, shareholders’ approval for directors’ compensation and employment arrangements is not required if both the compensation committee and the board of directors resolve that either (i) the directors’ compensation and employment arrangements are solely for the benefit of the company or (ii) the remuneration to be paid to any such director does not exceed the maximum amounts set forth in the regulations. Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply.
Fiduciary Duties of Officeholders
The Companies Law imposes a duty of care and a duty of loyalty on all officeholders of a company.
The duty of care requires an officeholder to act with the level of care with which a reasonable officeholder in the same position would have acted under the same circumstances. The duty of care of an officeholder includes a duty to use reasonable means to obtain:
| ● | information on the advisability of a given action brought for his approval or performed by him by virtue of his position; and |
| ● | all other important information pertaining to these actions. |
The duty of loyalty of an officeholder requires an officeholder to act in good faith and for the benefit of the company and includes a duty to:
| ● | refrain from any conflict of interest between the performance of his duties in the company and his performance of his other duties or personal affairs; |
| ● | refrain from any action that is competitive with the company’s business; |
| ● | refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and |
| ● | disclose to the company any information or documents relating to the company’s affairs which the officeholder has received due to his position as an officeholder. |
Under the Companies Law, a company may approve an act specified above which would otherwise constitute a breach of the officeholder’s fiduciary duty, provided that the officeholder acted in good faith, neither the act nor its approval harms the company, and the officeholder discloses his, her or its personal interest a sufficient time before the approval of such act. Any such approval is subject to the terms of the Companies Law setting forth, among other things, the appropriate bodies of the company required to provide such approval and the methods of obtaining such approval.
83
Insurance
Under the Companies Law, a company may obtain insurance for any of its officeholders against the following liabilities incurred due to acts he or she performed as an officeholder, if and to the extent provided for in the company’s articles of association:
| ● | breach of his or her duty of care to the company or to another person, to the extent such a breach arises out of the negligent conduct of the officeholder; |
| ● | a breach of his or her duty of loyalty to the company provided that the officeholder acted in good faith and had reasonable cause to assume that his or her act would not prejudice the company’s interests; |
| ● | a financial liability imposed upon him or her in favor of another person; and |
| ● | any other event, occurrence or circumstance in respect of which it may lawfully insure an officeholder. |
Without derogating from the aforementioned, subject to the provisions of the Companies Law and the Israeli Securities Law, 5728-1968, or the Israeli Securities Law, we may also enter into a contract to ensure an officeholder, in respect of expenses, including reasonable litigation expenses and legal fees, incurred by an officeholder in relation to an administrative proceeding instituted against such officeholder or payment required to be made to an injured party, pursuant to certain provisions of the Israeli Securities Law.
As of May 1, 2026, we currently have directors’ and officers’ liability insurance, providing total coverage of $10 million per occurrence and in the aggregate, which provides coverage until April 30, 2027. Upon the listing on Nasdaq, we will have directors’ and officers’ liability insurance to cover the Nasdaq listing exposure (among other exposures) that will replace our existing policy. The new policy will provide total coverage of $25 million in the aggregate and will provide coverage until April 30, 2027. Such insurance includes company reimbursement for indemnification of our directors and officers, and directors’ and officers’ liability coverage, with total ABC coverage of $20 million per occurrence and in the aggregate, and Side A directors’ and officers’ liability insurance with total coverage of $5 million per occurrence and in the aggregate, for the benefit of all of our directors and officers. This policy will cover our directors and officers, including those who are controlling shareholders.
Indemnification
The Companies Law and the Israeli Securities Law provide that a company may indemnify an officeholder against the following liabilities and expenses incurred for acts performed by him or her as an officeholder, either pursuant to an undertaking made in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:
|
|
● | a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an officeholder, including a settlement or arbitrator’s award approved by a court; |
| ● | reasonable litigation expenses, including attorneys’ fees, expended by the officeholder (i) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (a) no indictment (as defined in the Companies Law) was filed against such officeholder as a result of such investigation or proceeding; and (b) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (ii) in connection with a monetary sanction; | |
| ● | reasonable litigation expenses, including attorneys’ fees, expended by the officeholder or imposed on him or her by a court: (i) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (ii) in criminal proceedings of which he or she was acquitted; or (iii) as a result of a conviction for a crime that does not require proof of criminal intent; |
84
| ● | expenses incurred by an officeholder in connection with an Administrative Procedure under the Israeli Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees or payment required to be made to an injured party, pursuant to certain provisions of the Israeli Securities Law. An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Israeli Securities Law; and | |
| ● | any other liability or expense for which it is permitted and/or will be permitted to indemnify an officeholder. |
The Companies Law also permits a company to undertake in advance to indemnify an officeholder, provided that if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount or criterion:
| ● | to events that in the opinion of the board of directors can be foreseen based on the company’s activities at the time that the undertaking to indemnify is made; and |
| ● | in amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances. |
Under the Companies Law, exemption, indemnification, and insurance of officeholders must be approved by the compensation committee and the board of directors (and, with respect to directors and the chief executive officer, by the shareholders). However, under regulations promulgated under the Companies Law, the insurance of officeholders does not require shareholder approval and may be approved by only the compensation committee if the engagement terms are determined in accordance with the company’s compensation policy, which was approved by the shareholders by the same special majority required to approve a compensation policy, provided that the insurance policy is on market terms and the insurance policy is not likely to materially impact the company’s profitability, assets or obligations.
Indemnification letters, covering indemnification and insurance of those liabilities imposed under the Companies Law and the Israeli Securities Law, as discussed above, were granted to each of our officeholders and were approved for any future officeholders.
The maximum indemnification amount set forth in such letters to all of our officeholders is limited to an amount equal to the higher of $5,000,000 and 25% of our total shareholders’ equity, neutralizing a provision made for such indemnification, as reflected in our most recent financial statements (annual or quarterly) prior to the date on which the indemnity payment is made. The maximum amount set forth in such letters is in addition to any amount paid (if paid) under insurance and/or by a third party pursuant to an indemnification arrangement.
In the opinion of the SEC, indemnification of directors and officeholders for liabilities arising under the Securities Act, however, is against public policy and therefore unenforceable.
Exemption
Under the Companies Law, an Israeli company may not exempt an officeholder from liability for a breach of his or her duty of loyalty, but may exempt in advance an officeholder from his or her liability to the company, in whole or in part, for damages caused to the company as a result of a breach of his or her duty of care (other than in relation to distributions), but only if a provision authorizing such exemption is included in its articles of association. Our articles of association provide that we may exempt, in whole or in part, any officeholder from liability to us for damages caused to the company as a result of a breach of his or her duty of care. Subject to the aforesaid limitations, under the indemnification agreements, we exempt and release our officeholders from any and all liability to us related to any breach by them of their duty of care to us to the fullest extent permitted by law.
Exemption letters were granted to each of our officeholders and were approved for any future officeholders.
85
Limitations
The Companies Law provides that we may not exempt or indemnify an officeholder nor enter into an insurance contract that would provide coverage for any liability incurred as a result of any of the following: (1) a breach by the officeholder of his or her duty of loyalty unless (in the case of indemnity or insurance only, but not exemption) the officeholder acted in good faith and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the officeholder of his or her duty of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) an act committed with the intention of making a personal profit unlawfully; or (4) any fine, monetary sanction, penalty or forfeit levied against the officeholder.
Under the Companies Law, exemption, indemnification and insurance of officeholders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain officeholders or under certain circumstances, also by the shareholders.
Our Articles of Association permit us to exempt (subject to the aforesaid limitation), indemnify and insure our officeholders to the fullest extent permitted or to be permitted by the Companies Law.
The foregoing descriptions summarize the material aspects and practices of our board of directors. For additional details, we also refer you to the full text of the Companies Law, as well as of our Articles of Association, which are exhibits to this registration statement of which this prospectus forms a part and are incorporated herein by reference.
There are no service contracts between us or any of our subsidiaries, on the one hand, and our directors in their capacity as directors, on the other hand, providing for benefits upon termination of service.
Approval of Related Party Transactions under Israeli Law
General
Under the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if:
| ● | the office holder acts in good faith and the act or its approval does not cause harm to the company; and |
| ● | the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company’s approval of such matter. |
Disclosure of Personal Interests of an Office Holder
The Companies Law requires that an office holder disclose to the company, promptly, and, in any event, not later than the board meeting at which the transaction is first discussed, any direct or indirect personal interest that he or she may have and all related material information known to him or her relating to any existing or proposed transaction by the company. If the transaction is an extraordinary transaction, the office holder must also disclose any personal interest held by:
| ● | the office holder’s relatives; or |
| ● | any corporation in which the office holder or his or her relatives holds 5% or more of the shares or voting rights, serves as a director or general manager or has the right to appoint at least one director or the general manager. |
86
An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction is a transaction:
| ● | not in the ordinary course of business; |
| ● | not on market terms; or |
| ● | that is likely to have a material effect on the company’s profitability, assets or liabilities. |
The Companies Law does not specify to whom within us nor the manner in which required disclosures are to be made. We require our office holders to make such disclosures to our board of directors.
Under the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association provide otherwise and provided that the transaction is in the company’s interest. If the transaction is an extraordinary transaction in which an office holder has a personal interest, first the audit committee and then the board of directors, in that order, must approve the transaction. Under specific circumstances, shareholder approval may also be required. Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting unless the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present in order to present the transaction that is subject to approval. A director who has a personal interest in a transaction, which is considered at a meeting of the board of directors or the audit committee, may not be present at this meeting or vote on this matter, unless a majority of members of the board of directors or the audit committee, as the case may be, has a personal interest. If a majority of the board of directors has a personal interest, then shareholder approval is generally also required.
Disclosure of Personal Interests of a Controlling Shareholder
Under the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directly or indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, and transactions concerning the terms of engagement and compensation of a controlling shareholder or a controlling shareholder’s relative, whether as an office holder or an employee, require the approval of the audit committee or the compensation committee, as the case may be, the board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders’ meeting. In addition, the shareholder approval must fulfill one of the following requirements:
| ● | at least a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or |
| ● | the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2% of the voting rights in the company. |
In addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with a term of more than three years requires the abovementioned approval every three years; however, such transactions not involving the receipt of services or compensation can be approved for a longer term, provided that the audit committee determines that such longer term is reasonable under the circumstances.
The Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the vote in question. Failure to so indicate will result in the invalidation of that shareholder’s vote.
The term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint 50% or more of the directors of the company or its general manager. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includes a shareholder who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company. For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated.
Approval of the Compensation of Directors and Executive Officers
The compensation of, or an undertaking to indemnify, insure or exempt, an office holder who is not a director requires the approval of the company’s compensation committee, followed by the approval of the company’s board of directors, and, if such compensation arrangement or an undertaking to indemnify, insure or exempt is inconsistent with the company’s stated compensation policy, or if the said office holder is the chief executive officer of the company (subject to a number of specific exceptions), then such arrangement is subject to the approval of our shareholders, subject to a special majority requirement.
87
Directors. Under the Companies Law, the compensation of our directors requires the approval of our Compensation Committee, the subsequent approval of the board of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the general meeting of our shareholders. If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and board of directors, shareholder approval by a special majority will be required.
Executive officers other than the chief executive officer. The Companies Law requires the approval of the compensation of a public company’s executive officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and (iii) only if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders by a special majority. However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision.
Chief executive officer. Under the Companies Law, the compensation of a public company’s chief executive officer is required to be approved by: (i) the company’s compensation committee; (ii) the company’s board of directors, and (iii) the company’s shareholders by a special majority. However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provides detailed reasons for their decision. In addition, the compensation committee may exempt the engagement terms of a candidate to serve as the chief executive officer from shareholders’ approval, if the compensation committee determines that the compensation arrangement is consistent with the company’s stated compensation policy, that the chief executive officer did not have a prior business relationship with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would impede the company’s ability to attain the candidate to serve as the company’s chief executive officer (and provide detailed reasons for the latter).
The approval of each of the compensation committee and the board of directors, with regard to the office holders and directors above, must be in accordance with the company’s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors may approve compensation terms of a chief executive officer that are inconsistent with the company’s compensation policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained by a special majority requirement.
Duties of Shareholders
Under the Companies Law, a shareholder has a duty to refrain from abusing his power in the company and to act in good faith and in an acceptable manner in exercising his rights and performing his obligations toward the company and other shareholders, including, among other things, in voting at general meetings of shareholders (and at shareholder class meetings) on the following matters:
| ● | amendment of the articles of association; |
| ● | increase in the company’s authorized share capital; |
| ● | merger; and |
| ● | the approval of related party transactions and acts of office holders that require shareholder approval. |
A shareholder also has a general duty to refrain from oppressing other shareholders. The remedies generally available upon a breach of contract will also apply to a breach of the above-mentioned duties, and in the event of oppression of other shareholders, additional remedies are available to the injured shareholder.
In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or has another power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account.
88
BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of our Ordinary Shares as of August 21, 2026 by:
| ● | each person, or group of affiliated persons, known to us to be the beneficial owner of more than 5% of our outstanding ordinary shares; |
| ● | each of our directors and executive officers; and |
| ● | all of our directors and executive officers as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to Ordinary Shares. Ordinary Shares issuable under share options or warrants that are exercisable within 60 days after August 21, 2026, are deemed outstanding for the purpose of computing the percentage ownership of the person holding the options, RSUs or warrants but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
We are not controlled by another corporation, by any foreign government or by any natural or legal persons except as set forth herein, and there are no arrangements known to us which would result in a change in control of the Company at a subsequent date. Except as indicated in footnotes to this table, we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown to be beneficially owned by them, based on information provided to us by such shareholders. Unless otherwise noted below, each beneficial owner’s address is: c/o TurboGen Ltd. 22 Efal Street, Kiryat Aryeh, Petah Tikva, 4951122 Israel.
| Number
of Ordinary Shares Beneficially Owned |
Percentage Owned |
|||||||
| Holders of more than 5% of our voting securities: | ||||||||
| Anglo Turbo, Limited Partnership(1) | 6,925,299 | 29.6 | % | |||||
| Directors and senior management who are not 5% holders: | ||||||||
| Yaron Gilboa | 375,590 | 1.6 | % | |||||
| Itzhak Natan Even Ari(1)* | 30,649 | ** | % | |||||
| Dan Katz | 11,333 | ** | % | |||||
| Ziv Nir | 24,988 | ** | % | |||||
| Dov Friedman(1) | 37,944 | ** | % | |||||
| David Deri* | 36,123 | ** | % | |||||
| Ziv Gafni* | 81,676 | ** | % | |||||
| Ethy Levy* | - | - | % | |||||
| Eli Zooker* | - | - | % | |||||
| Idan Ben Shitrit* | - | - | % | |||||
| Alex Katz* | 576,832 | 2.4 | % | |||||
| Neta Zruya Hashai | 21,875 | ** | % | |||||
| All directors and senior management as a group (12 persons) | 8,122,309 | 34.7 | % | |||||
| (1) | Mr. Dov Friedman and Mr. Itzhak Natan Even Ari have shared voting and dispositive power over the shares held by Anglo Turbo, Limited Partnership. |
| * | Indicates director of the Company. |
| ** | Less than 1%. |
89
Changes in Percentage Ownership by Major Shareholders
Over the course of 2025, there was a decrease in the percentage ownership of Anglo Turbo from 43.0% to 36.0%. There was an increase in the percentage ownership of Alex Katz from 1.4% to 5.6%. There was a decrease in the percentage ownership of Other Sources Energy Group (OSEG) Ltd. from 6.9% to 4.4%. There was a decrease in the percentage ownership Rafael from 5.1% to 4.2%.
Over the course of 2024, there was a decrease in the percentage ownership of Anglo Turbo from 44.4% to 43.0%. There was an increase in the percentage ownership of Other Sources Energy Group (OSEG) Ltd. from 7.3% to 6.9%. There was a decrease in the percentage ownership Rafael from 5.4% to 5.1%.
Over the course of 2023, there was an increase in the percentage ownership of Anglo Turbo from 44.0% to 44.4%. There was a decrease in the percentage ownership of Other Sources Energy Group (OSEG) Ltd. from 7.6% to 7.3%. There was a decrease in the percentage ownership of R-Jet 5.1% to 4.0%. There was a decrease in the percentage ownership Rafael from 5.5% to 5.4%.
Record Holders
As of August 21, 2026, to our knowledge, the majority of shareholders of record of our Ordinary Shares were not located in the United States. This is not representative of the number of beneficial holders of our shares nor is it representative of where such beneficial holders reside, since many of these shares were held of record by brokers or other nominees.
Shareholders Agreement between Anglo Turbo and Emil Katan
On July 8, 2021, the Controlling Shareholders entered into a shareholder agreement, or the Shareholder Agreement, with respect to the Company. Pursuant to the Shareholder Agreement, following the completion of the Company’s initial public offering on the TASE in November 2021 and becoming a public company in Israel, the parties agreed to vote in the same manner on all matters submitted to a vote at any general meeting of the Company’s shareholders, in accordance with Anglo Turbo’s sole discretion. The Shareholder Agreement is governed by the laws of the State of Israel and may be terminated by either party upon 90 days’ written notice. The Company is not a party to the Shareholder Agreement.
90
Employment and Service Agreements
We have entered into written employment or services agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information, and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance. Certain members of our senior management may be eligible for bonuses each year. To the extent a member of management is entitled to a bonus, such bonuses are payable upon meeting objectives and targets that are set by our Chief Executive Officer and approved annually by our compensation committee and our board of directors that also set the bonus targets for our Chief Executive Officer. For additional information regarding the employment and service agreements with our executive officers, see “Management —Employment and Advisory Agreements with Executive Officers.”
Indemnification Agreements and Exemption Letters
We have entered into indemnification agreements and exemption letters with all of our directors and with all members of our senior management. Each such indemnification agreement provides the officeholder with indemnification permitted under applicable law and up to a certain amount, and to the extent that these liabilities are not covered by directors and officer’s insurance. Each such exemption letter provides that we may exempt, in whole or in part, the relevant director or member of senior management from liability to us for damages caused to the Company as a result of a breach of his or her duty of care.
Services Agreement with Alex Katz
On July 19, 2023, we entered into a consulting services agreement with Mr. Alex Katz, who at the time was a controlling shareholder of Anglo Turbo, for strategic advisory and business development services related to our operations in the United States. The agreement, effective as of July 1, 2023, provided for a monthly fee of NIS 45,000 (approximately $12,000), plus applicable VAT, and the grant of 58,816 warrants to purchase up to 58,816 Ordinary Shares of the Company. The consulting agreement was terminated by mutual consent on December 26, 2024.
As of December 26, 2024, Mr. Katz had an unpaid consulting fee balance of NIS 675,000 (approximately $185,000). Pursuant to a conversion notice dated December 25, 2024, and following shareholder approval on March 9, 2025, the balance was converted into equity. Under the conversion, Mr. Katz was issued 150,000 Ordinary Shares at a price of NIS 5.31 (approximately $1.46) per share and 260,000 warrants to purchase up to 260,000 Ordinary Shares at an exercise price of NIS 11 (approximately $3.03) per share, expiring on December 24, 2025. On November 25, 2025, Mr. Katz was appointed as a director of the Company, and on November 26, 2025, our shareholders approved the reimbursement of reasonable expenses incurred by him in connection with his service as a director.
2025 Warrant Inducement Agreement with Alex Katz and Tannenbaum Group
On August 21, 2025, our audit committee and board of directors approved, and on November 26, 2025, our shareholders approved, the Company’s entry into two separate warrant exercise commitment and registration rights agreements with (i) Mr. Alex Katz, or the Katz Warrant Inducement Agreement, and (ii) the Tannenbaum Group, or the Tannenbaum Warrant Inducement Agreement, pursuant to Section 270(4) of the Israeli Companies Law. We refer to the Katz Warrant Inducement Agreement and the Tannenbaum Warrant Inducement Agreement collectively as the 2025 Warrant Inducement Agreement. Under the 2025 Warrant Inducement Agreement, Mr. Katz and the Tannenbaum Group separately agreed to exercise, no later than two business days following the date on which we inform them that we received approval to list our Ordinary Shares on Nasdaq, all warrants held by them and previously issued to them pursuant to the Katz Conversion Agreement and Tannenbaum Conversion Agreement, dated December 25, 2024 and December 31, 2024, respectively. In consideration for this commitment, pursuant to the 2025 Warrant Inducement Agreement, we agreed to register with the SEC 934,627 Ordinary Shares underlying the warrants. On March 24, 2026, the investors under the 2025 Warrant Inducement Agreement transferred to us the total exercise amount of $2.7 million under the warrants. The Ordinary Shares underlying the warrants will be issued upon receipt of Nasdaq listing approval.
91
Director Consulting Agreements
In January 2021, we began granting options to certain of our directors under the 2020 Share Incentive Plan. We describe these options grants in more detail under “Management — Equity Incentive Plan”.
Equity Grants
Since our inception, we have granted equity grants our employees, officers, directors, consultants and service providers and to purchase our Ordinary Shares under our 2020 Plan. For a description of the equity grants to see “Management — Equity Incentive Plan” above.
Shareholder Loans
Anglo Turbo
On April 4, 2023, we entered into a loan agreement with Anglo Turbo, in which we agreed to borrow up to NIS 1,200,000 (approximately $336,000), or the First Anglo Turbo Loan. The First Anglo Turbo Loan’s maturity was 24 months, in which the owed amount would be redeemed in a single installment on April 8, 2025. The First Anglo Turbo Loan does not bear interest and is linked to the Consumer Price Index, or CPI. The repayment of the First Anglo Turbo Loan was extended to December 31, 2025. Prior to the loan conversion described below, we had borrowed approximately NIS 500,000 ($136,00) of the original balance back to Anglo Turbo.
On September 27, 2023, the Company’s audit committee and board of directors approved the Company’s entry into a second loan agreement with Anglo Turbo, in which we agreed to borrow up to NIS 1,000,000, (approximately $260,000), or the Second Anglo Turbo Loan. The Second Anglo Turbo Loan had a maturity of six months, with the owed amount redeemed in a single installment on April 8, 2024. The loan did not bear interest and was linked to the August 2023 CPI. The repayment of the Second Anglo Turbo Loan was extended to December 31, 2025.
The First Anglo Turbo Loan and the Second Anglo Turbo Loan were non-interest-bearing, unsecured, and were not subject to any financial covenants.
On May 4, 2025, following the approval and recommendation of the audit committee, the board of directors approved the conversion of the full outstanding balance of the loans provided by Anglo Turbo (after CPI linkage totaling approximately NIS 1,570,000 ($435,000)) into 136,450 Ordinary Shares, each with a nominal value of NIS 0.01, at a conversion price of NIS 11.50 ($3.19) per share. The Company’s shareholders approved the conversion on November 26, 2025, in accordance with the terms described above.
Alex Katz
On December 1, 2022, our board of directors approved the Company’s entry into a loan agreement with Mr. Alex Katz, one of our major shareholders, or the Katz Loan Agreement, pursuant to which Mr. Katz provided the Company with a loan in the principal amount of NIS 3,500,000 (approximately $1,025,000). The Katz Loan Agreement bore a fixed annual interest rate of 10%, payable upon maturity, and was convertible into Ordinary Shares and non-tradable warrants of the Company, as determined on the conversion notice date. The loan was originally repayable in a single payment on December 1, 2024, and was subsequently extended by agreement on January 30, 2025, with no other changes to its terms.
On July 16, 2023, the board approved an additional loan agreement with Mr. Katz, or the Second Katz Loan Agreement, in the principal amount of NIS 2,000,000, (approximately $1,100,400) bearing a fixed annual interest rate of 10%, repayable on June 26, 2025. The Second Katz Loan Agreement was also convertible into Ordinary Shares and included a conversion price adjustment mechanism tied to the price per share in future capital raises
92
On December 25, 2024, the Company received a conversion notice from Mr. Katz for the full conversion of the outstanding balances under the Katz Loan Agreement and Second Katz Loan Agreement (including accrued interest), or the Katz Conversion Agreement. In connection with the Katz Conversion Agreement, Mr. Katz was issued an aggregate of (i) 1,114,795 Ordinary Shares and 457,143 warrants to purchase up to 457,143 Ordinary Shares at an exercise price of NIS 6.00 (approximately $1.64) per share, in consideration of the conversion of the First Loan Agreement and Second Loan Agreement (including accrued interest), and (ii) 150,000 Ordinary Shares and 260,000 warrants to purchase up to 260,000 Ordinary Shares at an exercise price at NIS 11.00 (approximately $3.03) per share, in consideration of the conversion of the outstanding balance under the services agreement in the amount of NIS 675,000 (plus VAT) (approximately $185,000).
Related Party Loans
Tannenbaum
On July 16, 2023, concurrently with the execution of the Second Katz Loan Agreement, Mr. Katz assigned one-half of his rights and obligations thereunder to the Tannenbaum Group, for an aggregate principal amount of NIS 2,000,000 (approximately $550,000). We entered into a parallel loan agreement with the Tannenbaum Group, or the Tannenbaum Loan Agreement, on identical terms and subject to the same conversion-price-adjustment mechanism as the Second Katz Loan Agreement, and issued to the Tannenbaum Group 142,857 warrants to purchase up to 142,857 Ordinary Shares at an exercise price of NIS 14.00 (approximately $3.77).
On December 31, 2024, we received a conversion notice from the Tannenbaum Group with respect to the Tannenbaum Loan in the aggregate amount of NIS 2,420,000, (approximately $660,000) which was converted on May 12, 2025, at a conversion price of NIS 6.00 per share (after adjustment), or the Tannenbaum Conversion Agreement. In connection with such conversion, the Company issued to Tannenbaum Group 403,333 Ordinary Shares and 142,857 warrants to purchase up to 142,857 Ordinary Shares at an exercise price of NIS 8.00 (approximately $2.26) per share.
Zohar Rappaport and Maayan Zvi
In February 2023, we approved a convertible loan framework with Mr. Zohar Rappaport, pursuant to which Mr. Rappaport committed to provide up to NIS 2.5 million (approximately $695,000). Under this framework, we received an initial tranche of NIS 1.0 million (approximately $273,000) in February 2023. The loan had an initial maturity date of February 26, 2025. In connection with the loan, we issued 71,429 warrants to purchase 71,429 Ordinary Shares, exercisable until February 26, 2025.
In April 2023, we entered into a separate convertible loan agreement with Ms. Maayan Zvi, under which we received gross proceeds of approximately NIS 1.0 million (approximately $273,000). This loan had an initial maturity date of October 3, 2024. In connection with this loan, we issued 71,429 warrants to purchase 71,429 Ordinary Shares, exercisable until October 3, 2024.
In February 2025, pursuant to the original loan framework agreement, Mr. Rappaport provided us with an additional loan in the amount of approximately $211,000 and assigned his right to provide a further loan of approximately $211,000 to Mr. Pinhas Hertz.
On October 22, 2025, following the approval of our Audit Committee and Board of Directors, and on November 26, 2025, following the approval of our shareholders, we entered into the Settlement Agreement with certain lenders and assignees, including parties who may be considered related parties due to their business relationships with our controlling shareholders and directors. We entered into this arrangement because we were unable to satisfy our obligations under previously issued convertible loan agreements after we did not receive the required approval from the TASE to list the underlying securities.
Under the Settlement Agreement, we agreed to allocate 595,744 ordinary shares to the relevant assignees at a conversion price of NIS 6.58 (approximately $2.01). Pursuant to the terms of the Settlement Agreement, if we do not achieve the Nasdaq Milestones, the effective conversion price will be reduced to NIS 2.91 ($0.90). Because we did not achieve the milestone relating to the receipt of Nasdaq approval by June 30, 2026, the effective conversion price of these Ordinary Shares was reduced to NIS 2.91 (or approximately $0.88).
Several of the participants in the original loan agreements and settlement agreement, including Mr. Zohar Rappaport and Ms. Maayan Zvi, have business relationships with certain of our controlling shareholders and directors. All participating lenders and assignees irrevocably waived any claims relating to the original loan agreements. The arrangement includes customary adjustment provisions for changes to our share capital and for dividend distributions. Depending on whether we achieve the milestone and on subsequent exercises or allocations, the securities issued under the agreement may represent approximately 4% of our fully diluted share capital as of the date of the agreement.
93
DESCRIPTION OF SHARE CAPITAL AND GOVERNING DOCUMENTS
General
The following description of our share capital, provisions of our Articles of Association as may be amended and restated from time to time, and Israeli law are summaries and do not purport to be complete, and is qualified in its entirety by reference to, the provisions of our Articles of Association as well as the Israeli law and any other documents referenced in the summary and from which the summary is derived.
As of August 21, 2026, our authorized share capital consisted of 100,000,000 Ordinary Shares, no par value per share, of which 23,389,747 shares were issued and outstanding as of such date. All of our outstanding Ordinary Shares have been validly issued, fully paid and non-assessable. Our Ordinary Shares are not redeemable and are not subject to any preemptive right.
Our registration number with the Israeli Registrar of Companies is 515086056.
Ordinary Shares
In the last three years, we have issued an aggregate of 9,604,194 Ordinary Shares in several public offerings, rights offerings and exercise of employees’ stock options.
Options
In the last three years, we have granted options to purchase an aggregate of 2,556,475 Ordinary Shares to directors, officers and employees with exercise prices ranging from NIS 0.30 to NIS 18.50 (approximately $0.10 to $5.80) per share.
Restricted Share Units
In the last three years, we have granted an aggregate of 841,394 RSUs to directors, officers and employees.
94
Our Articles of Association
Purposes and Objects of the Company
Our purpose is set forth in Article 3 of our Articles of Association and includes every lawful purpose.
The Powers of the Directors
Our board of directors shall direct our policy and shall supervise the performance of our Chief Executive Officer and his actions. Our board of directors may exercise all powers that are not required under the Companies Law or under our Articles of Association to be exercised or taken by our shareholders.
Rights Attached to Shares
Our Ordinary Shares shall confer upon the holders thereof:
| ● | equal right to attend and to vote at all of our general meetings, whether regular or special, with each Ordinary Share entitling the holder thereof, which attend the meeting and participate at the voting, either in person or by a proxy or by a written ballot, to one vote; |
| ● | equal right to participate in distribution of dividends, if any, whether payable in cash or in bonus shares, in distribution of assets or in any other distribution, on a per share pro rata basis; and |
| ● | equal right to participate, upon our dissolution, in the distribution of our assets legally available for distribution, on a per share pro rata basis. |
Election of Directors
Under our Articles of Association, the board of directors is to consist of not less than three (3) and not more than eleven (11) directors.
With the exception of directors elected by our board of directors and external directors, pursuant to our Articles of Association, our directors are elected at an annual general meeting of our shareholders and serve on the board of directors for a three-year term or until he or she resigns or unless he or she is removed by a majority vote of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and our Articles of Association. The directors are classified, with respect to the term for which they each severally hold office, into three classes, as nearly equal in number as practicable, and designated as Class I, Class II and Class III. The board of directors may assign members of the board of directors already in office to such classes at the time such classification becomes effective. If the number of directors is changed, any newly created directors or decrease in directors must be apportioned by the board among the classes to make them equal in number. Pursuant to our Articles of Association, other than the external directors, for whom special election requirements apply under the Companies Law, the vote required to appoint a director is a simple majority vote of holders of our voting shares, participating and voting at the relevant meeting. In addition, our Articles of Association allow our board of directors to appoint directors to fill vacancies and/or as an addition to the board of directors (subject to the maximum number of directors). Such appointments shall be for the remaining term that the departing director would have served. In the case of a vacancy arising due to the number of directors being below the maximum stated in our Articles of Association, our board of directors shall determine, at the time of appointment, the class to which the additional director will be assigned. External directors are elected for an initial term of three years, may be elected for additional terms of three years each under certain circumstances, and may be removed from office pursuant to the terms of the Companies Law.
The vote required to remove a director (other than an external director) is a supermajority of 70% of the voting power represented at the annual general meeting in person or by proxy and voting thereon, with abstentions disregarded from the count. A director’s removal becomes effective on the date fixed in the shareholder resolution. A director’s office is also automatically vacated upon death, resignation, legal incapacity to serve, or a board determination that the director is unable to serve due to mental or physical condition. External directors may only be removed in accordance with the provisions of the Companies Law.
95
Annual and Special Meetings
Under Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year, at such time and place which shall be determined by our board of directors, that must be no later than 15 months after the date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to as special general meetings. Our board of directors may call special meetings whenever it sees fit and upon the written request of: (a) any two of our directors or such number of directors equal to one quarter of the directors then at office; and/or (b) one or more shareholders holding, in the aggregate, either (i) five percent (5%) or more of our outstanding issued shares and one percent (1%) or more of our outstanding voting power or (ii) five percent (5%) or more of our outstanding voting power, or the Non Exempted Holding. However, under the Exemptions Regulations, the board of directors of an Israeli company whose shares are listed outside of Israel, shall convene a special meeting at the request of (i) one or more shareholders holding at least ten percent (10%) of the issued and outstanding share capital instead of five percent (5%) in the past, and at least one percent (1%) of the voting rights in the company, or (ii) one or more shareholders holding at least ten percent (10%) of the voting rights in the company, provided that if the applicable law as applicable to companies incorporated in the country which the Company is listed for trade, establishes a right to demand convening of such a meeting for those holding a percentage of holdings lower than ten percent (10%), then the Non Exempted Holding shall apply.
In addition, one or more shareholders that hold at least one percent (1%) of the voting rights of a company may request its board of directors to include an item on the agenda of a future general meeting to be convened in the future, provided that it is appropriate to discuss such a matter at the general meeting (and in case of a proposed additional agenda item for nominating or removing a director, at least five percent (5%) of the outstanding voting rights of the Company). Under the Exemptions Regulations, one or more shareholders of an Israeli company whose shares are listed outside of Israel, may request a company’s board of directors to include an appointment of a candidate for a position on the board of directors or the dismissal of a board member from office, as an item on the agenda of a future general meeting (if the company sees fit), provided that the shareholder holds at least five percent (5%) of the voting rights of the company, instead of one percent (1%) as required previously.
Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the board of directors, which may be between four (4) and sixty (60) days prior to the date of the meeting, as the case may be. Resolutions regarding the following matters must be approved at a general meeting of our shareholders:
| ● | amendments to our Articles of Association; |
| ● | the exercise of our board of directors’ powers by a general meeting if our board of directors is unable to exercise its powers and the exercise of any of its powers is required for our proper management; |
| ● | appointment or termination of our auditors; |
| ● | appointment of directors, including external directors; |
| ● | approval of acts and transactions requiring general meeting approval pursuant to the provisions of the Companies Law (mainly certain related party transactions) and any other applicable law; |
| ● | increases or reductions of our authorized share capital; |
| ● | a merger (as such term is defined in the Companies Law); and |
| ● | a dissolution of the Company by the court or by its shareholders (as such term is defined in the Companies Law). |
Notices
The Companies Law and our Articles of Association require that a notice of any annual or special shareholders meeting be provided at least 14 or 21 days prior to the meeting, as the case may be, and if the agenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders or interested or related parties, approval of the company’s general manager to serve as the chairman of the board of directors or an approval of a merger, notice must be provided at least 35 days prior to the meeting.
96
Quorum
As permitted under the Companies Law, the quorum required for our general meetings consists of at least two shareholders present in person, by proxy, written ballot or voting by means of electronic voting system, who hold or represent between them at least 25% of the total outstanding voting rights. If half an hour has elapsed from the date set for the meeting and the quorum has not been found valid, the meeting will be postponed (i) to the week after, at the same day, the same time and the same place of the meeting, (ii) to such day and such time and place as indicated in the notice to such meeting, or (iii) to such day and at such time and place as the Chairman of the General Meeting shall determine. The company will announce through the immediate report of the postponement of the meeting and the date of the postponed meeting. If no lawful quorum is present at the adjourned meeting as aforesaid, at least one shareholder shall be present in person or by proxy, a lawful quorum, unless the meeting was convened at the request of shareholders. If a special general meeting was summoned following the request of a shareholder, and within half an hour a legal quorum shall not have been formed, the meeting shall be canceled.
Adoption of Resolutions
Our Articles of Association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required under the Companies Law or our Articles of Association. A shareholder may vote in a general meeting in person, by proxy, by a written ballot.
Changing Rights Attached to Shares
Unless otherwise provided by the terms of the shares and subject to any applicable law, any modification of rights attached to any class of shares must be adopted by the holders of a majority of the shares of that class present a general meeting of the affected class or by written consent of all the shareholders of the affected class.
The enlargement of an existing class of shares or the issuance of additional shares thereof, shall not be deemed to modify the rights attached to the previously issued shares of such class or of any other class, unless otherwise provided by the terms of the shares.
Limitations on the Right to Own Securities in Our Company
There are no limitations on the right to own our securities.
Provisions Restricting Change in Control of Our Company
There are no specific provisions of our Articles of Association that would have an effect of delaying, deferring or preventing a change in control of our Company or that would operate only with respect to a merger, acquisition or corporate restructuring involving us or our subsidiaries. However, as described below, certain provisions of the Companies Law may have such effect.
The Companies Law includes provisions that allow a merger transaction and requires that each company that is a party to the merger have the transaction approved by its board of directors and, unless certain requirements described under the Companies Law are met, a vote of the majority of shareholders, and, in the case of the target company, also a majority vote of each class of its shares. For purposes of the shareholder vote of each party, unless a court rules otherwise, the merger will not be deemed approved if shares representing a majority of the voting power present at the shareholders meeting and which are not held by the other party to the merger (or by any person or group of persons acting in concert who holds 25% or more of the voting power or the right to appoint 25% or more of the directors of the other party) vote against the merger. If, however, the merger involves a merger with a company’s own controlling shareholder or if the controlling shareholder has a personal interest in the merger, then the merger will be subject to the same special majority approval that governs all extraordinary transactions with controlling shareholders instead. Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that as a result of the merger the surviving company will be unable to satisfy the obligations of any of the parties to the merger, and may further give instructions to secure the rights of creditors. If the transaction would have been approved by the shareholders of a merging company but did not receive the separate approval of each class or the exclusion of the votes of certain shareholders as provided above, a court may still approve the merger upon the petition of holders of at least 25% of the voting rights of a company. For such petition to be granted, the court must find that the merger is fair and reasonable, taking into account the value of the parties to the merger and the consideration offered to the shareholders. In addition, a merger may not be completed unless at least (1) 50 days have passed from the time that the requisite proposals for approval of the merger were filed with the Israeli Registrar of Companies by each merging company and (2) 30 days have passed since the merger was approved by the shareholders of each merging company.
97
The Companies Law also provides that, subject to certain exceptions, an acquisition of shares in an Israeli public company must be made by means of a “special” tender offer if as a result of the acquisition (1) the purchaser would become a holder of 25% or more of the voting rights in the company, unless there is already another holder of at least 25% or more of the voting rights in the company or (2) the purchaser would become a holder of 45% or more of the voting rights in the company, unless there is already a holder of more than 45% of the voting rights in the company. These requirements do not apply if, in general, the acquisition (1) was made in a private placement that received shareholders’ approval, subject to certain conditions, (2) was from a holder of 25% or more of the voting rights in the company which resulted in the acquirer becoming a holder of 25% or more of the voting rights in the company, or (3) was from a holder of more than 45% of the voting rights in the company which resulted in the acquirer becoming a holder of more than 45% of the voting rights in the company. A “special” tender offer must be extended to all shareholders. In general, a “special” tender offer may be consummated only if (1) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by the offeror and (2) the offer is accepted by a majority of the offerees who notified the company of their position in connection with such offer (excluding the offeror, controlling shareholders, holders of 25% or more of the voting rights in the company or anyone on their behalf, or any person having a personal interest in the acceptance of the tender offer). If a special tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser or such controlling person or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender offer.
If, as a result of an acquisition of shares, the acquirer will hold more than 90% of an Israeli company’s outstanding shares or of certain class of shares, the acquisition must be made by means of a tender offer for all of the outstanding shares, or for all of the outstanding shares of such class, as applicable. In general, if less than 5% of the outstanding shares, or of applicable class, are not tendered in the tender offer and more than half of the offerees who have no personal interest in the offer tendered their shares, all the shares that the acquirer offered to purchase will be transferred to it by operation of law. However, a tender offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the applicable class of shares. Any shareholders that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not, may request, by petition to an Israeli court, (i) appraisal rights in connection with a full tender offer, and (ii) that the fair value should be paid as determined by the court, for a period of six months following the acceptance thereof. However, the acquirer is entitled to stipulate, under certain conditions, that tendering shareholders will forfeit such appraisal rights.
However, under the Exemptions Regulations, such limitations regarding a tender offer do not apply to an Israeli company whose shares are listed outside of Israel, provided that the applicable law to companies incorporated in the country in which the company is listed for trade provides restrictions on the acquisition of control of any percentage of a company or that the acquisition of control of any percentage of the company requires the purchaser to also offer its securities (by way of tender offer) to shareholders from among the public.
Lastly, Israeli tax law treats some acquisitions, such as stock-for-stock exchanges between an Israeli company and a foreign company, less favorably than U.S. tax laws. For example, Israeli tax law may, under certain circumstances, subject a shareholder who exchanges his Ordinary Shares for shares in another corporation to taxation prior to the sale of the shares received in such stock-for-stock swap.
98
Exclusive Forum
Our Articles of Association provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions, and accordingly, both state and federal courts have jurisdiction to entertain such claims. While the federal forum provision in our Articles of Association does not restrict the ability of our shareholders to bring claims under the Securities Act, we recognize that it may limit shareholders’ ability to bring a claim in the judicial forum that they find favorable and may increase certain litigation costs, which may discourage the filing of claims under the Securities Act against the Company, its directors and officers. However, the enforceability of similar forum provisions (including exclusive federal forum provisions for actions, suits or proceedings asserting a cause of action arising under the Securities Act) in other companies’ organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive forum provisions in our Articles of Association. Any person or entity purchasing or otherwise acquiring any interest in our share capital shall be deemed to have notice of and to have consented to the choice of forum provision of our Articles of Association described above. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.
Changes in Our Capital
The general meeting may, by a simple majority vote of the shareholders attending the general meeting:
| ● | increase our registered share capital by the creation of new shares from the existing class or a new class, as determined by the general meeting; |
| ● | cancel any registered share capital which have not been taken or agreed to be taken by any person; |
| ● | consolidate and divide all or any of our share capital into shares of larger nominal value than our existing shares; and, |
| ● | subdivide our existing shares or any of them, our share capital or any of it, into shares of smaller nominal value than is fixed. |
Borrowing Powers
Pursuant to the Companies Law and our Articles of Association, our board of directors may exercise all powers and take all actions that are not required under law or under our Articles of Association to be exercised or taken by the Company’s shareholders.
99
The 2,066,243 Ordinary Shares being offered by the Selling Shareholders are those that will be issued to the selling shareholders in connection with the August 2026 Private Placement and the 2025 Warrant Inducement Agreement. For additional information regarding the aforementioned transactions, see “Prospectus Summary — Recent Developments.” We are registering the Ordinary Shares in order to permit the Selling Shareholders to offer the Ordinary Shares for resale from time to time.
Other than the relationships described herein, to our knowledge, the selling shareholders have not had any material relationship with us within the past three years.
Any selling shareholders that are affiliates of broker-dealers and any participating broker-dealers would be deemed to be “underwriters” within the meaning of the Securities Act, and any commissions or discounts given to any such selling shareholders or broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. To our knowledge, none of the selling shareholders listed below are broker-dealers or affiliates of broker-dealers.
The table below lists the selling shareholders and other information regarding the beneficial ownership of the Ordinary Shares by each of the selling shareholders. The second column lists the number of Ordinary Shares beneficially owned by each selling shareholder, based on its ownership of the Ordinary Shares, as of August 21, 2026.
The third column lists the Ordinary Shares being offered by this prospectus by the selling shareholders.
This prospectus generally covers the resale of at least a number of Ordinary Shares to be issued in the August 2026 Private Placement and in connection with the 2025 Warrant Inducement Agreement. Because the number of Ordinary Shares may be adjusted for reverse and forward share splits, share dividends, share combinations and other similar transactions, the number of Ordinary Shares that will actually be issued may be more or less than the number of Ordinary Shares being offered by this prospectus. The fourth column assumes the sale of all of the Ordinary Shares offered by the selling shareholders pursuant to this prospectus. Unless otherwise noted below, each beneficial owner’s address is: c/o TurboGen Ltd., 22 Efal Street, Kiryat Aryeh, Petah Tikva 4951122 Israel.
| Name of Selling Shareholders | Ordinary Shares Beneficially Owned Prior to Offering(1) | Percentage of Existing Ordinary Shares Prior to Offering | Maximum Number of Ordinary Shares to be Sold Pursuant to this Prospectus | Ordinary Shares Owned Immediately After Sale of Maximum Number of Shares in this Offering | Percentage of Ordinary Shares Immediately After Sale of Maximum Number of Shares in this Offering(2) | |||||||||||||||
| Alex Katz(3) | 1,368,602 | 5.4 | % | 791,770 | 576,832 | 2.2 | % | |||||||||||||
| Ari Real Estate (Arena) Investment Ltd. (4) | 339,485 | 1.3 | % | 339,485 | 0 | * | ||||||||||||||
| Daphna Bram(5) | 113,161 | * | % | 113,161 | 0 | * | % | |||||||||||||
| David Binyamin Greenberg(6) | 26,561 | * | % | 7,143 | 19,418 | * | % | |||||||||||||
| Dov Tannenbaum(7) | 131,186 | * | % | 14,286 | 116,900 | * | % | |||||||||||||
| Elliot Tannenbaum(8) | 416,130 | 1.6 | % | 121,428 | 294,702 | 1.2 | % | |||||||||||||
| Kesem Mutual Funds Ltd. (9) | 494,517 | 1.9 | % | 494,517 | 0 | * | % | |||||||||||||
| Moshe Danino (10) | 735,556 | 2.9 | % | 26,027 | 709,529 | 2.8 | % | |||||||||||||
| Pinhas Biton (11) | 158,426 | * | % | 158,426 | 0 | * | % | |||||||||||||
| * | Less than 1% |
100
| (1) | Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Ordinary shares subject to options or warrants currently exercisable, or exercisable within 60 days of August 21, 2026, are counted as outstanding for computing the percentage of the selling shareholder holding such options or warrants but are not counted as outstanding for computing the percentage of any other selling shareholder. |
| (2) | The applicable percentage of beneficial ownership is based on 25,455,990 Ordinary Shares that will be issued and outstanding immediately after this offering. |
| (3) | Includes (i) 576,832 Ordinary Shares currently issued and outstanding and (ii) 791,770 Ordinary Shares issuable in connection with the 2025 Warrant Inducement Agreement. |
| (4) | Includes 339,485 Ordinary Shares issuable in connection with the August 2026 Private Placement. Ari Real Estate (Arena) Investment Ltd. is a public company traded on the Tel Aviv Stock Exchange, and Mr. Tzachi Abu is the controlling shareholder. |
| (5) | Includes 113,161 Ordinary Shares issuable in connection with the August 2026 Private Placement. Ms. Bram has voting and dispositive power over the shares. |
| (6) | Includes (i) 19,418 Ordinary Shares currently issued and outstanding and (ii) 7,143 Ordinary Shares issuable in connection with the 2025 Warrant Inducement Agreement. Mr. David Binyamin Greenberg has the voting and dispositive power over the shares. |
| (7) | Includes (i) 28,500 Ordinary Shares currently issued and outstanding, (ii) 88,600 Ordinary Shares held by S.N.W. Ltd., or S.N.W, of which Mr. Tannenbaum is a beneficial owner of, and (iii) 14,268 Ordinary Shares issuable in connection with the 2025 Warrant Inducement Agreement. Mr. Dov Tannenbaum has sole voting and dispositive power over the shares individually, and shared voting and dispositive voting power over the shares held by S.N.W. |
| (8) | Includes (i) 294,702 Ordinary Shares currently issued and outstanding and (ii) 121,428 Ordinary Shares issuable in connection with the 2025 Warrant Inducement Agreement. Mr. Elliot Tannenbaum has the voting and dispositive power over the shares. |
| (9) | Includes 494,517 Ordinary Shares issuable in connection with the August 2026 Private Placement. Kesem Mutual Funds Ltd. has voting and dispositive power over the shares. Kesem Mutual Funds Ltd. is controlled by Phoenix Financial Ltd., a publicly traded company without a controlling shareholder. |
| (10) | Includes (i) 447,329 Ordinary Shares currently issued and outstanding and held directly by Mr. Danino, (ii) 27,200 Ordinary Shares held by Pai Mai Investments Ltd., of which Mr. Danino is a beneficial owner, (iii) 235,000 Ordinary Shares issuable upon exercise of options held by Mr. Danino, and (iv) 26,027 Ordinary Shares issuable in connection with the August 2026 Private Placement. Mr. Danino has sole voting and dispositive power over the shares held directly by him and shared voting and dispositive power over the shares held by Pai Mai Investments Ltd. |
| (11) | Includes 158,426 Ordinary Shares issuable in connection with the August 2026 Private Placement. Pinhas Biton has voting and dispositive power over the shares. |
101
We are registering the Ordinary Shares to be issued, to permit the resale of these Ordinary Shares by the holders of these securities from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the Ordinary Shares. Unlike an initial public offering, any resale by the selling shareholders of the Ordinary Shares is not being underwritten by any investment bank. We will bear all fees and expenses incident to our obligation to register the Ordinary Shares.
The selling shareholders may sell all or a portion of the Ordinary Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the Ordinary Shares are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The Ordinary Shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,
| ● | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
| ● | in the over-the-counter market; |
| ● | in transactions other than on these exchanges or systems or the over-the-counter market; |
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | sales pursuant to Rule 144 under the Securities Act; |
| ● | broker-dealers may agree with the selling securityholders to sell a specified number of such shares at a stipulated price per share; |
| ● | a combination of any such methods of sale; and |
| ● | any other method permitted pursuant to applicable law. |
102
If the selling shareholders affect such transactions by selling Ordinary Shares to or through underwriters, broker-dealers, or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the Ordinary Shares for whom they may act as an agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).
The selling shareholders may pledge or grant a security interest in some or all of the Ordinary Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Ordinary Shares from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate the Ordinary Shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The selling shareholders and any broker-dealer participating in the distribution of the shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of Ordinary Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.
Under the securities laws of some states, the Ordinary Shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states, the Ordinary Shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any selling shareholder will sell any or all of the Ordinary Shares registered pursuant to the registration statement, of which this prospectus forms a part.
The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares by the selling shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the Ordinary Shares to engage in market-making activities with respect to the shares. All of the foregoing may affect the marketability of the Ordinary Shares and the ability of any person or entity to engage in market-making activities with respect to the Ordinary Shares.
We will pay all expenses of the registration of the Ordinary Shares pursuant to the registration statement on Form F-1, of which this prospectus forms a part, estimated to be $895,047.33 in total, including, without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling shareholder will pay all underwriting discounts and selling commissions if any. We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities Act, in accordance with the August 2026 Private Placement, or the selling shareholders will be entitled to contribution. We may be indemnified by the selling shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling shareholders specifically for use in this prospectus, in accordance with the August 2026 Private Placement, or we may be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the Ordinary Shares will be freely tradable in the hands of persons other than our affiliates.
103
The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our Ordinary Shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign, including Israeli, or other taxing jurisdiction.
ISRAELI TAX CONSIDERATIONS AND GOVERNMENT PROGRAMS
The following is a description of the material Israeli income tax consequences of the ownership of our Ordinary Shares. The following also contains a description of material relevant provisions of the current Israeli income tax structure applicable to companies in Israel, with reference to its effect on us. To the extent that the discussion is based on new tax legislation which has not been subject to judicial or administrative interpretation, there can be no assurance that the tax authorities will accept the views expressed in the discussion in question. The discussion is not intended, and should not be taken, as legal or professional tax advice and is not exhaustive of all possible tax considerations.
The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our Ordinary Shares. Shareholders should consult their own tax advisors concerning the tax consequences of their particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.
General Corporate Tax Structure in Israel
Israeli companies are generally subject to corporate tax. As of December 2025, the corporate tax rate is 23%. However, the effective tax rate payable by a company that derives income from a “Preferred Enterprise” (as discussed below) may be considerably less. Capital gains derived by an Israeli company are generally subject to the prevailing corporate tax rate.
Capital gains derived by an Israeli resident company are subject to tax at the prevailing corporate tax rate. Under Israeli tax legislation, a corporation will be considered as an “Israeli resident company” if it meets one of the following: (i) it was incorporated in Israel; or (ii) the control and management of its business are exercised in Israel.
Law for the Encouragement of Industry (Taxes), 5729-1969
The Encouragement of Industry (Taxes) Law, 5729-1969, generally referred to as the Industry Encouragement Law, provides several tax benefits for “Industrial Companies.”
The Industry Encouragement Law defines an “Industrial Company” as an Israeli resident-company, of which 90% or more of its income in a given tax year, other than income from defense loans, is derived from an “Industrial Enterprise” located in Israel owned by it. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial production.
104
The following corporate tax benefits, among others, are available to Industrial Companies:
| ● | amortization of the cost of purchased a patent, rights to use a patent, and know-how, which are used for the development or advancement of the company, over an eight-year period, commencing on the year in which such rights were first exercised; |
| ● | under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and |
| ● | expenses related to a public offering are deductible in equal amounts over three years. |
Eligibility for benefits under the Industry Encouragement Law is not contingent upon approval of any governmental authority.
Tax Benefits and Grants for Research and Development
General. The IIA, an independent publicly funded agency, was created to provide a variety of practical tools and funding platforms aimed at effectively addressing the dynamic and changing needs of the local and international innovation ecosystem. The IIA acts under the Law for the Encouragement of Research, Development and Technological Innovation in the Industry 1984, or the Innovation Law, and the related IIA rules and regulations. Companies that receive funding from the IIA are subject to certain liabilities of the Innovation Law, mainly pertaining to the know-how that was developed with the support of the IIA within the framework of a research and development, or the R&D, funding program, and/or its derivatives (herein: “IIA-supported know-how”), and/or to the products derived from the technology that was developed with the support of the IIA within the framework of an R&D funding program, and/or its derivatives, or IIA-supported products.
Ownership Structure. Any change of ownership of an IIA-supported company must be reported to the IIA prior to the execution of change of ownership. A change in the company’s ownership, in which a foreign entity becomes a stakeholder in the company, requires the IIA approval and the new shareholder’s signature on an undertaking letter acknowledging the company’s liabilities to the Innovation Law.
Royalty payment. Companies supported by the IIA are required to pay royalties on income generated from IIA-supported products, until the full refund of the grant. For companies whose grants were approved by the IIA prior to July 2017, the grant was previously linked to the US dollar and bored a fixed LIBOR rate as published on the first day each year until December 31, 2023. From January 1, 2024, these same IIA grants have been linked to SOFR or an alternative rate published by the Bank of Israel, plus 0.72%.
Until July 2017, the rate of the royalties’ repayment was 3% of related income in the first three years, and 3.5% from the 4th year, onward. As of July 2017, the rate of the royalties’ refund for companies with total revenues of under $70M at the year preceding the application date, has changed to 3%.
On January 1, 2025, Amendment No. 9 to the Interest and Linkage Law was instated, in which the term “Linkage differences and interest” no longer exists. Therefore, the new default for an addition to a sum of money is Shekel interest, which relates to both maintaining the value of the money and compensating the creditor (the Shekel interest rate includes the linkage component). According to the Interest and Linkage Law, charges incurred up to December 31, 2024, will accrue interest and linkage differences, as defined prior to the law’s amendment, until December 31, 2024. Charges incurred on this date and afterwards, will accrue Shekel interest until they are fully repaid.
Manufacturing location. The manufacturing location (including assembly) is determined based on the manufacturing declaration located in the grant application submitted for supporting R&D, or the Manufacturing Declaration. The transfer of manufacturing activity outside Israel may be subject to the prior approval of the IIA and may result in an increased royalty payment’s rate and an increased total royalty payment, which will be calculated based on the deviation from the company’s Manufacturing Declaration. Cumulative deviation of under 10% requires notification of the IIA, while 10% or more requires pre-approval.
105
The rate of royalty payment due to overseas manufacturing is increased as follows: If the foreign company will be given the rights to only manufacture the IIA-supported products, an additional 1% will be incurred (e.g., instead of paying 3%, the company will pay 4%). However, if the foreign company will be given the rights to both manufacture and distribute the IIA-supported products, the royalties rate may be higher. The increased royalty rate will apply for revenues associated with manufacturing outside of Israel only. In general, royalties will be paid from the final sale price to the client and not from the inter-company transfer price. The company will have to keep paying royalties until it reaches the new royalty liability ceiling.
The increased repayment is calculated according to the percentage of the manufacturing activities that are carried out outside of Israel out of the total cumulative manufacturing activities both in Israel and abroad, as described in the following table:
| Percentage of manufacturing activities performed outside of Israel, cumulatively | The increased payment to the Israel Innovation Authority | |
| Up to 50% | 120% of the received grants + interest | |
| 50% – 90% | 150% of the received grants + interest | |
| 90% or more | 300% of the received grants + interest |
If the manufacturing is performed outside of Israel by us, the rate of royalties payable on revenues from the sale of products manufactured outside of Israel will increase by 1% over the regular rates. If the manufacturing is performed outside of Israel by a third party, the rate of royalties payable by us on those revenues will be equal to the ratio obtained by dividing the amount of the grants received from the IIA and our total investment in the project that was funded by these grants. The transfer of no more than 10% of the manufacturing capacity in the aggregate outside of Israel is exempt under the Research Law from obtaining the prior approval of the IIA. A company requesting funds from the IIA also has the option of declaring in its IIA grant application an intention to perform part of its manufacturing outside Israel, thus avoiding the need to obtain additional approval. On January 6, 2011, the Research Law was amended to clarify that the potential increased royalties specified in the table above will apply even in those cases where the IIA approval for transfer of manufacturing outside of Israel is not required, namely when the volume of the transferred manufacturing capacity is less than 10% of total capacity or when the company received an advance approval to manufacture abroad in the framework of its IIA grant application. For applications to manufacture abroad, submitted to the IIA after October 25, 2023, the maximum increased liability is up to 150% of the IIA grants, plus interest accrued thereon, instead of 300%.
Know-how location.
To the extent a company wishes to transfer its IIA-supported know-how outside of Israel, it must be preapproved by the IIA and the company may be required to pay an additional payment to the IIA, or the Fee, as described below. This Fee (which also relates to programs that are absolved of royalty payment) is calculated according to the ratio between the total grants received from the IIA and the total financial R&D expenses invested in the related know-how (including the received grants), multiplied by the transaction price of the IIA-supported know-how, or the Basic Amount.
The Basic Amount minus the received grants is depreciated at a rate of 1/7 per annum, as of the fourth year from the end of the last supported file in each program. As a result, when transferring IIA-supported know-how after 10 years or more, the maximum payment to the IIA will be only the total sum of the received grants plus interest, minus paid royalties.
However, the aforementioned formula has minimum and maximum limits. The minimum amount of the payment is the total sum of grants received plus interest. The maximum amount shall be no higher than six times the total sum of grants received plus interest. In the case that the IIA-supported company retains its R&D center in Israel for at least 3 consecutive years, following the year of transferring the IIA-supported know-how outside of Israel, while maintaining at least 75% of its R&D employment in Israel ((in relation to the R&D the Company had for the six (6) months before the know-how was transferred) – the payment will be limited to three times the total sum of grants received plus interest.
Transferring IIA-supported know-how outside of Israel according to the Innovation Law (including paying the Fee where necessary) releases the IIA-supported company from all liabilities to the IIA.
Transfer of know-how to another Israeli entity is subject to signature of the recipient Israeli entity on a formal IIA issued undertaking document, to comply with the provisions of the Innovation Law, including the restrictions on the transfer of know-how and the obligation to pay royalties.
106
According to the above, these liabilities should be taken into account when we consider whether to outsource manufacturing, engage in change of control transactions or otherwise transfer our know-how outside of Israel, and may require us to obtain the pre-approval of the IIA for certain actions and transactions and pay additional payments to the IIA. In particular, any change of control and any change of ownership of our Ordinary Shares that would make a non-Israeli citizen or resident an “interested party,” as defined in the Innovation Law, requires a prior written notice to the IIA in addition to any payment that may be required of us for transfer of manufacturing or know-how outside of Israel. If we fail to comply with the Innovation Law, we may be subject to criminal charges or to mandatory repayment of grants received by us (together with interest and penalties).
Tax Benefits for Research and Development
Israeli tax law allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, for the year in which they are incurred. Expenditures are deemed related to scientific research and development projects, if:
| ● | The expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
| ● | The research and development must be for the promotion of the company; and |
| ● | The research and development is carried out by or on behalf of the company seeking such tax deduction. |
The amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific research and development projects. No deduction under these research and development deduction rules is allowed if such deduction is related to an expense invested in an asset depreciable under the general depreciation rules of the Tax Ordinance. Expenditures not so approved are deductible in equal amounts over three years.
From time to time, we may apply the IIA for approval to allow a tax deduction for all research and development expenses during the year incurred. There can be no assurance that such application will be accepted.
Taxation of our Shareholders
Capital Gains Taxes Applicable to Non-Israeli Resident Shareholders.
A non-Israeli resident who derives capital gains from the sale of shares in an Israeli resident company might be exempt from Israeli tax upon meeting the following terms: (1) the shares sold were purchased after January 1, 2009; (2) the capital gain is not derived from the permanent establishment of the foreign resident in Israel; (3) the purchase of shares was not from a relative; (4) and the shares are not traded on the stock exchange in Israel. In addition, a foreign resident might be exempt from capital gains tax in Israel from a sale of securities traded on the stock exchange in Israel if the capital gain is not derived from a permanent establishment of the foreign resident in Israel and the shares were purchased by the foreign resident before the listing day on the stock exchange.
Additionally, a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under Convention Between the Government of the United States of America and the Government of the State of Israel with respect to Taxes on Income, as amended, or the United States-Israel Tax Treaty, the sale, exchange or other disposition of shares by a shareholder who is a United States resident (for purposes of the treaty) holding the shares as a capital asset and is entitled to claim the benefits afforded to such a resident by the U.S.-Israel Tax Treaty, or a Treaty U.S. Resident, is generally exempt from Israeli capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising from such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period preceding the disposition, subject to certain conditions; or (v) such Treaty U.S. Resident is an individual and was present in Israel for 183 days or more during the relevant taxable year.
107
In some instances where our shareholders may be liable for Israeli tax on the sale of their Ordinary Shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale.
Taxation of Non-Israeli Shareholders on Receipt of Dividends.
Non-Israeli residents are generally subject to Israeli income tax on the receipt of dividends paid on our Ordinary Shares at the rate of 25%, which tax will be withheld at source, unless relief is provided in a treaty between Israel and the shareholder’s country of residence. With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30%. A “substantial shareholder” is generally a person who alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means of control” generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. However, a distribution of dividends to non-Israeli residents is subject to withholding tax at source at a rate of 20% if the dividend is distributed from income attributed to a Preferred Enterprise, unless a reduced tax rate is provided under an applicable tax treaty. For example, under the United States-Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our Ordinary Shares who is a Treaty U.S. Resident is 25%. However, generally, the maximum rate of withholding tax on dividends, not generated by a Preferred Enterprise, that are paid to a United States corporation holding 10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. Notwithstanding the foregoing, dividends distributed from income attributed to a “Preferred Enterprise” are not entitled to such reduction under the tax treaty but are subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation, provided that the condition related to our gross income for the previous year (as set forth in the previous sentence) is met. If the dividend is attributable partly to income derived from a Preferred Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. We cannot assure you that we will designate the profits that we may distribute in a way that will reduce shareholders’ tax liability.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
THE FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSIDERED TO BE, LEGAL OR TAX ADVICE. EACH U.S. HOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND SALE OF ORDINARY SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.
Subject to the limitations described in the next paragraph, the following discussion summarizes the material U.S. federal income tax consequences to a “U.S. Holder” arising from the purchase, ownership and sale of the securities. For this purpose, a “U.S. Holder” is a holder of securities that is: (1) an individual citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under U.S. federal income tax laws; (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) or a partnership (other than a partnership that is not treated as a U.S. person under any applicable U.S. Treasury regulations) created or organized under the laws of the United States or the District of Columbia or any political subdivision thereof; (3) an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of source; (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust; or (5) a trust that has a valid election in effect to be treated as a U.S. person to the extent provided in U.S. Treasury regulations.
108
This summary is for general information purposes only and does not purport to be a comprehensive description of all of the U.S. federal income tax considerations that may be relevant to a decision to purchase our securities. This summary generally considers only U.S. Holders that will own our securities as capital assets. Except to the limited extent discussed below, this summary does not consider the U.S. federal tax consequences to a person that is not a U.S. Holder, nor does it describe the rules applicable to determine a taxpayer’s status as a U.S. Holder. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, or the Code, final, temporary and proposed U.S. Treasury regulations promulgated thereunder, administrative and judicial interpretations thereof, (including with respect to the Tax Cuts and Jobs Act of 2017), and the U.S.-Israel Income Tax Treaty, all as in effect as of the date hereof and all of which are subject to change, possibly on a retroactive basis, and all of which are open to differing interpretations. We will not seek a ruling from the IRS with regard to the U.S. federal income tax treatment of an investment in our securities by U.S. Holders and, therefore, can provide no assurances that the IRS will agree with the conclusions set forth below.
This discussion does not address all of the aspects of U.S. federal income taxation that may be relevant to a particular U.S. holder based on such holder’s particular circumstances and in particular does not discuss any estate, gift, generation-skipping, transfer, state, local, excise or foreign tax considerations. In addition, this discussion does not address the U.S. federal income tax treatment of a U.S. Holder who is: (1) a bank, life insurance company, regulated investment company, or other financial institution or “financial services entity;” (2) a broker or dealer in securities or foreign currency; (3) a person who acquired our securities in connection with employment or other performance of services; (4) a U.S. Holder that is subject to the U.S. alternative minimum tax; (5) a U.S. Holder that holds our securities as a hedge or as part of a hedging, straddle, conversion or constructive sale transaction or other risk-reduction transaction for U.S. federal income tax purposes; (6) a tax-exempt entity; (7) real estate investment trusts or grantor trusts; (8) a U.S. Holder that expatriates out of the United States or a former long-term resident of the United States; or (9) a person having a functional currency other than the U.S. dollar. This discussion does not address the U.S. federal income tax treatment of a U.S. Holder that owns, directly or constructively, at any time, securities representing 10% or more of our voting power. Additionally, the U.S. federal income tax treatment of partnerships (or other pass-through entities) or persons who hold securities through a partnership or other pass-through entity are not addressed.
Each prospective investor is advised to consult his or her own tax adviser for the specific tax consequences to that investor of purchasing, holding or disposing of our securities, including the effects of applicable state, local, foreign or other tax laws and possible changes in the tax laws.
Taxation of Dividends Paid on securities
We do not intend to pay dividends in the foreseeable future. In the event that we do pay dividends, and subject to the discussion under the heading “Passive Foreign Investment Companies” below and the discussion of “qualified dividend income” below, a U.S. Holder, other than certain U.S. Holder’s that are U.S. corporations, will be required to include in gross income as ordinary income the amount of any distribution paid on securities (including the amount of any Israeli tax withheld on the date of the distribution), to the extent that such distribution does not exceed our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. The amount of a distribution which exceeds our earnings and profits will be treated first as a non-taxable return of capital, reducing the U.S. Holder’s tax basis for the securities to the extent thereof, and then capital gain. We do not expect to maintain calculations of our earnings and profits under U.S. federal income tax principles and, therefore, U.S. Holders should expect that the entire amount of any distribution generally will be reported as dividend income.
In general, preferential tax rates for “qualified dividend income” and long-term capital gains are applicable for U.S. Holders that are individuals, estates or trusts. For this purpose, “qualified dividend income” means, inter alia, dividends received from a “qualified foreign corporation.” A “qualified foreign corporation” is a corporation that is entitled to the benefits of a comprehensive tax treaty with the United States which includes an exchange of information program. The IRS has stated that the U.S.- Israel Tax Treaty satisfies this requirement and we believe we are eligible for the benefits of that treaty.
109
In addition, our dividends will be qualified dividend income if our securities are readily tradable on Nasdaq or another established securities market in the United States. Dividends will not qualify for the preferential rate if we are treated, in the year the dividend is paid or in the prior year, as a PFIC, as described below under “Passive Foreign Investment Companies.” A U.S. Holder will not be entitled to the preferential rate: (1) if the U.S. Holder has not held our securities for at least 61 days of the 121-day period beginning on the date which is 60 days before the ex-dividend date, or (2) to the extent the U.S. Holder is under an obligation to make related payments on substantially similar property. Any days during which the U.S. Holder has diminished its risk of loss on our securities are not counted towards meeting the 61-day holding period. Finally, U.S. Holders who elect to treat the dividend income as “investment income” pursuant to Code section 163(d)(4) will not be eligible for the preferential rate of taxation.
The amount of a distribution with respect to our securities will be measured by the amount of the fair market value of any property distributed, and for U.S. federal income tax purposes, the amount of any Israeli taxes withheld therefrom. Cash distributions paid by us in NIS will be included in the income of U.S. Holders at a U.S. dollar amount based upon the spot rate of exchange in effect on the date the dividend is includible in the income of the U.S. Holder, and U.S. Holders will have a tax basis in such NIS for U.S. federal income tax purposes equal to such U.S. dollar value. If the U.S. Holder subsequently converts the NIS into U.S. dollars or otherwise disposes of it, any subsequent gain or loss in respect of such NIS arising from exchange rate fluctuations will be U.S. source ordinary exchange gain or loss.
Taxation of the Disposition of Securities
Except as provided under the PFIC rules described below under “Passive Foreign Investment Companies,” upon the sale, exchange or other disposition of our securities, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between such U.S. Holder’s tax basis for the securities in U.S. dollars and the amount realized on the disposition in U.S. dollar (or its U.S. dollar equivalent determined by reference to the spot rate of exchange on the date of disposition, if the amount realized is denominated in a foreign currency). The gain or loss realized on the sale, exchange or other disposition of securities will be long-term capital gain or loss if the U.S. Holder has a holding period of more than one year at the time of the disposition. Individuals who recognize long-term capital gains may be taxed on such gains at reduced rates of tax. The deduction of capital losses is subject to various limitations.
Passive Foreign Investment Companies
Special U.S. federal income tax laws apply to U.S. taxpayers who own shares of a corporation that is a PFIC. We will be treated as a PFIC for U.S. federal income tax purposes for any taxable year that either:
| ● | 75% or more of our gross income (including our pro rata share of gross income for any company, in which we are considered to own 25% or more of the shares by value), in a taxable year is passive; or |
| ● | At least 50% of our assets, averaged over the year and generally determined based upon fair market value (including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value) are held for the production of, or produce, passive income. |
For this purpose, passive income generally consists of dividends, interest, rents, royalties, annuities and income from certain commodities transactions and from notional principal contracts. Cash is treated as generating passive income.
Based on the composition of our income and valuation of our assets, we were not a PFIC for 2025 and we do not expect to become a PFIC in the future. The tests for determining PFIC status are applied annually, however, and it is difficult to make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of our securities. Accordingly, there can be no assurance that we currently are not or will not become a PFIC.
Based on the projected composition of our income and valuation of our assets, we do not expect to be a PFIC for 2023, and we do not expect to become a PFIC in the future, although there can be no assurance in this regard. If we currently are or become a PFIC, each U.S. Holder who has not elected to mark the shares to market (as discussed below), would, upon receipt of certain distributions by us and upon disposition of our securities at a gain: (1) have such distribution or gain allocated ratably over the U.S. Holder’s holding period for the securities, as the case may be; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, when shares of a PFIC are acquired by reason of death from a decedent that was a U.S. Holder, the tax basis of such shares would not receive a step-up to fair market value as of the date of the decedent’s death, but instead would be equal to the decedent’s basis if lower, unless all gain were recognized by the decedent. Indirect investments in a PFIC may also be subject to these special U.S. federal income tax rules.
110
The PFIC rules described above would not apply to a U.S. Holder who makes a QEF election for all taxable years that such U.S. Holder has held the securities while we are a PFIC, provided that we comply with specified reporting requirements. Instead, each U.S. Holder who has made such a QEF election is required for each taxable year that we are a PFIC to include in income such U.S. Holder’s pro rata share of our ordinary earnings as ordinary income and such U.S. Holder’s pro rata share of our net capital gains as long-term capital gain, regardless of whether we make any distributions of such earnings or gain. In general, a QEF election is effective only if we make available certain required information. The QEF election is made on a shareholder-by-shareholder basis and generally may be revoked only with the consent of the IRS. We do not intend to notify U.S. Holders if we believe we will be treated as a PFIC for any tax year. In addition, we do not intend to furnish U.S. Holders annually with information needed in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. Therefore, the QEF election will not be available with respect to our securities.
In addition, the PFIC rules described above would not apply if we were a PFIC and a U.S. Holder made a mark-to-market election. A U.S. Holder of our securities which are regularly traded on a qualifying exchange, including Nasdaq, can elect to mark the securities to market annually, recognizing as ordinary income or loss each year an amount equal to the difference as of the close of the taxable year between the fair market value of the securities and the U.S. Holder’s adjusted tax basis in the securities. Losses are allowed only to the extent of net mark-to-market gain previously included income by the U.S. Holder under the election for prior taxable years.
U.S. Holders who hold our securities during a period when we are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC. U.S. Holders are strongly urged to consult their tax advisors about the PFIC rules.
Tax on Net Investment Income
U.S. Holders who are individuals, estates or trusts will generally be required to pay a 3.8% Medicare tax on their net investment income (including dividends on and gains from the sale or other disposition of our securities), or in the case of estates and trusts on their net investment income that is not distributed. In each case, the 3.8% Medicare tax applies only to the extent the U.S. Holder’s total adjusted income exceeds applicable thresholds.
Tax Consequences for Non-U.S. Holders of Securities
Except as provided below, an individual, corporation, estate or trust that is not a U.S. Holder referred to below as a non-U.S. Holder, generally will not be subject to U.S. federal income or withholding tax on the payment of dividends on, and the proceeds from the disposition of, our securities.
A non-U.S. Holder may be subject to U.S. federal income tax on a dividend paid on our securities or gain from the disposition of our securities if: (1) such item is effectively connected with the conduct by the non-U.S. Holder of a trade or business in the United States and, if required by an applicable income tax treaty is attributable to a permanent establishment or fixed place of business in the United States; or (2) in the case of a disposition of our securities, the individual non-U.S. Holder is present in the United States for 183 days or more in the taxable year of the disposition and other specified conditions are met.
In general, non-U.S. Holders will not be subject to backup withholding with respect to the payment of dividends on our securities if payment is made through a paying agent, or office of a foreign broker outside the United States. However, if payment is made in the United States or by a U.S. related person, non-U.S. Holders may be subject to backup withholding, unless the non-U.S. Holder provides an applicable IRS Form W-8 (or a substantially similar form) certifying its foreign status, or otherwise establishes an exemption.
The amount of any backup withholding from a payment to a non-U.S. Holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
Information Reporting and Withholding
A U.S. Holder may be subject to backup withholding at a rate of 24% with respect to cash dividends and proceeds from a disposition of securities. In general, backup withholding will apply only if a U.S. Holder fails to comply with specified identification procedures. Backup withholding will not apply with respect to payments made to designated exempt recipients, such as corporations and tax-exempt organizations. Backup withholding is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, provided that the required information is timely furnished to the IRS.
Pursuant to recently enacted legislation, a U.S. Holder with interests in “specified foreign financial assets” (including, among other assets, our securities, unless such securities are held on such U.S. Holder’s behalf through a financial institution) may be required to file an information report with the IRS if the aggregate value of all such assets exceeds $50 thousand on the last day of the taxable year or $75 thousand at any time during the taxable year (or such higher dollar amount as may be prescribed by applicable IRS guidance); and may be required to file a Report of Foreign Bank and Financial Accounts, or FBAR, if the aggregate value of the foreign financial accounts exceeds $10 thousand at any time during the calendar year. You should consult your own tax advisor as to the possible obligation to file such information report.
111
Certain legal matters concerning this offering will be passed upon for us by Sullivan & Worcester LLP, New York, New York. Certain legal matters with respect to the legality of the issuance of the securities offered by this prospectus and other legal matters concerning this offering relating to Israeli law will be passed upon for us by Sullivan & Worcester Tel Aviv (Har-Even & Co.), Tel Aviv, Israel.
The financial statements as of December 31, 2025 and 2024 and for the years then ended included in this prospectus have been so included in reliance on the report of Brightman Almagor Zohar & Co., Certified Public Accountants, a firm in the Deloitte Global Network, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The following are the estimated expenses of the issuance and distribution of the securities being registered under the registration statement of which this prospectus forms a part, all of which will be paid by us. With the exception of the SEC registration fee, all amounts are estimates and may change:
| SEC registration fee | $ | 3,047.33 | * | |
| Printer fees and expenses | $ | 25,000 | ||
| Legal fees and expenses | $ | 458,000 | ||
| Accounting fees and expenses | $ | 355,000 | ||
| Miscellaneous | $ | 54,000 | ||
| Total | $ | 895,047.33 |
| * | Previously Paid. |
112
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated under the laws of the State of Israel. Service of process upon us and upon our directors and officers and the Israeli experts named in the registration statement of which this prospectus forms a part, a substantial majority of whom reside outside of the United States, may be difficult to obtain within the United States. Furthermore, because substantially all of our assets and a substantial of our directors and officers are located outside of the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States.
We have been informed by our legal counsel in Israel, Sullivan & Worcester Tel Aviv (Har-Even & Co.), that it may be difficult to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, if U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law.
Subject to specified time limitations and legal procedures, Israeli courts may enforce a U.S. judgment in a civil matter which, subject to certain exceptions, is non-appealable, including judgments based upon the civil liability provisions of the Securities Act and the Exchange Act and including a monetary or compensatory judgment in a non-civil matter, provided that among other things:
| ● | the judgment is obtained after due process before a court of competent jurisdiction, according to the laws of the state in which the judgment is given and the rules of private international law currently prevailing in Israel; |
| ● | the judgment is final and is not subject to any right of appeal; |
| ● | the prevailing law of the foreign state in which the judgment was rendered allows for the enforcement of judgments of Israeli courts; however, the court may enforce a foreign judgment, even without reciprocity, based on the request of the Attorney General, under certain circumstances; |
| ● | adequate service of process has been effected and the defendant has had reasonable opportunity to be heard and to present his or her evidence; |
| ● | the liabilities under the judgment are enforceable according to the laws of the State of Israel and the judgment and the enforcement of the civil liabilities set forth in the judgment is not contrary to the law or public policy in Israel nor likely to impair the security or sovereignty of Israel; |
| ● | the judgment was not obtained by fraud, there was reasonable opportunity for the defendant to present its case, the judgment was given by an authorized court to issue it under the applicable international private law rules in Israel, and the judgment does not conflict with any other valid judgments in the same matter between the same parties; an action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted in the foreign court; |
| ● | the judgment is enforceable according to the laws of the foreign state in which it was granted; and |
| ● | enforcement may be denied if it could harm the sovereignty or security of the State of Israel. |
If a foreign judgment is declared enforceable by an Israeli court, it generally will be payable in Israeli currency. The conversion to Israeli currency will be based on the latest official exchange rate published by the Bank of Israel before the payment date. However, the obligated party will fulfill its duty for the judgment even if it chooses to make the payment in the same foreign currency, subject to the laws governing the foreign currency applicable at that time. Pending collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily will be linked to the Israeli consumer price index plus interest at the annual statutory rate set by Israeli regulations prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rates.
113
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form F-1 under the Securities Act relating to this offering of our securities. This prospectus does not contain all of the information contained in the registration statement. The rules and regulations of the SEC allow us to omit certain information from this prospectus that is included in the registration statement. Statements made in this prospectus concerning the contents of any contract, agreement or other document are summaries of all material information about the documents summarized but are not complete descriptions of all terms of these documents. If we filed any of these documents as an exhibit to the registration statement, you may read the document itself for a complete description of its terms.
The SEC maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through the SEC’s website at www.sec.gov.
We are subject to the information reporting requirements of the Exchange Act that are applicable to foreign private issuers, and under those requirements are filing reports with the SEC. Those other reports or other information may be inspected without charge at the locations described above. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements. Further, our officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act and our principal shareholders are exempt from the reporting provisions thereunder. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and intend to submit to the SEC, on Form 6-K, unaudited interim financial information.
We maintain a corporate website at https://turbogenchp.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. We will post on our website any materials required to be so posted on such website under applicable corporate or securities laws and regulations, including, posting any XBRL interactive financial data required to be filed with the SEC and any notices of general meetings of our shareholders.
114
Financial Statements
For the Year Ended December 31, 2025
Table of Contents
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Turbogen Ltd.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Turbogen Ltd. (the “Company”) as of December 31, 2025 and 2024 and the related statements of comprehensive loss, shareholders’ deficiency and cash flows for each of the two years in the period ended December 31, 2025 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1b to the financial statements, the Company’s lack of revenues and accumulated operating losses raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1b. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Brightman Almagor Zohar & Co.
Certified Public Accountants
A Firm in the Deloitte Global Network
Tel Aviv, Israel
May 14, 2026
We have served as the Company’s auditor since 2019.
F-2
BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
| December 31 | ||||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 3,942 | $ | 336 | ||||
| Restricted cash | 36 | 17 | ||||||
| Other current assets | 2,689 | 66 | ||||||
| Total current assets | 6,667 | 419 | ||||||
| LONG-TERM ASSETS: | ||||||||
| Operating lease right-of-use assets, net | 204 | 356 | ||||||
| Property, plant and equipment, net | 83 | 91 | ||||||
| Other assets | 109 | 95 | ||||||
| Total long-term assets | 396 | 542 | ||||||
| Total assets | $ | 7,063 | $ | 961 | ||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Loans payable to related parties – current portion | $ | - | $ | 405 | ||||
| Operating lease liabilities – current portion | 186 | 151 | ||||||
| Trade payables | 176 | 105 | ||||||
| Other payables | 1,152 | 1,382 | ||||||
| Convertible loans | - | 3,050 | ||||||
| Warrants liability | 8,335 | 693 | ||||||
| Total current liabilities | 9,849 | 5,786 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Operating lease liabilities – net of current portion | 50 | 209 | ||||||
| Loans payable to related parties – net of current portion | 279 | 205 | ||||||
| Total long-term liabilities | 329 | 414 | ||||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
| SHAREHOLDERS’ DEFICIENCY | ||||||||
| December 31, 2025 no par value – Authorized: 100,000,000 shares; issued and outstanding: 21,152,241 shares. December 31, 2024, 0.01 NIS par value - Authorized: 100,000,000 shares; issued and outstanding: 14,720,692 shares | - | 42 | ||||||
| Additional paid-in capital | 40,367 | 18,716 | ||||||
| Accumulated deficit | (43,482 | ) | (23,997 | ) | ||||
| Total shareholders’ deficiency | (3,115 | ) | (5,239 | ) | ||||
| Total liabilities and shareholders’ deficiency | $ | 7,063 | $ | 961 | ||||
The accompanying notes are an integral part of the financial statements.
F-3
STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars in thousands, except share and per share data)
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating Expenses: | ||||||||
| Research and development expenses, net | $ | 946 | $ | 1,192 | ||||
| Sales and marketing expenses | 1,265 | 273 | ||||||
| General and administrative expenses | 6,894 | 1,366 | ||||||
| Loss from operations | 9,105 | 2,831 | ||||||
| Financial expenses: | ||||||||
| Changes in fair value of warrants liabilities and extinguishment of debt | 10,666 | 82 | ||||||
| Other financing (income) expenses, net | (286 | ) | 85 | |||||
| Net loss and comprehensive loss | 19,485 | 2,998 | ||||||
| Basic loss per share of ordinary shares | (1.09 | ) | (0.21 | ) | ||||
| Diluted loss per share of ordinary shares | (1.09 | ) | (0.21 | ) | ||||
| Weighted average number of shares used in computing basic loss per share of ordinary shares | 17,953,558 | 14,251,689 | ||||||
| Weighted average number of shares used in computing diluted loss per share of ordinary shares | 17,953,558 | 14,458,415 | ||||||
The accompanying notes are an integral part of the financial statements.
F-4
STATEMENTS OF SHAREHOLDERS’ DEFICIENCY
(U.S. dollars in thousands, except share and per share data)
| Number (*) | Amount | Shares and Additional paid in capital | Accumulated deficit | Total | ||||||||||||||||
| Balance as of December 31, 2023 | 13,792,765 | $ | 39 | $ | 16,460 | $ | (20,999 | ) | $ | (4,500 | ) | |||||||||
| Issuance of ordinary shares through rights offering | 262,064 | 1 | 446 | 447 | ||||||||||||||||
| Issuance of ordinary shares | 167,173 | 1 | 141 | 142 | ||||||||||||||||
| Issuance of ordinary shares upon conversion of convertible loans | 367,738 | 1 | 648 | 649 | ||||||||||||||||
| Stock-based compensation | 340 | 340 | ||||||||||||||||||
| Capital contribution from controlling shareholder (benefit on shareholder loan) | 40 | 40 | ||||||||||||||||||
| Vesting of RSUs | 130,952 | - | ||||||||||||||||||
| Proceeds received in advance of share issuance (conversion of loans) | 484 | 484 | ||||||||||||||||||
| Proceeds received in advance of share issuance (share issuance) | 157 | 157 | ||||||||||||||||||
| Net loss | (2,998 | ) | (2,998 | ) | ||||||||||||||||
| Balance as of December 31, 2024 | 14,720,692 | $ | 42 | $ | 18,716 | $ | (23,997 | ) | $ | (5,239 | ) | |||||||||
| Proceeds from exercise of warrants | 1,504,317 | 3,526 | 3,526 | |||||||||||||||||
| Issuance of ordinary shares (**) | 1,525,420 | 4,837 | - | 4,837 | ||||||||||||||||
| Issuance of ordinary shares upon conversion of convertible loans | 2,791,182 | 5,429 | 5,429 | |||||||||||||||||
| Stock-based compensation | 6,060 | 6,060 | ||||||||||||||||||
| Conversion of loan from related party | 136,450 | 497 | 497 | |||||||||||||||||
| Capital contribution from controlling shareholder (benefit on shareholder loan) | 48 | 48 | ||||||||||||||||||
| Vesting of RSUs | 94,705 | - | ||||||||||||||||||
| Issuance of ordinary shares to service provider | 379,475 | 186 | 186 | |||||||||||||||||
| Conversion of warrant liabilities into ordinary shares | 1,026 | 1,026 | ||||||||||||||||||
| Cancelation of par value | (42 | ) | 42 | - | ||||||||||||||||
| Net loss | (19,485 | ) | (19,485 | ) | ||||||||||||||||
| Balance as of December 31,2025 | 21,152,241 | $ | - | $ | 40,367 | $ | (43,482 | ) | $ | (3,115 | ) | |||||||||
| (*) | As of December 31, 2025, no par value |
| (**) | Including 343,757 ordinary shares that were issued in January 2026. |
The accompanying notes are an integral part of the financial statement
F-5
STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | (19,485 | ) | (2,998 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 23 | 53 | ||||||
| Financial expenses, net | 10,666 | 189 | ||||||
| Stock-based compensation expense | 6,060 | 340 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) Decrease in other assets | (1,587 | ) | (1 | ) | ||||
| Increase (decrease) in trade payables | 70 | (237 | ) | |||||
| (Decrease) increase in other payables | (265 | ) | 937 | |||||
| Change in operating lease right-of-use assets | 152 | 162 | ||||||
| Change in operating lease liabilities | (194 | ) | (163 | ) | ||||
| Net cash used in operating activities | (4,560 | ) | (1,718 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | - | (2 | ) | |||||
| Net cash used in investing activities | - | (2 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of ordinary shares and warrants, net of issuance costs | 3,802 | 1,100 | ||||||
| Proceeds from loans payable to related parties | - | - | ||||||
| Proceeds from issuance of convertible loans and warrants | - | 535 | ||||||
| Proceeds from exercise of options | 2,600 | - | ||||||
| Proceeds from exercise of warrants | 1,086 | - | ||||||
| Net cash provided by financing activity | 7,488 | 1,635 | ||||||
| Effects on cash and cash equivalents from changes in foreign currency rates | 697 | (26 | ) | |||||
| Net Increase (decrease) in cash, cash equivalents and restricted cash | 3,625 | (111 | ) | |||||
| Cash, cash equivalents and restricted cash-beginning of period | 353 | 464 | ||||||
| Cash, cash equivalents and restricted cash-end of period | 3,978 | 353 | ||||||
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Right-of-use assets recognized with corresponding lease liability | 459 | |||||||
| Conversion of convertible loans | 3,617 | 1,134 | ||||||
| Conversion of Anglo Turbo loans | 497 | |||||||
| Exercise of warrants | 416 | - | ||||||
| Decrease in other payable against additional paid in capital | 186 | |||||||
| Increase in loans payable to related party against decrease in other payable | - | - | ||||||
| Conversion of warrants liabilities into ordinary shares | 1,026 | |||||||
| Note payable against additional paid in capital | 1,034 | |||||||
The accompanying notes are an integral part of the financial statement.
F-6
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 1 – General Information, Liquidity and Going Concern
| a. | General Information |
Turbogen Ltd. (“Turbogen” or the “Company”) is a corporation organized under the laws of the State of Israel, incorporated on May 27, 2014.
Turbogen is a development-stage clean-energy technology company focused on the design and commercialization of multi-fuel micro-turbine systems for on-site generation of electricity and heat in buildings. As of the date that these financial statements are issued, the Company has not generated revenues from its operations and continues to invest in research and development activities.
On November 22, 2021, the Company completed its initial public offering in Israel, and its ordinary shares began trading on the Tel Aviv Stock Exchange on November 24, 2021.
The Company’s registered office is located in Israel, and its principal place of business is at 22 Efal Street, Petah Tikva 4951122, Israel.
On August 24, 2025, the Company’s Board of Directors approved to proceed with the listing of the Company’s shares for dual trading on the Nasdaq Stock Market. In order to meet the initial listing requirements of the Nasdaq Stock Exchange (including, among others, equity and public holding value requirements), on November 26, 2025, the Company’s general and special meeting of shareholders approved capital raising in the amount of $7.5 million (including through an investment by a related party in the Company and the exercise of warrants by investors). As of this date, the Company is in the process with the US Securities and Exchange Commission and Nasdaq Stock Market to complete the process of listing its shares on the Nasdaq Stock Market.
| b. | Liquidity and Going Concern |
In November 2021, the Company completed an initial public offering of shares on the Tel Aviv Stock Exchange, raising gross proceeds of approximately $5,788. The net proceeds were approximately $4,920. Since that offering, and as of the date these financial statements are issued, the Company has raised approximately $12,003 from subsequent share issuances and approximately $4,700 from convertible loans and loans from controlling shareholders. The Company has also been awarded six grants totaling approximately $3,970 from the Israel Innovation Authority (the “IIA”) and $665 from the Bird Foundation (“BIRD” or “BIRD Energy”). As of the date these financial statements are issued, the Company has received approximately $2,972 and $665, respectively, from these grants. As of the date these financial statements are issued, the Company’s cash balance amounted to $7,300.
As of December 31, 2025, the Company has a single area of activity — the development of a multi-fuel micro-turbine for localized generation of electricity and heat in buildings. As of the date these financial statements are issued, the Company has not yet generated revenues from its operations. The Company anticipates that this activity will continue to produce negative cash flows from operating activities in the near term. As of December 31, 2025, the Company recorded a working capital deficit of $3,182, and total shareholders’ deficiency of $3,115, and, for the year ended December 31, 2025, the Company has negative cash flows from operating activities totaling $4,560. In addition, the Company is dependent on various fundraising sources to continue its research and development activities, which are not within the Company’s control.
Management, with the oversight of the Board of Directors, has concluded that these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments to the carrying amounts or classifications of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.
F-7
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Management’s plan to continue as a going concern includes raising funds from existing shareholders and/or new investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to successfully complete the development of, and to commercialize, its products.
| c. | Impact of Geopolitical Events on Operations and Liquidity |
“The Lion’s Roar Operation”
On February 28, 2026, after the reporting date, “The Lion’s Roar Operation” (the “Operation”) commenced, a joint military operation by the United States and Israel involving attacks in Iran. In response, Iran launched ballistic missiles and unmanned aerial vehicles toward Israel and certain states in the Persian Gulf region. These events have resulted in civilian casualties and property damage in Israel. Additionally, Hezbollah, a terrorist organization in Lebanon, joined the attacks against Israel and Israel has started military operations in Lebanon.
Following the commencement of the Operation, Israel’s Home Front Command announced a “special home front situation” and updated safety guidelines that include, among other measures, restrictions on passenger flights, limitations on gatherings, broad reserve recruitment, and temporary closure of certain businesses, which has contributed to a partial reduction in economic activity. As of April 8, 2026, Israel and U.S. are in temporary ceasefire with Iran. However, a special situation remains in effect in Israel, impacting the Israeli economy and routine civilian activities.
Currently, the war has not significantly affected the Company, and the Company continues to operate at full capacity with minimal to no disruption.
| d. | Company’s Restructuring Plan |
On October 11, 2023, the Board of Directors approved a comprehensive efficiency plan (“Efficiency Plan”) designed to adjust its cost structure and resources in light of prevailing economic. The main elements of the Efficiency Plan are as follows:
| 1. | Reduction in workforce: A decrease of approximately 50% in its workforce, through unpaid leave of up to three months or terminations. Following this downsizing, the Company’s workforce during the relevant period was reduced to approximately 15 employees. |
| 2. | Executive compensation reductions: The Company’s Chief Executive Officer (the “CEO”), Mr. Yaron Gilboa informed the Company that, as part of the Efficiency Plan, he would defer approximately 50% of his monthly compensation under his service agreement, without reducing his working hours. On January 11, 2024, the deferral of the CEO’s compensation was discontinued and reverted to the original compensation. | |
| In addition, members of the Board of Directors entitled to remuneration informed the Company that they would reduce their annual and attendance fees from the maximum allowed under the Israeli Companies Regulations (Rules Regarding Compensation and Expenses of External Directors), to the minimum allowed under such regulations, effective October 1, 2023. On October 1, 2025, the remuneration of the members of the Board of Directors was increased back to the maximum fees allowed under the Israeli Companies Regulations (Rules Regarding Compensation and Expenses of External Directors). | ||
| 3. | Continued operations in a reduced scale: In parallel with implementing the Efficiency Plan, the Company has continued to operate on a reduced scale, focusing all available resources on raising additional funding for its ongoing operations. | |
| 4. | Ongoing oversight: The Board of Directors will convene from time to time to review the implementation of the Efficiency Plan, assess the Company’s financial position, consider alternative courses of action, and make further decisions as needed. |
F-8
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 2 – Summary of Significant Accounting Policies
The financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”).
| a. | Basis of Presentation |
These financial statements are those of Turbogen Ltd., a single legal entity. The Company has no subsidiaries, and, therefore, no consolidated financial statements are presented.
| b. | Use of estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates
| c. | Financial statement in U.S dollars |
The Company’s functional currency is the U.S. dollars (“USD”). Management has determined the functional currency based on its assessment of the primary economic environment in which the Company expects to generate and expend cash.
While the Company has not yet commenced revenue-generating operations, its principal market is expected to be the United States, and the majority of its planned future sales prices, supplier contracts, and financing activities are expected to be denominated in USD, including through the planned fundraising upon listing.
The presentation currency of these financial statements is the USD, and all amounts are rounded to the nearest thousand USD, unless otherwise indicated.
Accordingly, monetary accounts maintained in currencies other than the U.S. dollars are translated into U.S. dollars in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 830 “Foreign Currency Matters”. All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the statements of comprehensive loss as financial income or expenses, as appropriate.
| d. | Cash and cash equivalents |
Cash equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or less at the date acquired.
| e. | Restricted cash |
Restricted cash consists of amounts whose use is limited under contractual arrangements. These balances primarily represent security deposits in connection with the Company’s credit card.
| f. | Government grants and grants from national funds |
The Company receives financial support from government agencies and national funds for certain research and development (“R&D”) projects. Grant funding is recognized as a reduction of R&D expenses in the statements of comprehensive loss on a systematic basis over the periods in which the related costs are incurred, when there is reasonable assurance that the Company will comply with the conditions of the grant and that the funds will be received.
Under the terms of certain programs from the IIA and the BIRD Foundation, the Company is required to pay royalties, capped at the amount of the grant received plus interest rate, or limited to a certain percentage defined in the grant agreement, based on revenues from products developed with program funding. The Company’s royalty obligations will become payable upon the generation of sales from products developed under the relevant grant programs. A liability will be recognized when the related revenues are recorded.
F-9
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| g. | Leases |
The Company accounts for its leases in accordance with ASC 842, “Leases” and determines if an arrangement is or contains a lease at inception. Contracts containing a lease are further evaluated for classification as an operating or finance lease. In determining the leases classification, the Company assesses among other criteria: (i) The lease term is for a major part of the remaining economic life of the underlying asset (ii) The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already included in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.
The Company has elected not to recognize short-term leases on the balance sheet, nor separate lease and non-lease components and currently does not have any finance leases.
Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Company’s balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
For leases with terms longer than 12 months, the Company records the ROU asset and liability at commencement date based on the present value of lease payments according to their term. All lease agreements include lease payments that are adjusted periodically for the consumer price index (“CPI”). The ROU asset and lease liability were calculated using the CPI as of the adoption date and will not be subsequently adjusted, unless the liability is reassessed for other reasons, thereafter, changes to lease payments due to changes in CPI are recorded as rent expense in the period incurred.
The Company uses incremental borrowing rates (IBRs) based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The ROU asset also includes any lease payments made in advance and net of lease incentives, when applicable. Lease terms may include options to extend the lease when it is reasonably certain that the Company will exercise that option, or options to terminate the lease when it is reasonably certain that the Company will not exercise that option. Lease expenses are recognized on a straight-line basis over the lease term or the useful life of the leased asset.
In addition, the carrying amount of the ROU asset and lease liabilities are remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
| h. | Property, plant and equipment |
Property, plant, and equipment are stated at cost, net of accumulated depreciation and related impairments. Depreciation is calculated by the straight-line method over the estimated useful life of the assets, at the following rates:
| Depreciation rate | ||||
| % | ||||
| Computers and peripheral equipment | 33.3 | |||
| Furniture and equipment | 7-15 | |||
| Machinery | 15 | |||
| Leasehold improvements | Over the shorter of the lease term or estimated useful life | |||
F-10
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| i. | Impairment of long-lived assets |
The Company’s long-lived assets to be held and used, including property, plants and equipment and ROU assets, are reviewed for impairment in accordance with ASC 360 “Property, Plants and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.
Recoverability of assets (or assets group) to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset (or assets group). If such evaluation indicates that the carrying amount of the asset (or asset group) is not recoverable, the assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value.
For the years ended December 31, 2025 and 2024, no impairment losses were recognized.
| j. | Severance pay |
The employees of the Company are included under Section 14 of the Severance Pay Law, 1963, in Israel, under which these employees are entitled only to monthly deposits contributed on their behalf in accounts held with insurance companies, at a rate of 8.33% of their monthly salary. Upon making such deposits, the Company is relieved of any future obligation under the Israeli Severance Pay Law to pay severance benefits with respect to those employees.
For the years ended December 31, 2025 and 2024, the Company recorded $75 and $66 in severance expenses related to such employees, respectively.
| k. | Concentration of credit risk |
The Company’s financial instruments that potentially subject it to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, restricted deposits and other current assets. Cash and cash equivalents, restricted cash and restricted deposits are maintained with high-quality financial institutions in Israel. Management monitors the creditworthiness of these institutions and believes that the Company is not exposed to significant credit risk in respect of these balances.
Government grant receivables, when applicable, are due from Israeli governmental agencies or national funds, and management believes the credit risk associated with these counterparties is minimal.
| l. | Fair value of financial instruments |
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: The carrying value of cash and cash equivalents, restricted cash, other current assets, restricted deposits, trade payables and other payables approximate their fair values due to the short-term maturities of such instruments.
The Company applies ASC 820 “Fair Value Measurements and Disclosures”, with respect to fair value measurements of all financial assets and liabilities. Fair value is an exit price, representing the amount that would be received for the sale of an asset or paid to transfer liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
Liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 are comprised of warranty liability and embedded derivative related to the Company’s convertible loans (See Note 9).
A three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in
in the valuation methodologies in measuring fair value:
| Level 1 - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level 2 - | Include other inputs that are directly or indirectly observable in the marketplace. |
| Level 3 - | Unobservable inputs which are supported by little or no market activity. |
F-11
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
| m. | Warrant liability |
The Company determines the classification of warrants as liability-classified instruments or equity-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging”.
The Company classifies warrants to purchase its ordinary shares as liabilities on its balance sheets when such warrants may result in delivery of a settlement amount that is not solely indexed to the Company’s own stock. Warrants are initially recorded at fair value on the issuance date and are subsequently remeasured to fair value at the end of each reporting period with changes presented within finance (income) expense, net in the statements of (income) loss in the period of change.
The warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs. See Note 9.
| n. | Convertible loans and detachable warrants |
From time to time, the Company enters into financing arrangements that include convertible loans together with detachable warrants to purchase ordinary shares. Such arrangements are considered the issuance of a package of financial instruments and are accounted for in accordance with ASC 470-20, Debt—Debt with Conversion and Other Options. Under this guidance, the proceeds are allocated between the debt host and any derivative liabilities at the time of issuance in accordance with ASC 815, “Derivatives and Hedging”.
The debt host is recorded at amortized cost using the effective interest method, while derivative liabilities are initially measured at fair value and remeasured at each reporting date, with changes in fair value recognized in financial (income) or expense in the statements of comprehensive loss. The detachable warrant is accounted as described in Note 2m above.
| o. | Contingencies |
The Company accounts for its contingent liabilities in accordance with ASC 450, “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, when applicable, the Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. The Company recognizes gain contingencies when they are realized or when all related contingencies have been resolved.
As of December 31, 2025 and 2024, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.
| p. | Stock-based compensation |
Stock-based compensation expense related to stock-based payment awards is recognized based on the fair value of the awards granted and recognized as an expense over the requisite service period for share options and restricted stock units. The Company has elected to recognize compensation expenses for all stock-based payment awards subject to graded vesting using the accelerated (graded vesting attribution) method. Forfeitures are accounted for as they occur.
F-12
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The fair value of each share option award is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the fair value of the underlying ordinary shares the expected volatility of the price of the Company’s ordinary shares, risk-free interest rates, and the expected dividend yield of ordinary shares. The fair value of each restricted stock unit award equals the fair value of the underlying ordinary shares on the grant date.
Share-based awards to non-employees, including consultants and other non-employee service providers, are measured at the fair value of the equity instruments granted on the grant date.
The Company determines the fair value of share-based awards using appropriate valuation techniques.
Compensation cost for non-employee awards is recognized in expense as the related services are rendered, typically over the vesting period of the awards. The measurement date for non-employee awards aligns with the grant date when all necessary terms and service conditions are established. Awards that vest based on service, performance, or market conditions are expensed over the requisite service period. If awards are subject to performance or market conditions, expense recognition reflects the Company’s best estimate of the likelihood of vesting.
| q. | Loss per share |
Basic loss per share is computed by dividing net loss attributable to the Company’s ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. In computing diluted loss per share, the weighted average number of ordinary shares outstanding is adjusted to include the effect of dilutive potential ordinary shares, such as share options, restricted share units, and warrants, using the treasury stock method, and convertible loans using the if-converted method. Potential ordinary shares are excluded from the computation of diluted loss per share if their effect is anti-dilutive.
For diluted loss per share, the numerator is further adjusted to add back finance income related to convertible instruments, as if those instruments were converted at the beginning of the period. Where the two-class method is used, income is allocated to participating securities prior to determining income available to common shareholders. All adjustments are documented and disclosed in the notes to the financial statements.
All outstanding stock options, RSUs and warrants were excluded from the calculation of the diluted loss per share for the years ended December 31, 2025 and 2024, because all such securities have an anti-dilutive effect.
| r. | Segment reporting |
The Company identifies operating segments in accordance with ASC 280, “Segment Reporting”, as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”), or decision-making group, in making decisions regarding resource allocation and evaluating financial performance. The Company determined that it operates in a single operating and reportable segment. The Company’s Chief Executive Officer (the “CEO”) is the Company’s CODM, who evaluates performance and makes operating decisions about allocating resources based on financial data.
The Company’s CODM uses net loss to measure segment profit or loss, to allocate resources and assess performance. Further, the CODM reviews and utilizes functional expenses (research and development, sales and marketing, and general and administrative) to manage the Company’s operations.
As of December 31, 2025 and 2024, the Company has not generated revenues from its operations. All of the Company’s long-lived assets are located in Israel.
| s. | Research and development costs |
The Company engages in significant research and development (“R&D”) activities to develop its proprietary micro-turbine technology for local generation of electricity and heat. R&D costs include salaries and related employee benefits, materials and supplies, fees to external contractors, depreciation of assets used in R&D, and other direct and indirect costs related to the development process.
F-13
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
In accordance with ASC 730, “Research and Development”, all R&D costs are expensed as incurred. Amounts received under government grants or other funding arrangements to offset R&D costs are recognized as a reduction of R&D expense in the period in which the related costs are incurred and the applicable conditions are met.
The Company also conducts R&D through external research institutions and specialized engineering firms. Costs associated with such services are included in R&D expenses in the period in which the services are performed.
| t. | Income taxes |
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”. This guidance prescribes the use of the liability method, whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates and laws that are expected to apply in the years in which those temporary differences are anticipated to be recovered or settled.
A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Given the Company’s history of losses and the uncertainty of generating future taxable income, the Company has recorded a full valuation allowance against its deferred tax assets.
The Company evaluates its tax positions using the guidance in ASC 740-10, “Accounting for Uncertainty in Income Taxes”. A tax benefit from an uncertain tax position is recognized only if it is more likely than not that the position will be sustained upon examination by the relevant taxing authority, based on the technical merits of the position. As of December 31, 2025 and 2024 the Company has no liability for unrecognized tax benefits.
| u. | New accounting pronouncements |
Recently issued accounting pronouncements, not yet adopted
The Accounting Standards Update (the “ASU”) 2025-10 Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities In October 2025, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which introduced authoritative guidance on the accounting for government grants received by business entities. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact ASU 2025-10 will have on its financial statements
In November 2024, the FASB issued ASU 2024-03 “Income Statement: Reporting Comprehensive Income— Expense Disaggregation Disclosures”, which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its financial statements disclosures.
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S. and in foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. The Company has adopted ASU 2023-09 for the year ended December 31, 2025 using the prospective method, with no significant impact. (See also note 11).
F-14
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 3 - Leases
As of December 31, 2025, the Company is party to a single lease agreement for office premises and a warehouse in Petach Tikva, Israel, used to support its ongoing operations.
The Company originally entered into a lease agreement in October 2020 for its principal office premises, with a contractual term ending on October 31, 2023. On April 1, 2022, the Company executed a modification to the original lease to add an additional floor to the leased premises and to align the term for the original office premise with the new expiration date of March 31, 2024. This modification was accounted for as a lease modification under ASC 842, “Leases”.
In addition, on May 1, 2022, the Company entered into a separate lease agreement for a warehouse facility in Petach Tikva, with the same expiration date of March 31, 2024.
Upon expiration of both the modified office lease and the warehouse lease, on April 14, 2024, the Company entered into a new lease agreement covering both the principal office premises and the warehouse, with a term ending in March 2027. At lease commencement, the Company recognized a right-of-use asset of approximately $459 and a corresponding lease liability of approximately $445, measured at the present value of lease payments using the IBRs as determined by an independent valuation.
On March 1, 2026, the Company entered into an additional lease agreement for a warehouse near the current principal office premises. The new lease expires on March 31, 2027 and the payments terms are aligned with the current lease agreement on its principal office premises.
The following table summarizes the Company’s lease-related assets and liabilities recorded in the balance sheets:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Assets: | ||||||||
| Operating lease right-of use assets | $ | 204 | $ | 356 | ||||
| Total lease assets | $ | 204 | $ | 356 | ||||
| Liabilities: | ||||||||
| Operating lease liabilities– current portion | $ | 186 | $ | 151 | ||||
| Operating lease liabilities – net of current portion | 50 | 209 | ||||||
| Total lease liabilities | $ | 236 | $ | 360 | ||||
The following tables presents certain information related to operating leases:
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease cost: | ||||||||
| Fixed payments and variable payments that depend on an index | 193 | 190 | ||||||
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease: | ||||||||
| Weighted average remaining leases term in years | 1.25 | 2.25 | ||||||
| Weighted average annual discount rate | 11.94 | % | 11.94 | % | ||||
F-15
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The following table reconciles the undiscounted cash flows for each of the years and the total of the remaining years of the operating lease liabilities recorded in the Company’s balance sheets:
| December 31, | ||||
| 2025 | ||||
| 2026 | 186 | |||
| 2027 | 46 | |||
| Total undiscounted operating lease payment | $ | 232 | ||
| Imputed interest | 4 | |||
| Operating lease liabilities | $ | 236 | ||
| Less current liabilities | (186 | ) | ||
| Operating lease liabilities – net of current portion | $ | 50 | ||
Note 4 – Property, Plant and Equipment, Net
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cost: | ||||||||
| Computers and peripheral equipment | $ | 107 | $ | 107 | ||||
| Furniture and equipment | 55 | 55 | ||||||
| Machinery | 110 | 110 | ||||||
| Leasehold improvements | 135 | 135 | ||||||
| Gross property, plant and equipment | 407 | 407 | ||||||
| Less – accumulated depreciation | (324 | ) | (316 | ) | ||||
| Total property, plant and equipment, net | $ | 83 | $ | 91 | ||||
Depreciation expenses for the years ended December 31, 2025 and 2024 were $8 and $53, respectively. No impairment charges were recorded for the years ended December 31, 2025 and 2024.
Note 5 – Other payables
| December 31 | ||||||||
| 2025 | 2024 | |||||||
| Payroll-related liabilities | $ | 371 | $ | 338 | ||||
| Accrued expenses | 672 | 1,044 | ||||||
| Other | 109 | - | ||||||
| Total current liabilities | $ | 1,152 | $ | 1,382 | ||||
F-16
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 6 – Segment Reporting
ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s business is comprised of one reportable segment specializing in development of Micro Turbine systems. The Company’s CODM is its Chief Executive Officer.
The CODM performs the assessment of the segment performance by using functional expenses - research and development, sales and marketing, and general and administrative in addition to net loss to monitor budget versus actual results. The segment significant expense categories that are reviewed by the CODM are reported within the Company’s statements of comprehensive loss.
Note 7 – Loans Payable to Related Parties and Related Parties Transactions
The Company has received loans from related parties, including R-Jet Engineering Ltd. (“R-Jet”) and Anglo Turbo Limited Partnership (“Anglo Turbo”). Shareholder loans are unsecured, bear no contractual interest, and have been measured upon initial recognition at present value using effective interest rates as described below.
| December 31 | ||||||||
| 2025 | 2024 | |||||||
| Anglo Turbo – short-term loans (2)(3) | - | $ | 405 | |||||
| R-Jet (1) | $ | 279 | $ | 205 | ||||
| Total long-term shareholder loan | 279 | 205 | ||||||
| Total shareholder loan | $ | 279 | $ | 610 | ||||
| (1) | R-Jet loan |
In 2018, R-Jet, a shareholder of the Company, transferred certain intellectual property rights to the Company in exchange for a commitment in the amount of $432. This commitment is non-interest-bearing and was initially recognized at the present value of the estimated future cash flows, applying an effective interest rate of approximately 19%. Pursuant to the terms of the commitment, repayment of the obligation shall commence upon the generation of revenues by the Company and shall be made from the Company’s “Free Cash Flow” (the Company’s future cash flows available for repayment). In accordance with ASC 470-10-25, Sales of Future Revenues or Various Other Measures of Income, management evaluates at each reporting date, the Company’s projections regarding the timing and amount of “Free Cash Flow”, and adjusts the carrying amount of the obligation when estimates change. Any difference between the revised estimates and the present value of the remaining payments is recognized in profit or loss within finance expenses. For the years ended December 31, 2025 and 2024, no changes were made to management’s estimates regarding the expected repayment cash flows.
Finance expenses recognized in the years ended December 2025 and 2024 were $75 and $32, respectively. For further information related to this loan, see note 8(a).
F-17
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| (2) | Anglo Turbo – April 2023 agreement |
On April 4, 2023, the Audit Committee and Board of Directors approved a loan agreement with Anglo Turbo, the Company’s controlling shareholder, for up to $336. The loan is CPI-linked, non-interest-bearing, and unsecured, with repayment of principal plus CPI adjustments in a single payment 24 months from the issuance date. The loan was approved to finance the Company’s operating activities.
In May 2023, the Company received an initial proceed of $27, of which $18 was recognized as a shareholder loan and $9 was recorded as a capital contribution from a controlling shareholder. The liability was initially measured at present value using an effective interest rate of 19%.
In July 2023, $109 was reclassified from an existing payable balance to Anglo Turbo as a shareholder loan. Of this amount, approximately $76 was recognized as a shareholder loan and $33 was recorded as a capital contribution. The liability was initially measured at present value using an effective interest rate of approximately 19%. See Note 8(c).
| (3) | Anglo Turbo – October 2023 agreement |
In October 2023, a loan agreement for $259 was approved, repayable in a single payment after six months, CPI-linked. The loan was primarily intended to finance the Company’s operations and ongoing activities. On receipt, the Company recognized a shareholder loan of $237 and a capital contribution of $22. The liability was initially measured at the present value of the future cash flows using a market-based discount rate, applying an effective interest rate of approximately 19%.
In April, July, and December 2024, the repayment date of the October 2023 Anglo Turbo loan was extended to March 31, 2025. At each extension date, the loan was re-measured using effective interest rates of 24%.
On March 30, 2025, the Company’s Board of Directors approved the extension of all loans provided by Anglo Turbo under the April 2023 and October 2023 agreements, such that the loans would be repaid in a single payment on December 31, 2025.
On May 4, 2025, the Board of Directors approved, subject to the approval of the Company’s general meeting of shareholders, the conversion of the full remaining balance of the loans provided by Anglo Turbo, totaling $418, into 136,450 ordinary shares of the Company. On November 26, 2025, the shareholders during its general meeting approved the conversion of such loans. The ordinary shares were issued to Anglo Turbo in December 2025. Total of $497 was converted to additional paid in capital in the shareholders deficiency, and the Company recognized additional $79 finance expenses.
In the years ended December 2025 and 2024, finance expenses recognized with regards to Anglo Turbo loans were $127 and $117, respectively.
As of December 31, 2025, a balance of approximately $25 of account payable to Anglo Turbo is included in other payables.
F-18
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 8 – Commitments and Contingencies
| a. | 2018 Intellectual Property Agreement with R-Jet and Related Parties |
In January 2018, the Company entered into an investment and share allocation agreement (amended February and October 2018) (the “share allocation agreements”) with Anglo Turbo, A.I.H Paris Holdings Ltd., Kar Eco Holdings Ltd., and R-Jet Under the agreements, R-Jet transferred to the Company certain intellectual property rights in micro-turbine technology for electricity generation up to 500 kW capacity, excluding military, electric vehicle, and aviation uses.
Concurrently, the Company, R-Jet, and Rafael Advanced Defense Systems Ltd (“Rafael”), entered into a license ownership agreement (the “license agreement”) granting the Company exclusive civilian rights and Rafael, exclusive military rights to the transferred IP. Any new know-how developed by Rafael will be owned exclusively by Rafael; any new know-how developed by the Company will be owned exclusively by the Company. For further information related to additional license agreement with Rafael in connection with an agreement with a defense company, please refer to Notes 8e and 8f.
The consideration under the share allocations agreements and the license agreement, included:
| 1. | A commitment to pay R-Jet of $432 plus VAT from the Company’s free cash flows, measured at fair value at inception using a discounted cash flow model. For further information please refer to note 7(1). |
| 2. | Issuance of 750,000 ordinary shares to R-Jet. |
| 3. | Contingent royalties based on TG-40 development cost thresholds. As of December 31, 2025, cumulative TG-40 development costs have exceeded the contractual threshold - and therefore no royalties are payable to R-Jet under the agreement. |
| 4. | Following the IP transfer, the Company assumed R-Jet’s existing obligations to the IIA under prior grant agreements. Under those agreements, R-Jet is required to pay up to 5% of future revenues until the grant is repaid. The Company has agreed to make any payments required by the IIA on R-Jet’s behalf, up to the capped percentage, to enable R-Jet to meet its obligations. |
| 5. | The Company granted Rafael options to purchase 343,750 ordinary shares of the Company. These options expired in January 2020. |
| b. | EN-Power Group / BIRD Energy Agreement |
In January 2021, the Company entered into a joint development agreement with BIRD Energy and EN-Power Group (“ENPG”), an engineering and energy services company based in New York and a project partner, for the TG-40 microturbine, including adaptation to U.S. regulations and installation at a demonstration site in New York.
Under the joint development agreement (as amended August 24, 2021), the Company committed to contribute up to $82.5 toward the installation cost of the TG-40 microturbine at the demonstration site, if the demonstration site owner does not cover such cost. As of December 31, 2025, the Company recorded a provision for this commitment in the amount of $82.5.
In September 2023, ENPG entered into a service agreement with the demonstration site owner covering installation, service, maintenance, repair, and monitoring arrangements, and payment terms from the demonstration site owner to ENPG. In November 2023, the joint development agreement between the Company and ENPG was amended to provide that the Company and ENPG will share equally (50% each) in future revenues and commissions generated under such agreement.
F-19
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| c. | Joint Research Agreements |
| i. | Southwest Research Institute (SWRI) |
On June 22, 2022, the Company contracted SWRI to conduct three-dimensional CFD (Computational Fluid Dynamics) simulations of TG-40 combustors using hydrogen and natural gas blends, to evaluate combustion performance and flame output. The contract consideration was approximately $80.
Related R&D expenses recognized in the year ended December 2025 was nil and 2024 was $38.
| ii. | Israel Institute of Technology (Technion) |
On July 13, 2022, the Company entered into a research agreement with the Technion to conduct combustion performance studies for TG-40 using hydrogen and natural gas blends. The contract consideration was approximately $289.
Related R&D expenses recognized in the years ended December 2025 and 2024 were $nil and $48, respectively.
| d. | Government grants and grants from national funds |
| i. | Israel Innovation Authority |
Since 2020, the Company has been awarded several research and development grants by the IIA to support projects for the development of its micro-turbine technologies. These grants are recognized as a reduction of research and development expenses in the periods in which the related costs are incurred.
In July 2020, the IIA approved a grant of up to $1,581 for the development of a micro-turbine. The Company received $785 in 2020, $219 in 2021, $419 in 2022, and $158 in October 2023.
In July 2022, the IIA approved a second grant of up to $841 for the development of a hydrogen hybrid micro-turbine. The Company received $304 in November 2022, $161 in 2023, $250 in 2024 and $38.5 in 2025.
On December 26, 2023, the IIA approved a third grant — the TG-120 hybrid micro-turbine, designed to produce electricity and heat using a fuel blend of up to 50% hydrogen and/or natural gas. This project carries a total grant amount of approximately up to $624, representing 30% of the project budget, with a planned execution period of nine months from January 2024 that was extended until April 30, 2026. In March 2024, the Company received $312 under this grant. In November 2025, the Company received an advance payment of approximately $19 from the IIA in respect of this project.
In June 2025, the Company received approval from the IIA for new project to develop a multi-fuel combustor, in collaboration with the Israeli Ministry of Defense and the Technion. The approved budget for the project is approximately $1,070, with the grant from the IIA representing 55%, of the budget or approximately $614. The project is scheduled to be executed through June 30, 2026. In August 2025, the Company received an advance payment of approximately $215 from the IIA in respect of this project.
In July 2025, the Company received an additional approval from the IIA for a new project for the development and commissioning of a hybrid micro-turbine production line. The approved budget for this project is approximately $1,114, with the grant from IIA representing 40%, of the budget or approximately $471. The project is scheduled to be executed through September 30, 2026 and is also subject to royalties. In November 2025, the Company received an advance payment of approximately $165 from the IIA in respect of this project.
F-20
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Under the terms of the IIA funding agreements, if any of the projects result in commercialized products, the Company will be required to pay royalties at the rate of 3% of revenues generated from such products, up to 100% of the grants received, linked to the USD and bearing interest at SOFR (Secured Overnight Financing Rate). These royalty obligations are contingent on future sales; in the absence of sales, no repayments are required.
As of December 31, 2025, the total contingent obligation to the IIA amounts to $3,409 (including interest in the amount of $424).
| ii. | BIRD Energy Foundation Grant |
In March 2021, the Company and ENPG were awarded a grant by BIRD Energy Foundation to support the development of a 40 kW micro-turbine, including adaptation to U.S. regulations and the installation of a demonstration site in New York, USA. The funding for the cost of the project is shared between the Company and ENPG, an engineering and energy services company based in New York and the Company’s project partner, with the Company bearing 70% of the remaining costs and ENPG the 30%. The total approved grant amounted to approximately up to $950 (the Company’s share is $665 and ENPG’s share is $285), representing 50% of the actual costs of the project.
Under the terms of the grant agreement between the Company, BIRD Energy Foundation, and ENPG, repayment of the grant will be made by way of royalties equal to 5% of gross product sales, up to a maximum of 150% of the grant amount. These royalty obligations are contingent upon future sales, and in the absence of sales, no repayment is required.
The Company received under this grant $266 in 2021, approximately $177 in 2022, $186 in 2023, and, $36 in June 2024.
For the years ended December 31, 2025 and 2024, the Company offset nil and $36, respectively, against research and development expenses in connection with this grant.
The project was formally completed in July 2024, with the demonstration 40kW micro-turbine system successfully installed at the New York site.
As of December 31, 2025, no royalties have been incurred in relation to the BIRD Energy grant. As of December 31, 2025, the total contingent obligation to BIRD Energy Foundation is in the amount of $998.
| e. | Development and Revenue-Sharing Agreement for Multi-Fuel Microturbine Technology |
On May 26, 2025, the Company entered into an agreement for the development and delivery of engine-generator energy production systems, based on a multi-fuel microturbine technology with a multinational defense company (the “Defense Company”). Under the agreement, the parties will collaborate over 18 months, to develop and produce a laboratory demonstrator of a turbo-generator for a governmental entity based on the Company’s technology.
The agreement includes a revenue-sharing model between the parties for product sales. This agreement is valid for a period of 10 years. Additionally, each party may terminate the agreement, subject to the occurrence of certain events defined therein. Furthermore, on June 22, 2025, the Company received an order from the Defense Company for the production of the demonstrator for a total of approximately NIS 2,000 (approximately $548). As of December 31, 2025, a total of $128 was received. In addition, as of the date these financial statements are issued, an additional $66 was received. As to the license agreement in connection with the agreement with the Defense Company see Note 8f below.
F-21
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| f. | License Agreement with Rafael in Connection with the Agreement with the Defense Company |
On December 25, 2025, the Company entered into a license agreement with Rafael in order to complete and deliver the engine-generator production systems under the agreement with the Defense Company. The license agreement was required in order to obtain Rafael’s consent for the Company’s use of certain microturbine technology in connection with the agreement with the Defense Company.
Pursuant to the terms of the license agreement, Rafael granted the Company a limited-use license for military purposes in the microturbine, including the rights, know-how, and technology embodied in the Company’s TG-40 microturbine system, for the purpose of developing, adapting, manufacturing, marketing, and selling the demonstrator and/or the product developed based on the TG-40 microturbine system, and in accordance with the agreement with the Defense Company. Such activities are to be conducted by the Defense Company’s parent company for delivery to the Israel Defense Forces, the Israeli Ministry of Defense, (the “IMD”), or the IMD’s Directorate of Defense, Research, and Development, as applicable.
In consideration for the grant of the license, the Company agreed to pay Rafael royalties in the amount of ten percent (10%) of the consideration to be received in connection with the license agreement relating to the demonstrator and/or the product.
The license agreement will remain in effect until the later of a period of three (3) years, or completion of the project. The license agreement includes customary provisions for agreements of this type, including provisions regarding immediate termination in customary circumstances, as well as provisions relating to intellectual property, liability, and the protection of intellectual property rights in the event of a merger or sale.
| g. | Agreement with European Company |
In December 2025, the Company entered into a supplier agreement with a European Union-based company for the planned production of the Company’s microturbine systems. As of December 31, 2025, the Company has placed an order to buy twelve microturbine systems, into which the Company expects to use its proprietary technology.
Note 9 - Fair value measurement
The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. The Company did not have any transfers between fair value measurements levels in the years ended December 31, 2025 and 2024.
The following table sets forth the Company’s assets and liabilities that were measured at fair value as of December 31, 2025 and 2024, by level within the fair value hierarchy:
| Fair value measurements as of | ||||||||||||
| Fair
value hierarchy |
December
31, 2025 |
December
31, 2024 |
||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | Level 1 | $ | 3,942 | $ | 336 | |||||||
| Restricted cash | Level 1 | 36 | 17 | |||||||||
| Liabilities: | ||||||||||||
| Conversion option | Level 3 | 192 | ||||||||||
| Warrant liability | Level 3 | 8,335 | 693 | |||||||||
The Company measures the fair value for Warrants liability and the Conversion option by using Black-Scholes and Monte-Carlo simulation model, which are classified as Level 3, due to the use of unobservable inputs.
F-22
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The following table presents the changes in the fair value of Conversion option – derivative instrument and Warrants liability:
| Conversion option | Warrant Liability | |||||||
| Fair value as of December 31, 2023 | $ | 1,072 | $ | 182 | ||||
| Issuance | 161 | 429 | ||||||
| Conversion | (162 | ) | - | |||||
| Changes in fair value | (879 | ) | 82 | |||||
| Fair value as of December 31, 2024 | $ | 192 | $ | 693 | ||||
| Issuance | 589 | |||||||
| Conversion and reclassification to equity | (174 | ) | (1,454 | ) | ||||
| Changes in fair value | (18 | ) | 8,507 | |||||
| Fair value as of December 31, 2025 | $ | - | $ | 8,335 | ||||
Note 10 - Equity
| a. | Initial Public Offering |
On November 22, 2021, the Company completed its initial public offering, issuing 1,722,700 ordinary shares, which were listed for trading on the Tel Aviv Stock Exchange Ltd., for total gross proceeds of $5,788. As of that date, the Company became a public company and a reporting corporation (as defined under the Israeli Companies Law and the Israeli Securities Law, 1968, respectively). Issuance expenses related to this offering amounted to a total of $868.
| b. | Equity related transactions: |
| (1) | On June 14, 2022, the Board of Directors approved the grant of 83,822 warrants to an investor, exercisable to purchase 83,822 ordinary shares, pursuant to a prior investment made by this investor. The exercise price was set as a pre-defined formula comprising the average adjusted closing price of the Company’s ordinary shares on the Tel-Aviv Stock Exchange over the 30 trading days prior to the exercise date, and the number of warrants exercised. The warrants were exercisable in a single tranche for one year from the grant date and expired immediately if unexercised. |
The warrants were classified as a liability measured at fair value. In May 2023, the investor exercised all warrants, generating proceeds of $99.
For the year ended December 31, 2023, changes in the fair value of this liability was recognized within finance expense and totaled $47.
| (2) | On February 14, 2024, the Company completed a rights offering pursuant to its shelf prospectus, under which it offered 275,856 ordinary shares to its existing shareholders. Based on the exercise notices received from shareholders, the Company issued a total of 262,064 ordinary shares, for total gross proceeds of $447. |
| (3) | On October 22, 2024, the Company completed a private placement to two investors, receiving total gross proceeds of $291. In consideration, the Company issued 167,173 ordinary shares, 167,173 Series A warrants exercisable into 167,173 ordinary shares at an exercise price of NIS 7.68 ($2.11) per share, and 334,346 Series B warrants exercisable into 334,346 ordinary shares at an exercise price of NIS 10.5 ($2.89) per share. The Series A and Series B warrants are exercisable until April 14, 2026. The number of shares and the exercise price of both series are subject to adjustment during the exercise period if the Company conducts a future fundraising at a price lower than the original offering price, in accordance with the investment agreement. The fair value of the warrants was determined using Black-Scholes model, as described below. |
Total finance expenses net related to the warrants liability for 2025 totaled to $773.
| (4) | On December 8, 2024, the Company completed a private placement to an investor, receiving total gross proceeds of $112. In consideration, the Company issued 60,790 ordinary shares, 60,790 Series C warrants exercisable into 60,790 ordinary shares at an exercise price of NIS 7.68 ($2.11) per share, and 110,265 Series D warrants exercisable into 110,265 ordinary shares at an exercise price of NIS 10.5 ($2.89) per share. The Series C and Series D warrants are exercisable until May 27, 2026. The fair value of the warrants was determined using Black-Scholes model, as described below. |
F-23
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
On April 6, 2025, the number of Series C and D warrants were modified such that the number of such warrants following the modification was changed to 87,000 Series C warrants, with an exercise price of NIS 7.68 (approximately $2), rather than the amounts previously stated. Finance expense in the amount of $178 was recognized in the year ended December 31, 2025 for the difference in the fair value of the warrants immediately before and after the modification.
During 2025, the 87,000 warrants were exercised, and as of December 31, 2025 the warrant liability balance is zero.
Total finance income net related to the warrants liability for 2025 totaled to $41.
| (5) | On December 21, 2024, the Company completed a private placement to an investor, receiving total gross proceeds of $249. In consideration, the Company issued 135,597 ordinary shares and 135,598 Series E warrants exercisable into 135,598 ordinary shares at an exercise price of NIS 10.50 ($2.89) per share. The Series E warrants are exercisable until May 20, 2026. Under the investment agreement, the investor is entitled to receive additional ordinary shares for a period of up to 36 months, and the exercise price of the Series E warrants is subject to adjustment if future fundraising occurs at a lower price, in accordance with the investment agreement. The fair value of the warrants was determined using Black-Scholes model, as described below. |
On September 30, 2025, the denomination of the exercise price of the warrants was amended from NIS to US dollar, and therefore the warrant liability was converted into equity.
Total finance expenses related to the warrants liability for 2025 totaled to $207.
| (6) | On December 26, 2024, the Board of Directors approved the issuance of 157,400 ordinary shares in settlement of an underwriting advisory services of $116 which was recorded as issuance costs against equity. |
| (7) | On April 6, 2025, the Board of Directors approved an investment agreement, pursuant to which the Company will issue, by way of a private placement, 1,118,163 ordinary shares for aggregate consideration of $2,980. |
In April and May of 2025, the Company received an aggregate consideration of approximately $1,730 and issued 637,151 ordinary shares. As of June 30, 2025, the investor was committed to provide an additional $1,250 in exchange for the remaining ordinary shares, and the Company was obligated to complete such issuance. The investment agreement further stipulates that, if the Company conducts any additional fundraising at an effective share price lower than NIS 9.84 (approximately $2.9) per share, the investor will be entitled to receive additional ordinary shares in accordance with the anti-dilution adjustment mechanism set forth therein.
In relation to the remaining 481,012 ordinary shares, the Company recognized warrants liability of approximately $2,110, representing the fair value at the issuance date.
F-24
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
On November 26, 2025, an additional $434 was classified into equity (presented as of June 30, 2025 in other account payable) and 137,255 ordinary shares were issued, and on December 31, 2025 an amount of 1,034 was classified into equity (against other receivables) and in January 2026, a total of 343,757 ordinary shares were issued. In addition, the above-mentioned warrant liability was reduced to zero subsequent to December 31, 2025.
Additionally, the Board of Directors approved the issuance to a service provider (as a finder fee) who is related to the investor, of 78,252 ordinary shares, 200,000 warrants to purchase 200,000 ordinary shares at an exercise price of NIS 14 (approximately $4.2) per warrant, and 150,000 additional warrants to purchase 150,000 ordinary shares at an exercise price of NIS 10.5 (approximately $3.1) per warrant. The ordinary shares and the warrants were granted for services rendered in connection with the investment agreement. The warrants are exercisable until October 2026. As of December 31, 2025, 44,817 ordinary shares were issued, and 114,545 warrants at an exercise price of NIS 14 (approximately $4.2) per warrant, and 85,909 warrants at an exercise price of NIS 10.5 (approximately $3.1) per warrant, were issued to the service provider. In January 2026, additional 33.435 ordinary shares, 85,455 warrants at an exercise price of NIS 14 (approximately $4.4), and 64,091 warrants at an exercise price of NIS 10.5 (approximately $3.30), were issued to the service provider. Those amounts recorded at equity issuance cost.
| (8) | On May 13, 2025, the Company entered into separate investment agreements with two investors, pursuant to which it agreed to issue, by way of private placement, an aggregate of 480,000 ordinary shares for total consideration of $2,087. |
The share issuances were completed in two tranches: 240,000 ordinary shares were issued in May 2025 for consideration of $1,012, and additional 240,000 ordinary shares were issued in July 2025 for consideration of $1,075, upon receipt of the respective investment proceeds.
If the Company conducts an additional fundraising at an effective share price below NIS 9.42 (approximately $2.8) per share for a period of 18 months from the issuance date of the ordinary shares, each investor will be entitled to receive additional ordinary shares, in accordance with the adjustment mechanism specified in the investment agreement.
In addition, the Company separately issued to the investors: (a) 200,000 warrants to purchase 200,000 ordinary shares at an exercise price of NIS 18 (approximately $5.35) per warrant, exercisable until November 6, 2026; and (b) 160,000 warrants to purchase 160,000 ordinary shares at an exercise price of NIS 22.50 (approximately $6.7) per warrant, exercisable until November 6, 2026. On September 30, 2025, currency denomination of the exercise price of the warrants was amended from NIS to US dollar, and therefore the warrant liability which was recognized was converted into equity on this date (in an amount of $370).
On August 23, 2025, the Company entered into a definitive securities purchase agreement, or the August 2025 SPA, with Lender A, who is a member of the Board of Directors, for the issuance in a private placement of up to $5 million of the ordinary shares. Pursuant to the August 2025 SPA, the Company agreed to issue 921,621 ordinary shares, subject to the satisfaction of certain conditions, including the approval of the ordinary shares for listing on a tier of The Nasdaq Stock Market and the effectiveness of a registration statement covering the resale of the ordinary shares. As of the date that these financial statements are issued, the Company is in the process of listing its shares on the Nasdaq Stock Market.
F-25
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The fair value of the warrant liability as of the issuance date was determined in accordance with the following parameters:
| Issuance date | Stock price in NIS | Standard deviation | Risk-free interest rate | Fair value of the warrants | ||||||||||||
| October 22, 2024 | 5.94 | 73.9 | % | 4.2 | % | $ | 151 | |||||||||
| December 8, 2024 | 7.72 | 72.7 | % | 4.3 | % | $ | 92 | |||||||||
| December 21, 2024 | 10.29 | 70.9 | % | 4.6 | % | $ | 111 | |||||||||
| May 14, 2025 | 22 | 55.8 | % | 3.9 | % | $ | 568 | |||||||||
The fair value of the warrants liability detailed above as of December 31, 2025 was determined in accordance with the following parameters:
| Issuance date | Stock price in NIS | Standard deviation | Risk-free interest rate | Fair value of the warrants | ||||||||||||
| October 22, 2024 | 19.83 | 40 | % | 3.7 | % | $ | 874 | |||||||||
For the years ended December 31, 2025 and 2024, changes in the fair value of warrants liability was recognized within financial (income) expense, net and totaled $10,324 and $82, respectively.
| (9) | The ordinary shares have no par value per share. |
| c. | Stock- based compensation plans |
The Company’s equity incentive plan was approved by the Board of Directors and shareholders in November 2020, authorizing the grant of non-listed share options and Restricted Stock Units (RSUs) to eligible participants. Awards may vest subject to service conditions with certain awards also subject to performance milestones, such as fundraising targets, mergers or acquisitions, or listing of the Company’s shares on Nasdaq. Vesting periods are generally four years for employees and officers, and three years for certain executives, with some consultant awards vesting immediately. Share options generally have contractual terms of up to ten years.
The following provides detailed information on the stock-based compensation payment awards, including share options and RSUs, granted during the reporting periods.
In January 2021, Company’s officers received 9,866 options under the equity incentive plan to purchase 98,660 ordinary shares (an exercise ratio of 10), valued at $ 228 using the Black-Scholes option pricing model. The rights offering in February 2024 adjusted their exercise ratio to 10.075.
The shareholders in a meeting held in March 2021 approved grants to Yitzhak Natan Even Ari and Dov Friedman (shareholders of Anglo Turbo) for services rendered as directors of the Company, each receiving 33,519 options to purchase 335,190 ordinary shares. These awards were also adjusted to the new ratio after the rights offering, however, the share options expired on March 24, 2024.
In August 2021, the Company expanded participation to employees, granting 23,544 options to purchase 235,440 ordinary shares, vesting over four years, at an exercise price of NIS 98.4 (approximately $27.04) per option, with a total fair value of $530.
In the same month, a U.S. business development consulting agreement led to the grant of 3,853 options to purchase 38,530 ordinary shares valued at $79, vesting over 18 months, alongside 7,706 performance-based options to purchase 77,060 ordinary shares — no expense was recognized for the performance-based share options as performance targets are not expected to be met. The performance targets are completing a formation of a U.S. team as defined in the agreement and transaction of not less than $10 million as defined in the agreement. Total of 3,853 options, as of December 31, 2024, are exercisable.
On May 2022, the Board of Directors approved grant of securities to an employee of the Company, under which 116,512 options and 34,544 RSUs were issued with a four-year vesting period. The options and RSUs were valued at $530.
F-26
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
In January 2023, the Board of Directors approved grant of securities to officers and employees, under which 384,360 options (including 130,248 options to the CEO) and 182,248 RSUs (including 43,272 RSUs to the CEO) were issued. Employees and officers have a four-year vesting period, while the CEO’s awards vest over three years. The grant date fair value of the share options and RSUs were $764 and $486, respectively. Following the rights offering in February 2024, the exchange ratio for the share options was adjusted to 1.0075.
In December 2023, the Board of Directors approved a grant of securities to officers and employees, under which 654,348 options (398,076 options to the CEO) and 266,260 RSUs (143,316 RSUs to the CEO) were issued. The grant date fair values were $814 (options) and $381 (RSUs), and similarly adjusted for the rights offering.
In January 2024, shareholders approved a grant of 17,715 options to consultant Ziv Gafni (the “January 2024 Grant”), subject to a six-month vesting period, exercisable until December 2025, with a fair value of $14.5 which was determined based on the value of the services. The number of outstanding and exercisable share options as of December 31, 2024 were 17,715 with a remaining contractual term of 1 year.
During October 2024, a consultant was granted 800,000 Series 1 options and 800,000 Series 2 options (the “October 2024 Grant”), together to purchase 1,600,000 ordinary shares at NIS 6 (approximately $1.65) per option. The Series 1 options are vested upon grant date with a fair value of $579. The Series 2 options are subject to the achievement of specified performance conditions, including raising over $4,000 or listing the Company’s shares on Nasdaq by October 2027. No expense was recognized for Series 2 options in 2024. The specified conditions were met during May 2025. Series 2 options grant date fair value was $579.
As of December 31, 2025, total of 1,600,000 Series 1 options are exercisable, with a remaining contractual term until October 2027.
In December 2024, the Company granted to two service providers 58,414 RSUs (the “December 2024 Grant”), which are scheduled to vest over four years, subject to the achievement of specified performance conditions, including raising more than $3,000, completion of a merger or acquisition, or listing the Company’s shares on Nasdaq. As of December 31, 2024, the performance conditions had not been met and, accordingly, no expense has been recognized in respect of this grant. As of December 31, 2025, no options are exercisable.
On March 9, 2025, the shareholders approved the grant of 150,585 options to purchase 150,585 ordinary shares to five directors (30,177 options to each director), under the Company’s equity incentive plan. The share options have an exercise price of NIS 8.95 (approximately $2.47) per share and will vest over a two-year period. The fair value of the share options at the grant date was approximately $295 thousand.
Also, on March 9, 2025, the Board of Directors approved the grant of 19,696 options to purchase 19,696 ordinary shares to a service provider for services rendered in lieu of a cash payment. The share options vest immediately and have an exercise price of NIS 10 (approximately $2.76) per share. The fair value of the share options at the grant date was determined based on the value of the services provided, amounting to approximately $23.
On March 30, 2025, the Board of Directors approved the grant of 485,812 options to officers and employees, of which 398,076 options are granted to the CEO, Mr. Yaron Gilboa subject to the approval of the shareholders which was obtained on November 26, 2025. The remaining 61,728 options are granted to three officers, and 26,008 options to three employees.
In addition, 181,134 RSUs were granted, of which 143,316 RSUs to the CEO, subject to the approval of the shareholders which was obtained on November 26, 2025, 22,224 RSUs to three officers, and 15,594 RSUs to three employees.
F-27
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The vesting period for share options granted to the employees and officers is four years, except for the CEO for whom the vesting period is three years. The exercise price of the share options is NIS 10.16 (approximately $2.73).
The aggregate fair value of the grants at the grant date, to the CEO, officers and employees, was approximately $1,530.
On August 27, 2025, the Board of Directors approved the grant of 45,000 options to a service provider to purchase 45,000 ordinary shares at an exercise price of NIS 10.50 (approximately $3.14) per share, vesting immediately. The fair value of the share options at the grant date was approximately $148. In addition, a grant of 12,500 options to another service provider to purchase 12,500 ordinary shares at an exercise price of NIS 0.30 (approximately $0.09) per share, with a vesting period of two years. The fair value of the share options at the grant date was approximately $64.
On October 5, 2025, the Board of Directors approved the grant of 150,000 options to the Company’s Chief Financial Officer at an exercise price of NIS 16.60 (approximately $5.06) per share, and 70,000 RSUs; both awards have a vesting period of four years. The fair value of the share options and the RSUs at the grant date was approximately $501, and $354, respectively.
On November 26, 2025, the Company entered into services agreements with Mr. Yitzhak Natan Even Ari, who serves as the Chairman of the Board of Directors and is also one of the Company’s controlling shareholders, and a VP of Strategy and Business Development services agreement, and with Mr. Dov Friedman, who also serves as a director of the Company and is one of its controlling shareholders. Under the terms of the agreements, the Company will pay each of them a monthly fee of $9 and will grant each of them 397,215 options exercisable into up to 397,215 ordinary shares of the Company at an exercise price of NIS 0.30 ($0.09) per share. The share options vest in two equal tranches: half of the share options vested immediately upon grant, and the remaining half will vest upon the completion of the Company’s listing on Nasdaq. The fair value of the share options at the grant date was approximately $3,908, out of which half of the amount was recognized as expenses in 2025 ($1,954).
A summary of the activity in employee share options and related information is as follows:
| Options exercisable to 10 shares | Number of options | Weighted average exercise | Weighted average remaining contractual term in years | Aggregate intrinsic Value (in thousands of $) | ||||||||||||
| Outstanding as of December 31, 2023 (1) | 120,203 | 1.28 | 2.98 | 60 | ||||||||||||
| Forfeited or expired | (75,528 | ) | 1.22 | - | - | |||||||||||
| Outstanding as of December 31, 2024 | 44,675 | $ | 1.35 | 5.29 | $ | 47 | ||||||||||
| Exercisable as of December 31, 2024 (1) | 43,503 | $ | 1.31 | 5.26 | $ | 47 | ||||||||||
| Outstanding as of December 31, 2024 (1) | 44,675 | $ | 1.35 | 5.29 | $ | 47 | ||||||||||
| Forfeited or expired | (1,300 | ) | 3.08 | - | - | |||||||||||
| Exercised | (1,200 | ) | 3.00 | - | - | |||||||||||
| Outstanding as of December 31, 2025 | 42,175 | $ | 1.45 | 4.21 | $ | 189 | ||||||||||
| Exercisable as of December 31, 2025 (1) | 42,175 | $ | 1.45 | 4.21 | $ | 189 | ||||||||||
F-28
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| Options exercisable to 1 share | Number of options | Weighted average exercise | Weighted average remaining contractual term in years | Aggregate intrinsic Value | ||||||||||||
| Outstanding as of December 31, 2023 (1) | 959,236 | 1.92 | 9.7 | 115 | ||||||||||||
| Granted | 17,715 | 0.08 | 1.03 | 40 | ||||||||||||
| Forfeited or expired | (186,752 | ) | 2.05 | - | - | |||||||||||
| Outstanding as of December 31, 2024 | 790,199 | $ | 1.83 | 8.55 | 515 | |||||||||||
| Exercisable as of December 31, 2024 (1) | 450,107 | $ | 1.93 | 8.34 | 271 | |||||||||||
| Outstanding as of December 31, 2024 (1) | 790,199 | $ | 1.83 | 8.55 | 515 | |||||||||||
| Granted | 1,580,827 | 1.52 | 7.40 | 7,002 | ||||||||||||
| Forfeited or expired | (51,358 | ) | 1.35 | - | - | |||||||||||
| Exercised | (15,525 | ) | 1.89 | - | - | |||||||||||
| Outstanding as of December 31, 2025 | 2,304,143 | $ | 1.89 | 8.11 | 9,970 | |||||||||||
| Exercisable as of December 31, 2025 (1) | 1,342,777 | $ | 2.94 | 8.90 | 4,394 | |||||||||||
| (1) | Following the rights offering completed by the Company on February 14, 2024, the number of ordinary shares to be issued upon the exercise of options with a conversion ratio of 1:10 was adjusted, such that the new exercise ratio is approximately 10.075; for options with an exercise ratio of 1:1, the new exercise ratio is 1.0075. |
| * | Translated at the exchange rate applicable at the end of the relevant year |
The intrinsic value is the amount by which the closing price of the Company’s ordinary shares on December 31, 2025 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.
A summary of the activity in the RSUs and related information is as follows:
| RSU | ||||||||
Number of units outstanding | Weighted average grant date fair value | |||||||
| Unvested as of December 31, 2023 (1) | 327,392 | $ | 1.70 | |||||
| Vested | (82,550 | ) | 1.45 | |||||
| Forfeited | (99,648 | ) | 1.71 | |||||
| Unvested as of December 31, 2024 | 145,194 | $ | 1.77 | |||||
| Granted | 251,134 | 4.66 | ||||||
| Vested | (189,920 | ) | 3.38 | |||||
| Forfeited | (27,423 | ) | 1.93 | |||||
| Unvested as of December 31, 2025 | 178,985 | $ | 4.08 | |||||
| (1) | Following the rights offering completed by the Company on February 14, 2024, the number of ordinary shares to be issued upon the vesting of the RSUs was adjusted, such that the new ratio is 1.0075. |
F-29
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The January 2024 Grant, the October 2024 Grant, the December 2024 Grant and the August 2025 Grant, all of which were made to consultants and other service providers outside of the Company’s equity incentive plan, are not included in the tables above.
The Company estimates the fair value of share options granted using the Black-Scholes option pricing model. Restricted share units are measured at the market price of the Company’s ordinary share on the grant date.
Fair value estimation of stock options
The parameters used to implement the model are detailed below:
| Issue date | January 2023 | December 2023 | October 2024 | March 2025(*) | March 2025(**) | October 2025 | November 2025 | |||||||||||||||||||||
| Price of one ordinary share (in NIS) | 9.06 | 5.38 | 5.75 | 10.47 | 10.17 | 16.6 | 16.39 | |||||||||||||||||||||
| Exercise price per share option (in NIS) | 10.35 | 5.38 | 6 | 8.95 | 10.16 | 16.6 | 10.16 | |||||||||||||||||||||
| Expected volatility | 68 | % | 81 | % | 68.8 | % | 73 | % | 72 | % | 71 | % | 70 | % | ||||||||||||||
| Risk-free interest rate | 3.35 | % | 3.98 | % | 4.27 | % | 4.35 | % | 4.11 | % | 3.85 | % | 3.56 | % | ||||||||||||||
| Expected dividend rate | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||||||
| (*) | March Grant to directors |
| (**) | March Grant to officers and employees |
Fair value estimation of restricted stock units (RSUs)
The fair value of a RSU is equal to the market price of the Company’s ordinary share. The fair value is determined based on the share price on the grant date, without the need to apply any additional economic valuation models.
F-30
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Stock-based compensation expenses
The Company recognized stock-based compensation expenses related to all stock-based payment awards in the statements of comprehensive loss for the years ended December 31, 2025 and 2024 as follows:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Research and development | $ | 67 | $ | 18 | ||||
| Sales and marketing | 1,049 | 58 | ||||||
| General and administrative | 4,944 | 264 | ||||||
| Total stock-based compensation expenses | $ | 6,060 | $ | 340 | ||||
As of December 31, 2025, there were total unrecognized compensation expenses in the amount of $3,001 related to non-vested equity-based compensation arrangements granted. These expenses are expected to be recognized over a weighted average period of approximately 1.1 years.
| d. | Dividend |
Since its incorporation, the Company has not declared or paid any dividends on its ordinary shares.
Note 11 – Income Taxes
| a. | Applicable tax rates |
The Company is subject to Israeli corporate income tax at a statutory rate of 23%. Capital gains are generally taxed at the corporate rate applicable in the year of realization.
| b. | Tax assessments |
The Company’s tax assessments are considered final through the 2018 tax year.
| c. | Deferred tax assets – Net operating loss carryforwards |
As of December 31, 2025, the Company had accumulated net operating loss carryforwards of $22,851 for Israeli income tax purposes ($19,822 as of December 31, 2024). These losses may be carried forward indefinitely and used to offset future taxable income.
In accordance with ASC 740 “Income Taxes”, the Company has recognized deferred tax assets in respect of temporary differences and loss carryforwards. However, based on current and historical operating losses and the absence of taxable income in the foreseeable future, management has concluded that it is more likely than not that the deferred tax asset will not be realized. Accordingly, a full valuation allowance has been recorded on the deferred tax asset.
F-31
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| d. | Deferred taxes: |
Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax liabilities and assets are as follows:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets, net: | ||||||||
| Research and development carryforward expenses | 270 | $ | 389 | |||||
| Net operating loss carryforward | 5,256 | 4,559 | ||||||
| Lease liabilities | 111 | 83 | ||||||
| Other | 13 | 6 | ||||||
| Total gross deferred tax assets, net | 5,650 | 5,026 | ||||||
| Less: Valuation allowance | (5,586 | ) | (4,944 | ) | ||||
| Total deferred tax assets, net | 64 | 82 | ||||||
| Deferred tax liabilities, net: | ||||||||
| Right-of-use assets | (64 | ) | (82 | ) | ||||
| Recorded as: | ||||||||
| Deferred tax assets, net | 64 | 82 | ||||||
| Deferred tax liabilities, net | (64 | ) | (82 | ) | ||||
| Net deferred tax assets (liabilities) | - | - | ||||||
| e. | Reconciliation of the statutory tax expense to the actual tax expense: |
The main reconciling item between the statutory tax rate of the Company and the effective tax rate is the change in valuation allowance in respect of tax benefits from carried forward tax losses due to uncertainty of the realization of such tax benefits (23%). As a result, the Company’s effective tax rate was 0% for the years ended December 31, 2025 and 2024.
| f. | The changes in the valuation allowance were as follows: |
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Balance at the beginning of the year | (4,955 | ) | (4,389 | ) | ||||
| Changes during the year: | (631 | ) | (566 | ) | ||||
| Balance at the end of the year | (5,586 | ) | (4,955 | ) | ||||
| g. | Loss before income taxes are comprised as follows: |
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Domestic | 19,485 | 2,998 | ||||||
| Loss before income taxes | 19,485 | 2,998 | ||||||
F-32
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 12 – Convertible loans and detachable warrants:
| a. | Convertible Loan Agreements – Key Terms |
Starting December 2022, the Company entered into several convertible loan agreements. The convertible loan agreements include the following conditions:
| (1) | Each loan is repayable in single payment at the end of its contractual term. |
| (2) | Loans bear fixed annual interest of 10%, which accrues and is added to the outstanding principal balance. |
| (3) | The outstanding principal and accrued interest may be converted into ordinary shares at a conversion price of NIS 12 ($3.30) per share. If conversion occurs more than six months after the loan issuance date, the number of ordinary shares issued upon conversion will be calculated based on the total principal and interest accrued over the full term of the loan. |
| (4) | The conversion price is subject to adjustment during the loan term if the Company issues shares at a price below NIS 12 ($3.30), in accordance with the provisions of the loan agreements (“Adjusted Conversion Price”). As of the conversion date (see below), the Adjusted Conversion Price was NIS 6.58 ($1.80) per share. |
| (5) | On the date of issuance of each convertible loan, the Company grants the lender detachable warrants to purchase ordinary shares. These warrants are not listed for trading and are exercisable at any time during the loan term. The initial exercise price stipulated in the loan agreement is NIS 14.00 ($3.80) per warrant. The exercise price is subject to adjustment if the Company issues shares at a price below NIS 12 ($3.30) per share (“Adjusted Exercise Price”). As of the conversion date (see below), the Adjusted Exercise Price was NIS 7.68 ($2.10) per warrant. |
Lender A
In December 2022, the Board of Directors approved a convertible loan agreement (“Loan A”) under which the lender (“Lender A”) provided gross proceeds of $1,032. The loan matures in a single bullet repayment on December 1, 2024.
In connection with Loan A, the Board of Directors also approved the grant of 250,000 warrants to purchase ordinary shares, exercisable until December 1, 2024. These warrants expired upon conversion of Loan A in March 2025.
For further details on the full conversion of Loan A, see Lenders A and F below.
Consulting agreement - Lender A
On August 10, 2023, the shareholders approved a consulting agreement with Lender A. Under the terms of the agreement, Lender A will provide advisory services to the Company for a period of 24 months commencing July 1, 2023. As compensation for the services, Lender A was entitled to a fixed monthly fee of $12.
For information regarding the conversion of accrued fixed monthly fees accumulated under this consulting agreement, see Lenders A and F below.
Lender F
In July 2023, the Board of Directors approved a convertible loan agreement (“Loan F”) with Lender A and additional lenders (“Lenders F”), pursuant to which Lenders F provided the Company with gross proceeds of $1,079. Loan F matures in a single bullet repayment on July 2, 2025.
F-33
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
In connection with Loan F, the Board of Directors approved the grant of 285,714 warrants to purchase ordinary shares, exercisable until July 2, 2025.
For additional details regarding the full conversion of Loan F, see Lenders A and F below.
Lenders A and F
On March 9, 2025, the shareholders approved a conversion agreement with Lender A and Lenders F, under which loans totaling approximately $2,452 were converted into 1,518,128 ordinary shares. In lieu of the above mentioned warrants they previously held, the Company issued 600,000 new warrants with an exercise price of NIS 8 (approximately $2.37) per warrant, exercisable until December 20, 2025. For 142,857 of these warrants, an exercise price adjustment mechanism applies. Since the warrants were recognized as a liability carried at fair value, the excess of the value of the new warrants over the fair value prior to the change was recorded in earnings.
The Company also issued to Lender A, in his capacity as a service provider, 260,000 options with an exercise price of NIS 11 (approximately $3.30) per option, exercisable for a period of 12 months. The fair value of the share options at the grant date was determined based on the value of the services provided, amounting to approximately $155. In addition, a debt of approximately $186 owed to Lender A under a service provider agreement was converted into 150,000 ordinary shares.
In March 2025, Lender A completed an additional investment of approximately $140, and the Company issued to Lender A 74,627 ordinary shares and 74,627 warrants with an exercise price of NIS 10.5 (approximately $3.1) per warrant, exercisable for a period of 12 months. The shares and warrants are subject to adjustment mechanisms for both the number of shares and the exercise price, in accordance with the terms of the agreement.
On November 25, 2025, the shareholders approved, the Company’s entry into a warrant exercise agreement with Lender A and Lenders F. Under the agreement, the lenders undertook to exercise all warrants previously issued to them, promptly following the listing of the Company’s ordinary shares on Nasdaq. In consideration for this commitment, the exercise of the warrants under the agreement is expected to generate proceeds of approximately $2,650 for the Company. As of the date these financial statements are issued, an amount of $2,700 was received from lenders A and F.
The Company recognized in its balance sheet a warranty liability. In addition, finance expenses of $789 were recognized in 2025, including $17 which reflects the change in the expiration date of such warrants.
Lender B and Lender E
In December 2022, the Board of Directors approved a convertible loan agreement (“Loan B”) under which the lender (“Lender B”) provided gross proceeds of $295. Loan B matures in a single bullet repayment on December 1, 2024.
In connection with Loan B, the Board of Directors also approved the grant of 71,429 warrants to purchase ordinary shares, exercisable until December 1, 2024.
F-34
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
In May 2023, the Board of Directors approved a convertible loan agreement (“Loan E”) under which the lender (“Lender E”) provided gross proceeds of $273. Loan E matures in a single bullet repayment on May 3, 2025.
In connection with Loan E, the Board of Directors also approved the grant of 71,429 warrants to purchase ordinary shares, exercisable until May 3, 2025.
In July 2024, the Board of Directors approved a loan conversion agreement with Lenders B and E. Under the agreement, loans totaling $649 were converted into 367,738 ordinary shares.
As part of the conversion, the exercise price of the existing 142,858 warrants was adjusted to NIS 7.68 ($2.10) per warrant. Additionally, the Company granted the lenders new 180,000 warrants with an exercise price of NIS 10.50 ($2.9) per warrant. The original warrant’s exercise period was extended to April 17, 2025, whereas the newly issued warrants expired on March 18, 2025.
In April 2025, the remaining 142,858 warrants held by these lenders, with an exercise price of NIS 7.68 (approximately $2.23) per warrant, were exercised.
Lender C
In February 2023, the Board of Directors approved a convertible loan agreement (“Loan C”) with a lender (“Lender C”) under which Lender C agreed to provide up to $695. Upon partial execution of the agreement in February 2023, Lender C provided $273 to the Company. Loan C matures in a single bullet repayment on February 26, 2025.
In connection with Loan C, the Board of Directors also approved the grant of 71,429 warrants to purchase ordinary shares, exercisable until February 26, 2025.
In February 2025, Lender C, together with Lender E, provided additional loans totaling $422, upon the full execution of the agreement. On February 26, 2025, the Company received a conversion notice for the full balance of Loan C.
In February 2025, Lender C provided the Company with an additional loan of approximately $211 and assigned its right to provide an additional loan of approximately $211 to Lender E, who provided the loan to the Company under the applicable loan agreement.
On February 26, 2025, the Company received a conversion notice from Lender C for the full convertible loan balance (principal and interest) totaling approximately $551, as well as a conversion notice from Lender E for the full convertible loan balance of approximately $211, together with the allocation of warrants as described above. The conversion is subject to certain required legal approvals. See below under “Lender D” for the conversion of such loan.
Lender D
In April 2023, the Board of Directors approved a convertible loan agreement (“Loan D”) under which the lender provided gross proceeds of $273. Loan D matures in a single bullet repayment on October 3, 2024.
In connection with Loan D, the Board of Directors also approved the grant of 71,429 warrants to purchase ordinary shares, exercisable until October 3, 2024.
As of December 31, 2024, Loan D had not been converted and was presented in the balance sheet as a current convertible loan. The associated conversion feature and the warrants granted in connection with Loan D have expired.
The original maturity date of Loan D was extended to April 3, 2025 (the “Updated Maturity Date”), while the Company worked to update the conversion terms.
F-35
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
As of October 22, 2025, following the approval of the Company’s Audit Committee and Board of Directors, and on November 26, 2025, following the approval of the Company’s shareholders, the Company entered into a settlement and conversion arrangement with lenders C, E and D and assignees.
Under the agreement, the Company agreed to allocate 595,744 ordinary shares to the assignees at a conversion price of NIS 6.58 (approximately $1.80). If the Company will achieve the milestone relating to the filing and effectiveness of a registration statement on Form F-1 with the SEC by June 30, 2026, the Company will allocate to one of Lenders G 1,200,000 ordinary shares issuable upon the exercise of warrants that will be exercisable for a period of 12 months from the date the registration statement becomes effective at an exercise price of $2. If the Company will not achieve the milestone by June 30, 2026, the Company will instead, allocate 750,000 share rights to this assignee, each convertible into one ordinary share. After evaluating the guidance in ASC 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” the Company concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting and thus meet the definition of a derivative liability. As of December 31, 2025, a warrant liability in an amount of $ 5,002 related to the warrants and the share rights, is presented.
Lenders G
In May 2024, the Board of Directors approved a convertible loan agreement (“Loan G”) with four lenders (collectively, “Lenders G”), pursuant to which Lenders G provided gross proceeds of $535. Loan G matures in a single bullet repayment on May 19, 2026.
In connection with Loan G, the Board of Directors also approved the grant of 142,857 warrants to purchase ordinary shares, exercisable until May 19, 2026.
In September 2024, the Board of Directors approved a loan conversion agreement with two of the Loan G lenders. Under the agreement, loans totaling $102 were converted into 110,320 ordinary shares.
As part of the conversion, the exercise price of existing 32,142 warrants was adjusted to NIS 7.68 (approximately $2.10) per warrant
In December 2024, the Board of Directors approved a loan conversion agreement with the two remaining Loan G lenders. Under the agreement, loans totaling $383 were converted into 566,990 ordinary shares.
In accordance with the agreement, the exercise price of existing 89,768 warrants was revised to NIS 3.73 ($1.00) per warrant, and the exercise price of existing 20,946 warrants was revised to NIS 4.51 ($1.20) per warrant.
On September 30, 2025, the exercise price of the remaining 89,768 warrants, were denominated into US dollar, and therefore the warrant liability which was recognized was converted into equity on this date (in an amount of $373).
| (a) | Upon receipt of the proceeds from each convertible loan, the total proceeds were allocated among the embedded conversion feature, the freestanding warrants, and the debt host component as follows: |
| Loans | Fair value of conversion feature* | Fair value of the warrants** | Balance of debt host component | |||||||||
| A. B | 254 | 90 | 982 | |||||||||
| C, D, E | 70 | 26 | 729 | |||||||||
| F | 496 | 87 | 496 | |||||||||
| G | 161 | 75 | 299 | |||||||||
| * | The fair value of the conversion feature was calculated using the Monte Carlo simulation model. |
| ** | The fair value of the warrants was determined applying both the Black-Scholes option-pricing model and Monte Carlo simulation techniques. |
F-36
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The key inputs used to determine the fair value of the conversion feature and warrants liability as of December 31, 2025 and 2024, were as follows:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Share price in NIS | 19.83 | 8.55 | ||||||
| Standard deviation | 42%-52 | % | 55% - 71 | % | ||||
| Discount rate | 23 | % | ||||||
| (1) | As of December 31, 2025, the fair value of the conversion feature, together with the fair value of the warrants for the remaining convertible loans was as follows: |
| Loans | Fair value of the warrants** | |||
| A , F | 2,459 | |||
| C,D,E | 5,002 | |||
| (2) | As of December 31, 2024, the fair value of the conversion feature, together with the fair value of the warrants for the remaining convertible loans was as follows: |
| Loans | Fair value of conversion feature* | Fair value of the warrants** | Balance of debt host component | |||||||||
| A | 3 | 5 | 1,173 | |||||||||
| B, E | - | 61 | - | |||||||||
| C | 1 | 5 | 323 | |||||||||
| D | - | - | 317 | |||||||||
| F | 189 | 31 | 1,044 | |||||||||
| G | - | 147 | - | |||||||||
| * | The fair value of the conversion feature was calculated using the Monte Carlo simulation model. |
| ** | The fair value of the warrants was determined under multiple market scenarios, applying both the Black-Scholes option-pricing model and Monte Carlo simulation techniques. |
F-37
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 13 - Research and development expenses, Net
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Salaries and related expenses (*) | $ | 954 | $ | 1,040 | ||||
| Materials | 504 | 24 | ||||||
| Contractors | 286 | 68 | ||||||
| Depreciation | 15 | 181 | ||||||
| Consultants | - | 29 | ||||||
| Overseas travel | 67 | 77 | ||||||
| Others | 111 | 145 | ||||||
| Less – grants for participation in research and development expenses | (991 | ) | (372 | ) | ||||
| Total Research and Development Expenses, Net | 946 | 1,192 | ||||||
| * | Includes the effect of stock-based compensation expense. See note 10. |
Note 14 – Sales and marketing expenses
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Salaries and related expenses (*) | $ | 1,139 | $ | 144 | ||||
| Depreciation | 1 | 4 | ||||||
| Consulting | 6 | 97 | ||||||
| Overseas travel | 85 | 4 | ||||||
| Others | 34 | 24 | ||||||
| Total Sales and marketing expenses | 1,265 | 273 | ||||||
| * | Includes the effect of stock-based compensation expense. See note 10. |
Note 15 – General and administrative expenses
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Salaries and related expenses (*) | $ | 5,128 | $ | 492 | ||||
| Professional services (*) | 1,528 | 622 | ||||||
| Depreciation | 7 | 55 | ||||||
| Overseas travel | 3 | 25 | ||||||
| Others | 228 | 172 | ||||||
| Total General and Administrative Expenses | 6,894 | 1,366 | ||||||
| * | Includes the effect of stock-based compensation expense. See note 10. |
F-38
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 16 - Loss per shares
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Basic EPS | ||||||||
| Numerator: | ||||||||
| Net income (loss) | (19,485 | ) | (2,998 | ) | ||||
| Denominator: | ||||||||
| Shares used in computing net profit (loss) per share of ordinary shares, basic | 17,953,558 | 14,251,689 | ||||||
| Diluted EPS: | ||||||||
| Numerator: | ||||||||
| Net income (loss) attributable to ordinary shares, basic | (19,485 | ) | (2,998 | ) | ||||
| Convertible loans effect | - | (74 | ) | |||||
| - | ||||||||
| Net income (loss) attributable to ordinary shares, diluted | (19,485 | ) | (3,072 | ) | ||||
| Denominator: | ||||||||
| Shares used in computing net profit (loss) per share of ordinary shares, basic | 17,953,558 | 14,251,689 | ||||||
| Convertible loans effect | - | 206,726 | ||||||
| - | ||||||||
| Shares used in computing net profit (loss) per share of ordinary shares, diluted | 17,953,558 | 14,458,415 | ||||||
| Profit (loss) per share: | ||||||||
| Basic | $ | (1.09 | ) | $ | (0.21 | ) | ||
| Diluted | $ | (1.09 | ) | $ | (0.21 | ) | ||
The following outstanding shares of ordinary shares equivalents were excluded from the calculation due to their antidilutive nature:
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Stock options exercisable to 10 ordinary shares | 42,175 | 44,675 | ||||||
| Stock options exercisable to 1 ordinary share | 3,050,898 | 772,484 | ||||||
| Convertible loans | 966,667 | |||||||
| Warrants and share rights issued in connection with convertible loans | 1,684,627 | 1,144,287 | ||||||
| Warrants issued in connection with capital offerings | 969,911 | 808,172 | ||||||
| RSU | 237,399 | 147,636 | ||||||
| Total shares excluded | 5,985,010 | 3,883,921 | ||||||
Note 17 – Subsequent Events
The Company evaluated subsequent events through May 14, 2026, the date these financial statements were available to be issued. The Company concluded that no subsequent events have occurred that would require recognition or disclosure in the financial statements, except:
On April 29, 2026, the Board of Directors approved the grant of 489,000 options to officers and employees, of which 165,000 options were granted to the CEO, Mr. Yaron Gilboa subject to the approval of the shareholders and the TASE. The remaining 186,000 options were granted to three officers, and 138,000 options to other employees.
In addition, 489,000 RSUs were granted, of which 165,000 RSUs were granted to the CEO, subject to the approval of the shareholders and the TASE, 186,000 RSUs were granted to three officers, and 138,000 RSUs to other employees.
The vesting period for the options granted to the employees and officers is four years, except for the CEO for whom the vesting period is two years as well as one of the officers. The exercise price of the options is NIS 18.50 per share (approximately $6.25).
In addition, on April 29, 2026, the Board of Directors approved the grant of 24,000 options to three service providers (two of them 6,000 options for each service provider, and additional 12,000 options for the third service provider) to purchase 24,000 ordinary shares at an exercise price of NIS 18.50 (approximately $6.25) per share, with a vesting period of two years.
F-39
Up to 2,066,243 Ordinary Shares
TurboGen Ltd.
PROSPECTUS
, 2026
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. Indemnification of Directors, Officers and Employees
Indemnification
The Companies Law, and the Israeli Securities Law, 5728-1968, or the Securities Law, provide that a company may indemnify an office holder against the following liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance of an event or following an event, provided its Articles of Association include a provision authorizing such indemnification:
| ● | A financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder, including a settlement or arbitrator’s award approved by a court; |
| ● | Reasonable litigation expenses, including attorneys’ fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction; |
| ● | Reasonable litigation expenses, including attorneys’ fees, expended by the office holder or imposed on him or her by a court; (1) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent; and |
| ● | Expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees. An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law. |
The Companies Law also permits a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount or criterion:
| ● | To events that in the opinion of the board of directors can be foreseen based on the company’s activities at the time that the undertaking to indemnify is made; and |
| ● | In amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances. |
We have entered into indemnification agreements with all of our directors and with all members of our senior management. Each such indemnification agreement provides the office holder with indemnification permitted under applicable law and up to a certain amount, and to the extent that these liabilities are not covered by directors and officers insurance.
II-1
Exemption
Under the Companies Law, an Israeli company may not exempt an office holder from liability for a breach of his or her duty of loyalty, but may exempt in advance an office holder from his or her liability to the company, in whole or in part, for damages caused to the company as a result of a breach of his or her duty of care (other than in relation to distributions), but only if a provision authorizing such exemption is included in its articles of association. Our Articles of Association provide that we may exempt, in whole or in part, any office holder from liability to us for damages caused to the company as a result of a breach of his or her duty of care, but prohibit an exemption from liability arising from a company’s transaction in which our controlling shareholder or officer has a personal interest. Subject to the aforesaid limitations, under the indemnification agreements, we exempt and release our office holders from any and all liability to us related to any breach by them of their duty of care to us to the fullest extent permitted by law.
Limitations
The Companies Law provides that our Company may not exempt or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity or insurance only, but not exemption) the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) any act or omission committed with the intent to derive an illegal personal benefit; or (4) any fine, monetary sanction, penalty or forfeit levied against the office holder.
Under the Companies Law, exemption, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders.
Our Articles of Association permit us to exempt (subject to the aforesaid limitation), indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Companies Law.
II-2
Item 7. Recent Sales of Unregistered Securities
Set forth below are the sales of all securities by us in the last three years since December 2022 which were not registered under the Securities Act. We believe that each of such issuances was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act, Rule 701 and/or Regulation S under the Securities Act.
In December 2022, we issued convertible loans to Mr. Alex Katz and Mr. Yoav Sharon in the amounts of NIS 3.5 million (approximately $1,032 thousand) and NIS 1.0 million (approximately $295 thousand), respectively, together with 250,000 warrants to Mr. Katz and 71,429 warrants to Mr. Sharon, each exercisable until December 1, 2024.
In February 2023, we issued a convertible loan to Mr. Zohar Rappaport in the amount of NIS 1.0 million (approximately $273 thousand), pursuant to a broader loan framework of up to NIS 2.5 million, and 71,429 warrants exercisable until February 26, 2025.
In April 2023, we issued a convertible loan to Ms. Maayan Zvi in the amount of NIS 1.0 million (approximately $273 thousand), together with 71,429 warrants exercisable until October 3, 2024. In May 2023, we issued a convertible loan to Mr. Pinhas Hertz in the amount of NIS 1.0 million (approximately $273 thousand), together with 71,429 warrants exercisable until May 3, 2025.
In July 2023, we issued an additional convertible loan of NIS 4.0 million (approximately $1,079 thousand) to a lender group consisting of Messrs. Alex Katz, Eliot Tannenbaum, Dov Tannenbaum, and David Binyamin Greenberg, together with 285,714 warrants exercisable until July 2, 2025.
On February 14, 2024, we issued 262,064 Ordinary Shares for total gross proceeds of approximately $447 thousand.
In May 2024, we issued a convertible loan in the aggregate amount of NIS 2.0 million (approximately $535 thousand) to Messrs. Ofer Eytan, Moshe Danino, Micha Pegasus, and Tal Levinson, together with 142,857 warrants exercisable until May 19, 2026.
In July 2024, we converted loans from Messrs. Sharon and Hertz in the aggregate amount of approximately $649 thousand into 367,738 Ordinary Shares, adjusted the exercise price of 142,858 outstanding warrants to NIS 7.68 (approximately $2.10) per warrant, and issued 180,000 additional warrants at an exercise price of NIS 10.50 (approximately $2.90) per warrant.
In September 2024, we converted loans from Messrs. Pegasus and Levinson in the aggregate amount of approximately $102 thousand into 110,320 Ordinary Shares and adjusted the exercise price of 32,142 outstanding warrants to NIS 7.68 (approximately $2.10) per warrant.
On October 22, 2024, we issued 167,173 Ordinary Shares to Amalul Investments Ltd. for total gross proceeds of $291 thousand, together with 167,173 warrants at an exercise price of NIS 7.68 (approximately $2.11) per share and 334,346 warrants at an exercise price of NIS 10.50 (approximately $2.89) per share, exercisable until March 21, 2026.
On December 8, 2024, we issued 60,790 Ordinary Shares to Flash Projects K.E. Ltd. for total gross proceeds of $112 thousand, together with 60,790 warrants at an exercise price of NIS 7.68 (approximately $2.11) per share and 110,265 warrants at an exercise price of NIS 10.50 (approximately $2.89) per share, exercisable until May 7, 2026.
On December 21, 2024, we issued 135,597 Ordinary Shares to Ms. Vivian Trau for total gross proceeds of $249 thousand, together with 135,598 warrants at an exercise price of NIS 10.50 (approximately $2.89) per share, exercisable until May 20, 2026.
In December 2024, we converted loans from Messrs. Eytan and Danino in the aggregate amount of approximately $383 thousand into 566,990 Ordinary Shares and revised the exercise prices of certain outstanding warrants to NIS 3.73 (approximately $1.00) and NIS 4.51 (approximately $1.20) per warrant, respectively.
In February 2025, Mr. Rappaport provided an additional loan of $211 thousand and assigned his remaining right to provide an additional loan of approximately $211 thousand to Mr. Hertz.
In March 2025, we issued 74,627 Ordinary Shares and 74,627 warrants to Mr. Katz, at an exercise price of NIS 10.50 (approximately $2.90) per share, for total gross proceeds of $140 thousand.
On April 6, 2025, we issued 1,118,163 Ordinary Shares to A.I. Azimuth Capital, Limited Partnership for total gross proceeds of $2.9 million, and issued to Flash an additional 78,252 Ordinary Shares and 350,000 warrants as consideration for transaction services.
On May 13, 2025, we issued 480,000 Ordinary Shares for total gross proceeds of $2.0 million, together with warrants to purchase up to 200,000 Ordinary Shares at an exercise price of NIS 18.00 (approximately $5.35) per share and up to 160,000 Ordinary Shares at an exercise price of NIS 22.50 (approximately $6.70) per share, exercisable until November 6, 2026, and subject to anti-dilution adjustments if subsequent financings occur below NIS 9.42 (approximately $2.80) per share.
II-3
On December 3, 2025, pursuant to a settlement and conversion agreement entered into in October 2025 with Mr. Rappaport, Ms. Zvi, Mr. Eytan and certain assignees, we issued 595,744 Ordinary Shares at a conversion price of NIS 6.58, or approximately $1.80, per share, subject to further adjustment. The agreement also provided for the issuance of up to 750,000 share rights to Mr. Eytan, contingent upon future regulatory outcomes. Because the Company did not achieve one of the specified regulatory outcomes, 750,000 share rights were issued to Mr. Eytan, which were converted into 750,000 Ordinary Shares on July 1, 2026 following TASE approval.
On December 8, 2025, we converted loans from Anglo Turbo Limited Partnership, in the aggregate amount of approximately $435 thousand into 136,450 Ordinary Shares at a conversion price of NIS 11.50 (approximately $3.19) per share.
On December 23, 2025, we issued 27,200 Ordinary Shares to a service provider, and 45,000 options to purchase 45,000 Ordinary Shares to another service provider. The options vested immediately and have an exercise price of NIS 10.50 (approximately $3.11) per share. We also issued 12,500 options to purchase 12,500 Ordinary Shares to another service provider. The shares vest over a two-year period and have an exercise price of NIS 0.30 (approximately $0.09) per share.
On April 29, 2026, our board of directors approved a grant of 489,000 options to purchase up to 489,000 Ordinary Shares and 489,000 RSUs to certain employees and officers. The options vest over a four-year period (except for the options granted to our CEO and one of the officers, for whom the vesting period is two years) and have an exercise price of NIS 18.50 (approximately $6.25) per share. The RSUs have the same vesting period as the options. In addition, on April 29, 2026, our board of directors approved the grant of 24,000 options to purchase up to 24,000 Ordinary Shares to three service providers. These options vest over a two-year period on an annual basis and have an exercise price of NIS 18.50 (approximately $6.25) per share. The aforementioned grant of options and RSUs to certain employees and officers was approved by TASE on May 12, 2026. The aforementioned grant of 165,000 options and 165,000 RSUs to our CEO was approved by our shareholders and by TASE on June 11, 2026 and June 15, 2026, respectively.
On August 20, 2026, we entered into five separate securities purchase agreements with (i) Kesem Mutual Funds Ltd., (ii) Ari Real Estate (Arena) Investment Ltd., (iii) Pinhas Biton, (iv) Hazavim Value LP and (v) Moshe Danino, pursuant to which we agreed to issue and sell, in private placements, an aggregate of 1,131,616 ordinary shares at a purchase price of NIS 13.22 ($4.42) per share, for an aggregate purchase price of $5 million.
Item 8. Exhibits and Financial Statement Schedules
Exhibits:
| * | Filed herewith. |
| ** | Previously filed |
II-4
Financial Statement Schedules:
All financial statement schedules have been omitted because either they are not required, are not applicable or the information required therein is otherwise set forth in the Company’s financial statements and related notes thereto.
Item 9. Undertakings
| (a) | The undersigned Registrant hereby undertakes: |
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| i. | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| ii. | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
| iii. | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3. |
| (5) | That for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
| (6) | That for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (b) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this amendment to the registration statement on Form F-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Petah Tikva, Israel on August 21, 2026.
| TURBOGEN LTD. | ||
| By: | /s/ Yaron Gilboa | |
| Yaron Gilboa | ||
| Chief Executive Officer | ||
Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement on Form F-1 has been signed by the following persons in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Yaron Gilboa | Chief Executive Officer, President, Director | August 21, 2026 | ||
| Yaron Gilboa | (Principal Executive Officer) | |||
| /s/ Neta Zruya Hashai | Chief Financial Officer | August 21, 2026 | ||
| Neta Zruya Hashai | (Principal Financial and Accounting Officer) | |||
| * | Chairman of the Board of Directors | August 21, 2026 | ||
| Itzhak Natan Even Ari | ||||
| * | Director | August 21, 2026 | ||
| Dov Fridman | ||||
| * | Director | August 21, 2026 | ||
| David Deri | ||||
| * | Director | August 21, 2026 | ||
| Ziv Gafni | ||||
| * | Director | August 21, 2026 | ||
| Eli Zooker | ||||
| * | Director | August 21, 2026 | ||
| Idan Ben Shitrit | ||||
| * | Director | August 21, 2026 | ||
| Ethy Levy | ||||
| * | Director | August 21, 2026 | ||
| Alex Katz |
| *By | /s/ Yaron Gilboa | |
| Yaron Gilboa | ||
| Attorney-in-Fact |
II-6
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the Securities Act of 1933, as amended, the undersigned, Puglisi & Associates, the duly authorized representative in the United States of TurboGen Ltd., has signed this registration statement on August 21, 2026.
| Puglisi & Associates | ||
| By: | /s/ Donald J. Puglisi | |
| Donald J. Puglisi | ||
| Managing Director | ||
II-7
Exhibit 5.1
 |
Sullivan & Wocester Tel Aviv | +972-747580480 | |
| 28 HaArba’a St. HaArba’a Towers | sullivanlaw.com | ||
| North Tower, 14th Floor | |||
| Tel-Aviv, Israel |
August 21, 2026
To:
Turbogen Ltd.
22 Efal Street, Kiryat Aryeh,
Petah Tikva 4951122
| Re: | Registration Statement on Form F-1 |
Ladies and Gentlemen:
We have acted as Israeli counsel to Turbogen Ltd. (the “Company”), an Israeli company, in connection with the filing by the Company of a registration statement on Form F-1 (the “Registration Statement”) with the Securities and Exchange Commission, relating to the resale by the selling shareholders identified in the Registration Statement, of 2,066,243 ordinary shares, no par value per share, of the Company (the “Ordinary Shares”), consisting of: (i) 1,131,616 Ordinary Shares (the “Shares”) issued under that certain securities purchase agreement between the Company and certain investors, dated August 21, 2026 (the “August 2026 Private Placement); and (ii) 934,627 Ordinary Shares (the “Inducement Warrant Shares”) issuable upon the exercise of the warrants (the “Inducement Warrants”) pursuant to certain warrant inducement agreements between the Company and certain shareholders dated August 21, 2025 (the “2025 Warrant Inducement Agreement”).
In connection with this opinion, we have examined the originals, or photocopies or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement, to which this opinion is filed as an exhibit, (ii) a copy of the Company’s articles of association, (iii) resolutions of the Company’s Board of Directors which have heretofore been approved and relate to the Registration Statement and the actions to be taken in connection with the offering of the Ordinary Shares by the Company, and (iv) such statutes, regulations, corporate records, documents, certificates and such other instruments that we have deemed relevant and necessary for the basis of our opinions hereinafter expressed. In such examination, we have assumed: (i) the authenticity of original documents and the genuineness of all signatures; (ii) the conformity to the originals of all documents submitted to us as copies; (iii) the truth, accuracy and completeness of the information, representations and warranties contained in the corporate records, documents, certificates and instruments we have reviewed; (iv) the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof; and (v) the legal capacity of all natural persons. In addition, we have assumed that the Company will receive full consideration for the Ordinary Shares underlying the Inducement Warrants upon the exercise thereof.
We are members of the Israel Bar and we express no opinion as to any matter relating to the laws of any jurisdiction other than the laws of the State of Israel and have not, for the purpose of giving this opinion, made any investigation of the laws of any other jurisdiction than the State of Israel.
Based upon and subject to the foregoing, we are of the opinion that (i) the Shares are validly issued, fully paid and non-assessable; and (ii) the Inducement Warrant Shares, when issued upon exercise of the Inducement Warrants in accordance with the terms thereof, will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the Company’s Registration Statement and to the use of our name wherever it appears in the Registration Statement. In giving such consent, we do not believe that we are “experts” within the meaning of such term as used in the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission issued thereunder with respect to any part of the Registration Statement, including this opinion as an exhibit or otherwise.
This opinion letter is rendered as of the date hereof, and we disclaim any obligation to advise you of facts, circumstances, events or developments that may be brought to our attention after the effective date of the Registration Statement that may alter, affect or modify the opinions expressed herein.
| Very truly yours, | |
| /s/ Sullivan & Worcester Tel-Aviv (Har-Even & Co.) | |
| Sullivan & Worcester Tel-Aviv (Har-Even & Co.) |
Exhibit 10.16
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of August 21, 2026, between TurboGen Ltd., an Israeli corporation (the “Company”), and each purchaser listed in Exhibit A attached hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, the Company is a public company registered in Israel whose securities are listed for trade on the Tel Aviv Stock Exchange Ltd. (the “TASE”);
WHEREAS, the Company is currently in the process of exploring the direct registration of its Ordinary Shares for trading on a tier of the Nasdaq Stock Market LLC, a Trading Market in the United States; and
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) contained in Regulation S promulgated under the Securities Act (“Regulation S”) and, to the extent applicable, Section 4(a)(2) of the Securities Act, the Company desires to issue and sell to each Purchaser and each Purchaser, severally and not jointly, desires to purchase from the Company securities of the Company which shall be eligible for trading on a Trading Market in the United States following their issuance, subject to applicable securities Laws, the effectiveness of the Registration Statement and the applicable procedures of the Transfer Agent, as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under Common Control with a Person.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York or Tel Aviv are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority with competent jurisdiction so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York or Tel Aviv are generally are open for use by customers on such day.
1
“Closing” means the closing of the purchase and sale of the Shares pursuant to Section 2.1.
“Closing Date” shall have the meaning ascribed to such term in Section 2.1.
“Commission” means the United States Securities and Exchange Commission.
“Companies Law” means the Israeli Companies Law – 5759-1999, as amended, and the rules and regulations promulgated thereunder.
“Control”, as such term is defined in the Securities Law.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Investment Amount” means a total amount in United States dollars and in immediately available funds to be paid by the Purchaser for the purchase of such number of Ordinary Shares as set forth next to each Purchaser’s name in Exhibit A attached hereto.
“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material Adverse Effect” means (i) a material adverse effect on the legality, validity or enforceability of any of the Transaction Documents, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any of the Transaction Documents.
“Milestone” means both (i) the SEC having completed its review of the Form F-1 with no further comments, and (ii) Nasdaq having completed its substantive review of the Company’s listing application and indicated that no further comments or substantive conditions remain outstanding, other than the consummation of the Closing, and other customary conditions required for final listing approval.
“Offshore Transaction” shall have the meaning set forth in Rule 902(h) of Regulation S.
“Ordinary Shares” means the ordinary shares of the Company, no par value, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Per Share Purchase Price” equals NIS 13.22, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Ordinary Shares that occur after the date of this Agreement. For purposes of calculating the Per Share Purchase Price (denominated in NIS) for a Purchaser’s Subscription Amount (denominated in United States dollars), the most recent exchange rate published by the Bank of Israel prior to the Closing Date shall apply.
2
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Registration Statement” means a registration statement registering with the Commission the resale by the Purchasers of the Shares under the Securities Act.
“Regulation S” means Regulation S promulgated by the Commission pursuant to the Securities Act, as the same may be amended or interpreted from time to time.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Law” means the Israeli Securities Law – 1968, as amended, and the rules and regulations promulgated thereunder.
“Shares” means the Ordinary Shares issued or issuable to each Purchaser pursuant to this Agreement.
“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds. For purposes of calculating the Per Share Purchase Price (denominated in NIS) for such Purchaser’s Subscription Amount (denominated in United States dollars), the most recent exchange rate published by the Bank of Israel prior to the Closing Date shall apply.
“TASE” shall have the meaning ascribed to such term in the Recitals hereto.
“Trading Market” means any of the following markets or exchanges on which the Ordinary Shares is listed or quoted for trading on the date in question: the TASE, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing).
“Transaction Documents” means this Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transaction contemplated hereunder.
“Transfer Agent” means the transfer agent company to be appointed by the Company in connection with the listing process, and thereafter any successor transfer agent of the Company.
“U.S. Person” shall have the meaning set forth in Rule 902(k) of Regulation S.
3
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
The Company shall notify the Purchaser upon achievement of the Milestone. The Closing Date shall be a Business Day within one (1) Business Day of notice from the Company of the Milestone. On the Closing Date, upon the terms and subject to the conditions set forth herein, and upon satisfaction of the covenants and conditions to closing set forth in Sections 2.2 and 2.3, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, the number and dollar amount of Shares set forth next to each Purchaser’s name in Exhibit A attached hereto, whereby each Purchaser, severally and not jointly, agrees to purchase the number of Shares as specified below such Purchaser’s name on the signature page of this Agreement to be purchased by it at the Closing. Each Purchaser shall deliver to the Company via wire transfer, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company, immediately upon effectiveness of the Registration Statement, shall deliver to each Purchaser its respective Shares and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur remotely via the exchange of documents and signature or such other location as the parties shall mutually agree.
For the avoidance of doubt, all actions, deliveries and payments required to be effected at the Closing shall constitute one integrated transaction, and the Closing shall be deemed consummated only upon completion of all such actions, deliveries and payments, to the extent practicable, simultaneously.
Notwithstanding anything to the contrary herein, if, following the delivery by the Purchaser of its Subscription Amount or Investment Amount to the Company in connection with the Closing, Nasdaq’s final approval for the listing of the Shares on the applicable Trading Market is not obtained and the listing process is not completed, then the Company shall promptly, and in any event within two (2) Business Days after the Company becomes aware that such final approval will not be obtained or the listing process will not be completed, return to the Purchaser, by wire transfer of immediately available funds to an account designated by such Purchaser, the full amount funded by such Purchaser, without deduction, set-off or counterclaim. Without limiting the foregoing, if Nasdaq’s final approval for the listing of the Shares on the applicable Trading Market has not been obtained, and the listing process has not been completed, within seven (7) Business Days following the Closing, the Company shall promptly, and in any event within two (2) Business Days thereafter, return to each Purchaser, by wire transfer of immediately available funds to an account designated by such Purchaser, the full amount funded by such Purchaser, without deduction, set-off or counterclaim, unless otherwise agreed in writing by such Purchaser.
2.2 Deliveries.
(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a copy of the Board of Directors consent to the Company’s execution, delivery and performance of the Transaction Documents;
4
(iii) the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer.
(iv) a copy of the Registration Statement, including the preliminary prospectus contained therein filed with the Commission.
(b) On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this Agreement duly executed by the Purchaser;
(ii) the Investment Amount, which shall be made available by wire transfer; and
(iii) the representations and certifications of such Purchaser set forth in Section 3.2, including the representations relating to Regulation S, being true and correct as of the Closing Date.
2.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
5
(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) the Milestone shall have been satisfied such that the Shares shall have been cleared for listing on the applicable Trading Market, subject only to customary conditions to listing; and
(vi) the Company shall have taken, or shall be prepared promptly following the Closing to take, all actions required pursuant to Section 4.1 to cause the removal of any restrictive legends and transfer restrictions applicable to the Shares.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser as of the date hereof and as of the Closing Date (unless as of a specific date therein, in which case they shall be accurate as of such date):
(a) Organization and Qualification. The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.
(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transaction contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transaction contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company or the Board of Directors in connection herewith or therewith, other than, the approval relating to meeting the Milestone.
(c) No Impediment; Notice of Changes. To the Company’s knowledge, as of the date hereof, the Company is not aware of any fact, circumstance or impediment that would reasonably be expected to preventor materially delay the receipt of any corporate, regulatory, Trading Market or other approval required for the consummation of the transaction contemplated by this Agreement, including the satisfaction of the Milestone and the listing or registration for trading of the Shares. The Company shall promptly notify each Purchaser in writing of any fact, circumstance, event or development that becomes known to the Company after the date hereof and that would reasonably be expected to prevent materially delay or materially adversely affect the satisfaction of the Milestone, the receipt of any approval required for the Closing, or the Company’s ability to consummate the Closing in accordance with this Agreement.
6
(d) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents and the Company’s Articles of Association. The Company has reserved from its duly authorized capital stock the maximum number of Ordinary Shares issuable pursuant to this Agreement. The transaction is exempted from the prospectus requirements of the Securities Law, and does not constitute an offer and sale to the public pursuant to the Securities Law.
(e) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under Israeli or U.S. securities Laws is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated hereby. The offer and sale of the Shares to each Purchaser is intended to be made in reliance upon Regulation S under the Securities Act. The Company has not engaged, and will not engage any “directed selling efforts” (as defined in Rule 902(c) of Regulation S) in the United States with respect to the offer or sale of the Shares and has complied, and will comply, with the applicable requirements of Rule 903 of Regulation S. The issuance and sale of the Shares hereunder does not contravene the Securities Law and the rules and regulations of the applicable Trading Market.
3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date).
For the avoidance of doubt, where a Purchaser is purchasing the Shares for and on behalf of one or more mutual funds under its management, the representations, warranties, covenants and agreements of such Purchaser in this Section 3.2 are made solely by such Purchaser in its capacity as fund manager of such mutual fund(s), and only with respect to the relevant mutual fund(s) on whose behalf such Purchaser is acting. Nothing in this Section 3.2 shall be deemed to create any personal liability of such Purchaser, or of any of its officers, directors, employees, portfolio managers or other representatives, beyond the Purchaser’s express obligations under the Transaction Documents.
(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transaction contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transaction contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable Law. No other approval or consent from any person, entity or authority, is required by such Purchaser for the execution, delivery and performance by it of this Agreement and the Transaction Documents to which it is party, and any and all agreements and instruments ancillary hereto or thereto.
7
(b) Own Account. Such Purchaser understands that it is acquiring the Shares for and on behalf of one or more mutual funds under its management, and not with a view to, or for distributing or reselling, such Shares or any part thereof in violation of the Securities Act or any applicable state securities law. Such Purchaser has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understanding with any other person to distribute, or regarding the distribution of, such Shares in violation of the Securities Act or any applicable state securities law; provided that this representation and warranty shall not limit such Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws. Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business as fund manager of such mutual fund(s). For the avoidance of doubt, the representations, warranties, covenants and agreements of such Purchaser in this Section 3.2 are made solely by such Purchaser in its capacity as fund manager of the relevant mutual fund(s), and only with respect to the mutual fund(s) on whose behalf such Purchaser is acting. Nothing herein shall be deemed to create any personal liability of such Purchaser, or of any of its officers, directors, employees, portfolio managers or other representatives, beyond the Purchaser’s express obligations under the Transaction Documents. Notwithstanding anything to the contrary in this Section, the Company acknowledges and agrees that the Purchaser may assign all or part of its rights and obligations under this Agreement to any Person to whom such assignment or transfer may be made in compliance with the Securities Act, including Regulation S, and all other applicable securities Laws, provided that (i) such Purchaser notifies the Company promptly of such assignment and (ii) such transferee agrees in writing to be bound, with respect to its respective portion in the Shares, by the provisions of the Transaction Documents that apply to the “Purchasers”, subject to the terms and conditions set forth in Section 5.7.
(b) Purchaser Status. At the time the Shares were offered to such Purchaser, at the time such Purchaser executed this Agreement, and at the Closing Date: (i) such Purchaser is not a “U.S. Person” as defined in Rule 902(k) of Regulation S and is not acquiring the Shares for the account or benefit of a U.S. Person; (ii) such Purchaser was outside the United States when the offer to purchase the Shares was made to it and is outside the United States at the time it executes this Agreement and its order to purchase the Shares is originated; (iii) the acquisition of the Shares by such Purchaser constitutes an “offshore transaction” within the meaning of Rule 902(h) of Regulation S; (iv) such Purchaser has not entered into any arrangement or understanding with any U.S. Person with respect to the transfer of the Shares or any beneficial interest therein; and (v) such Purchaser is acquiring the Shares in compliance with Regulation S and applicable securities Laws.
(c) No Directed Selling Efforts. Such Purchaser has not engaged, and will not engage, in any “directed selling efforts” (as defined in Rule 902(c) of Regulation S) in the United States with respect to the Shares and has not taken, and will not take, any action that would cause the offer or sale of the Shares to fail to qualify for the safe harbor provided by Regulation S.
(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment. Such Purchaser has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the Company’s business, assets and financial position and has reviewed and inspected all of the data and information provided to it by the Company in connection with the execution of this Agreement. The Purchaser acknowledges that (i) the issuance of the Shares hereunder does not constitute a promise or guaranty by the Company, its shareholders, officers or directors as to the financial, technological or commercial success of the Company or the future value of its shares, and (ii) the investment contemplated herein involves a high degree of risk that may result in the Purchaser losing its entire investment hereunder.
8
(e) Offshore Offering. Such Purchaser acknowledges that the offer and sale of the Shares to such Purchaser were made outside the United States in an Offshore Transaction in reliance upon Regulation S. Such Purchaser has not been solicited with respect to the Shares by means of any directed selling efforts in the United States.
(f) Except as detailed on the signature page hereto executed by such Purchaser, such Purchaser does not hold any securities of the Company immediately prior to the issuance of the Shares.
(g) There are no written or oral agreements between such Purchaser (or anyone on the Purchaser’s behalf) and any shareholder of the Company or others regarding the sale or purchase of the Company’s securities or voting rights.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Legends.
(a) Certificates or book-entry positions evidencing Shares may initially bear such restrictive legend or be subject to such stop-transfer or other transfer restrictions as are required under the Securities Act, Regulation S or otherwise reasonably required by the Transfer Agent at the time of issuance. Following the Closing, the Company shall, as promptly as practicable and in any event within seven (7) Business Days following the Closing, take all actions within its control that are necessary to cause any restrictive legend, stop-transfer instruction or other transfer restriction applicable to the Shares to be removed, including delivering any customary legal opinion, instruction letter or other documentation reasonably required by the Transfer Agent, provided that the removal of such legend or restriction is then permitted under the Securities Act and other applicable securities Laws. Notwithstanding the foregoing, such legend shall be removed (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Shares pursuant to Rule 144, (iii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) and the Purchaser shall provide the Company with a “no action” letter from the Commission or a legal opinion confirming the same.
(b) The Company shall use commercially reasonable efforts to cause the Transfer Agent to promptly effect the removal of any restrictive legend or stop-transfer instruction in accordance with Section 4.1(a), including by delivering to the Transfer Agent, at the Company’s expense, any customary legal opinion or instruction reasonably required by the Transfer Agent. In no event shall the Company make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer imposed by applicable securities Laws.
9
(c) Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
(d) For the avoidance of doubt, the Shares shall be issued to the Purchasers free and clear of all Liens imposed by the Company, except for restrictions on transfer expressly set forth in this Agreement, the Registration Statement, applicable securities Laws, the Company’s Articles of Association, or such customary restrictions as may be reasonably required by the Transfer Agent at the time of issuance. If any lock-up, holding period, resale restriction, stop-transfer arrangement or other transfer limitation applies to the Shares under Israeli law, U.S. securities law or the rules of any applicable Trading Market, such restriction shall be expressly disclosed to the Purchasers in writing prior to the Closing.
4.2 Use of Proceeds. The Company shall use the net proceeds from the sale of the Shares hereunder for the Company’s ordinary course of business operations.
4.3 Reservation of Ordinary Shares. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of authorized and unissued Ordinary Shares for the purpose of enabling the Company to issue Shares pursuant to this Agreement.
4.4 Listing of Ordinary Shares. The Company shall use commercially reasonable efforts to cause the Shares to be listed on the applicable Trading Market as promptly as practicable following the Closing and the receipt of Nasdaq’s final approval of the listing, and in any event within the time period contemplated by Section 2.1.
4.5 Regulatory Filings and Trading Approvals. The Company shall timely make all filings, reports and notices required to be made by the Company and use commercially reasonable efforts to obtain all approvals, confirmations and authorizations required of the Company under applicable law and the rules of any applicable Trading Market in connection with the offer, sale, issuance and listing or registration for trading of the Shares, including, to the extent required, any immediate report, notice to or approval of the TASE, Nasdaq, the Commission, the Israeli Securities Authority or any other applicable governmental authority or Trading Market.
4.6 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise.
10
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated within fourteen (14) days from the date of this Agreement. This Agreement may be extended for an additional fourteen (14) days by mutual consent of the parties.
For the avoidance of doubt, nothing in this Section 5.1 shall limit or derogate from the Company’s refund obligations under Section 2.1 in the event that any Purchaser has funded its Subscription Amount or Investment Amount and Nasdaq’s final listing approval is not obtained or the listing process is not completed as provided therein.
5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to the Purchasers.
5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. The Parties’ mailing and email addresses for the purpose of this Agreement are as set forth on the signature page of this Agreement or any other address notified by the Parties to each other and each notice delivered to by a party to the other party shall be deemed to have been delivered to the recipient on the day on which it was delivered to it personally, or three (3) days after its delivery by registered mail, or one (1) day after its delivery by email.
5.5 Amendments; Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived, only with the written consent of the Parties.
5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.
5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person, except as otherwise explicitly set forth in this Agreement.
5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Israel, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transaction contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the courts sitting in the City of Tel Aviv. Each party hereby irrevocably submits to the exclusive jurisdiction of the courts sitting in the City of Tel Aviv, Israel for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
11
5.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
5.11 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.12 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transaction contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
5.13 Weekends, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken, or such right may be exercised, on the next succeeding Business Day.
5.14 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and Ordinary Shares in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Ordinary Shares that occur after the date of this Agreement.
Confidentiality. The Purchaser shall not disclose or issue any public statement or press release concerning, or relating to, this transaction, without the prior written approval of the Company, of the substance and form of any such statement or release, except as may be required under applicable Law. Notwithstanding the foregoing, the Purchaser may disclose information concerning or relating to this transaction to its investors, regulator, trustee, investment committee, auditors, internal compliance and risk personnel, and any other person to whom disclosure is required under applicable Law, regulation, the relevant fund documents, fiduciary duties or ordinary reporting obligations; provided that such disclosure is limited to what is reasonably necessary in the circumstances.
(Signature Pages Follow)
12
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| TURBOGEN LTD. | Address for Notice: | |||
| By: | Email: | |||
| Name: | Fax: | |||
| Title: | ||||
With a copy to (which shall not constitute notice):
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
13
[PURCHASER SIGNATURE PAGES TO TURBOGEN SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: ________________________________________________________
Signature of Authorized Signatory of Purchaser: __________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory: ______________________________________________
Address for Notice to Purchaser:
Address for Delivery of Securities to Purchaser (if not same as address for notice):
Subscription Amount:
Investment Amount on the Closing
Shares:
14
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement on Form F-1 of our report dated May 14, 2026 relating to the financial statements of Turbogen Ltd. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
| /s/ Brightman Almagor Zohar & Co. | |
| Brightman Almagor Zohar & Co., | |
| Certified Public Accountants | |
| A firm in the Deloitte Global Network |
Tel Aviv, Israel
August 21, 2026