Turbogen Ltd F-1, filed Mar 12, 2026
Turbogen Ltd. (TRBG)
As filed with the Securities and Exchange Commission on March 11, 2026
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 35th 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 MARCH 11, 2026 |
Up to 3,056,248 Ordinary Shares
| TurboGen Ltd. |
This prospectus relates to the resale by the selling shareholders identified in this prospectus of up to 3,056,248 ordinary shares, no par value per share, or the Ordinary Shares, of TurboGen Ltd., or the Company, consisting of (i) 921,621 Ordinary Shares issued in connection with the 2025 Private Placement, (ii) 934,627 Ordinary Shares that were issued upon the exercise of warrants pursuant to the 2025 Warrant Inducement Agreement and (iii) 1,200,000 Ordinary Shares issuable upon the exercise of certain warrants, or the Warrants, as further described below under “Prospectus Summary — Recent Developments.”
The selling shareholders are identified in the table commencing on page 101. 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 2025 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 March 10, 2026 was NIS 23.01, or approximately $7.45 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 March , 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 34% 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.
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.
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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 addition to the TG-40, 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 CHP systems, including a smaller and larger scale version of the TG-40, unit sizes, 23 KW for mobile systems, 32 KW and 80 KW for in building installation. In December 2025, we entered into a supplier agreement with a European Union-based company for the planned production of our microturbine systems. As of the date of this Prospectus, we have placed an order to buy twelve systems, into which we expect to integrate our proprietary technology, and anticipate continuing to place purchase orders to support system demand over the next 12 months, subject to successful installations.
As of the date of this Prospectus, we are a development stage company that possesses production capacity intended solely for demonstration purposes. As of the date of this Prospectus, we have not generated any revenues.
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, housing developments, 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 anticipate commercial deployment of our TG-40 systems by the end of 2026.
We intend to continue differentiating our products by leveraging our multi-fuel combustion capabilities, high-efficiency turbine and 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. Furthermore, in addition to the EAAS business model, we plan to explore the possibility of offering our customers a model of purchasing systems with full customer financing.
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Recent Developments
2025 Private Placement
On August 23, 2025, we entered into a definitive securities purchase agreement, or the August 2025 SPA, with Mr. Alex Katz, who is a member of our board of directors, for the issuance in a private placement of up to $5 million of the Ordinary Shares. In connection with this private placement, or the 2025 Private Placement, we agreed to grant Mr. Katz registration rights with respect to the resale of the Ordinary Shares. Pursuant to the August 2025 SPA, we agreed to issue an amount of Ordinary Shares equal to the $5 million subscription amount, 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, or the Nasdaq Milestone. This registration statement is being filed to satisfy our registration obligations under the August 2025 SPA. For additional information regarding this securities purchase agreement entered into with Mr. Katz’s, see “Related Party Transactions — Alex Katz.”
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. 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.”
2025 Settlement Agreement
On October 22, 2025, we entered into a settlement and conversion arrangement with certain lenders and assignees, following approval by our audit committee and board of directors. On November 26, 2025, our shareholders approved the arrangement. We undertook this process 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 arrangement, we agreed to allocate a total of 595,744 ordinary shares to the relevant assignees at a conversion price of NIS 6.58 (or approximately $1.96). If we do not achieve the milestone relating to the receipt of Nasdaq approval and the submission of the request for effectiveness of a registration statement on Form F-1 with the SEC by June 30, 2026, the effective conversion price will be reduced to NIS 2.91 (or approximately $0.88). If we achieve the milestone, we will allocate to one of the lenders, Mr. Ofer Eytan, 1,200,000 warrants to purchase up to 1,200,000 Ordinary Shares that will be exercisable for a period of 12 months from the effective date of the registration statement at an exercise price of $2.00 per share. If we do not achieve the milestone by June 30, 2026, we will instead allocate 750,000 share rights to Mr. Eitan, each of which will convert into one ordinary share subject to approval from TASE. For additional information regarding this settlement agreement, see “Related Party Transactions - Transactions – Shareholder Loans – Ofer Eitan.”
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; |
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| ● | enter collaborations with 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:
| ● | Completing the development of our TG-40, including improving the recuperator, the heat recovery system, the engine bearing system and the output of the engine; |
| ● | Finalize the negotiations with one EU-based company and one U.S.-based company for the development of the 23 KW, 32 KW and 80 KW systems |
| ● | Develop a multi-fuel combustor for all system models that uses different types of gaseous substances, such as hydrogen or a hydrogen-natural bio-gas. |
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.
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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. 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 32.3% 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 32.3% 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).
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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 six months ended June 30, 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; |
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| ● | 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. |
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THE OFFERING
This prospectus relates to the resale by the selling shareholders identified in this prospectus of up to 3,056,248 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 | 21,894,321 | |
| Ordinary Shares to be issued and outstanding after this offering | 24,950,569 Ordinary Shares | |
| Ordinary Shares offered by the selling shareholders | Up to 3,056,248 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 intend to apply 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 21,894,321 Ordinary Shares outstanding on March 11, 2026 and includes:
| ● | 921,621 Ordinary Shares issued to certain Selling Shareholders in connection with the 2025 August Private Placement; |
| ● | 934,627 Ordinary Shares issued to certain Selling Shareholders upon the exercise of warrants under the 2025 Warrant Inducement Agreement; and |
| ● | 1,200,000 Ordinary Shares issuable upon the exercise of the Warrants issued to a certain Selling Shareholder to satisfy our obligations under the 2025 Settlement Agreement. |
The number of Ordinary Shares to be outstanding immediately after this offering Ordinary Shares excludes:
| ● | 3,832,368 Ordinary Shares issuable upon the exercise of options and restricted share units, or RSUs, vesting to with exercise prices ranging from NIS 0.3 to NIS 14.0 (or approximately $0.09 to $4.53) per share, of which 2,766,963 have vested as of March 11, 2026; and, |
| ● | 739,727 Ordinary Shares issuable upon exercise of 739,727 outstanding warrants, with exercise prices ranging from NIS 3.73 to NIS 22.50 (approximately $1.21 to $7.29) per share. |
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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, 2024 and 2023 from our audited financial statements, which are included elsewhere in this prospectus. We have derived the following statements of comprehensive loss for the six months ended June 30, 2025 and 2024, and balance sheet data as of June 30, 2025 from our unaudited interim 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, | Six Months Ended June 30, | |||||||||||||||
| US Dollars in thousands (except per share amounts) | 2024 | 2023 | 2025 | 2024 | ||||||||||||
| Statements of Comprehensive Loss: | (Unaudited) | |||||||||||||||
| Research and development expenses, net | 1,192 | 1,758 | 642 | 593 | ||||||||||||
| Selling and marketing expenses | 273 | 609 | 203 | 161 | ||||||||||||
| General and administrative expenses | 1,366 | 2,157 | 1,626 | 707 | ||||||||||||
| Other income in settlement of liability | - | 210 | ||||||||||||||
| Loss from operations | 2,831 | 4,524 | 2,261 | 1,461 | ||||||||||||
| Finance expenses (income), net | 167 | 835 | 5,368 | (62 | ) | |||||||||||
| Net loss and comprehensive loss | 2,998 | 5,359 | 7,629 | 1,399 | ||||||||||||
| Basic loss per share of ordinary shares | (0.21 | ) | (0.39 | ) | (0.48 | ) | (0.10 | ) | ||||||||
| Diluted loss per share of ordinary shares | (0.21 | ) | (0.39 | ) | (0.49 | ) | (0.11 | ) | ||||||||
| US Dollars in thousands | As of June 30, 2025 | |||
| Balance Sheet Data: | ||||
| Cash and cash equivalents | 3,364 | |||
| Total assets | 4,132 | |||
| Total current liabilities | 9,342 | |||
| Paid in capital | 25,982 | |||
| Accumulated loss | 31,626 | |||
| Total shareholders’ equity | (5,591 | ) | ||
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Investing in our securities involves a high degree of risk. 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, 32 KW, and 80 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.
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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.
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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; |
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| ● | 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, while the final assembly of our products is carried out in our engineering center in Petah Tikva, Israel, 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. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these arrangements. 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.
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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.
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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.
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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.
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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.
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Risks Related to Our Financial Condition and Capital Requirements
Our financial statements for the six months ended June 30, 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 six months ended June 30, 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 June 30, 2025, that raises substantial doubt on our ability to continue as a going concern. The financial statements for the six months ended June 30, 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 June 30, 2025, we incurred accumulated losses of approximately $31.5 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. The Board of Directors continues to convene periodically to assess the implementation of the Efficiency Plan, monitor our financial position, evaluate alternatives, and make further decisions as needed, and the Company publishes updates as required.
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; |
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| ● | 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 June 30, 2025, our cash and cash equivalents were $3,364 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. |
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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.
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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.
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.
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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.
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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.
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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 intend 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; |
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| ● | 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 intend 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 $40 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.
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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. 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 significant dilution as a result of this offering and future offerings.
A certain Selling Shareholder identified herein is selling from time to time up to 1,200,000 Ordinary Shares underlying the Warrants, which constitutes approximately 5.48% of our issued and outstanding Ordinary Shares prior to the offering pursuant to this prospectus. Purchasers of the Ordinary Shares, as well as our existing shareholders, will experience dilution if the certain Selling Shareholder identified herein sells the shares underlying the Warrants. Such sales could cause the market price of our Ordinary Shares to decline.
Further, if the warrants that are currently outstanding are exercised, our outstanding Ordinary Shares would increase from 21,894,321 to 22,634,048, representing an increase of approximately 3.4% in the number of outstanding Ordinary Shares. Accordingly, shareholders will experience significant 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.
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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 739,727 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.
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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.
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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.
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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, 2026. 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.
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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.
The requirements associated with being a public company require significant company resources and management attention.
We would 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.
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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. However, following the announcement of a ceasefire with Hamas, the Houthi Movement has stated that it will suspend such attacks, so long as the ceasefire with Hamas remains in place, and the immediate risk of further disruption has temporarily decreased.
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.
While the intensity and duration of the conflict have been difficult to predict, the current ceasefire marks a potential shift towards stability in the region. If sustained, this could reduce disruptions to our business and operations, and adversely affect Israel’s economy in general. However, if the war resumes or expands to other fronts, our operations may be harmed.
In connection with the multi-front conflict, Israeli military reservists have been called up to perform military service. None of our employees have been called up as of March 11, 2026. Almost all of those employees have returned after completing their reserve duty as of March 11, 2026, 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.
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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.
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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.
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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.
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Our Ordinary Shares have been trading on the TASE under the symbol “TURB” since November 2021. We intend to apply 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.
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The following table sets forth our cash and cash equivalents and our capitalization as of June 30, 2025:
| ● | on an actual basis; |
| ● | on a pro forma basis to give effect to (i) receipt of $2,056 million from investors after June 30, 2025; and (ii) the exercise of 1,285,959 warrants into 1,285,958 Ordinary Shares after June 30, 2025; and |
| ● | on a pro forma as adjusted basis to give effect to (i) the receipt of $5 million from the issuance of 921,621 Ordinary Shares issued in connection with the 2025 Private Placement with Mr. Katz; (ii) 934,627 Warrants to be issued in the 2025 Warrant Inducement Agreement and any conversions due to the arrangements made with the Selling Shareholders; and (iii) the issuance of 136,450 Ordinary Shares upon the conversion of the First Anglo Turbo Loan and the Second Anglo Turbo Loan. |
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 June 30, 2025 | ||||||||||||
| U.S. dollars in thousands | Actual | Pro forma | Pro forma as adjusted | |||||||||
| Cash and cash equivalents | $ | 3,364 | $ | 12,643 | $ | 16,007 | ||||||
| Restricted cash | $ | 18 | $ | - | $ | 18 | ||||||
| Shareholders’ equity: | ||||||||||||
| Ordinary shares and Additional Paid in Capital | 26,035 | 15,172 | 41,207 | |||||||||
| Accumulated deficit | (31,626 | ) | 2,110 | (29,516 | ) | |||||||
| Total shareholders’ equity (deficit) | $ | (5,591 | ) | $ | 17,282 | $ | 11,691 | |||||
| Total capitalization | $ | (2,209 | ) | $ | 29,926 | $ | 27,717 | |||||
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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 addition to the TG-40, 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 CHP systems, including a smaller and larger scale version of the TG-40, unit sizes, 23 KW for mobile systems, 32 KW and 80 KW for in building installation. In December 2025, we entered into a supplier agreement with a European Union-based company for the planned production of our microturbine systems. As of the date of this Prospectus, we have placed an order to buy twelve systems, into which we expect to integrate our proprietary technology, and anticipate continuing to place purchase orders to support system demand over the next 12 months, subject to successful installations.
As of the date of this Prospectus, we are a development stage company that possesses production capacity intended solely for demonstration purposes. As of the date of this Prospectus, we have not generated any revenues.
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, housing developments, 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 anticipate commercial deployment of our TG-40 systems by the end of 2026.
We intend to continue differentiating our products by leveraging our multi-fuel combustion capabilities, high-efficiency turbine and 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. Furthermore, in addition to the EAAS business model, we plan to explore the possibility of offering our customers a model of purchasing systems with full customer financing.
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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, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2025 | 2024 | |||||||||||||
| U.S. dollars in thousands | Unaudited | |||||||||||||||
| Research and development expenses, net | 1,192 | 1,758 | 642 | 593 | ||||||||||||
| Sales and marketing expenses | 273 | 609 | 203 | 161 | ||||||||||||
| General and administrative expenses | 1,366 | 2,157 | 1,626 | 707 | ||||||||||||
| Other income | - | - | (210 | ) | - | |||||||||||
| Operating loss | 2,831 | 4,524 | 2,261 | 1,461 | ||||||||||||
| Finance expenses (income), net | 167 | 835 | 5,368 | (62 | ) | |||||||||||
| Net loss and comprehensive loss | 2,998 | 5,359 | 7,629 | 1,399 | ||||||||||||
Comparison of Period to Period Results of Operations
Six Months Ended June 30, 2025 and Six Months Ended June 30, 2024
Research and Development Expenses, net
Research and development expenses, net, increased by 8% to $642 thousand for the six months ended June 30, 2025, compared to $593 thousand for the six months ended June 30, 2024. This increase was primarily attributable to increase in expenses related to materials and contractors, which resulted from increased testing on our microturbine technology and preparations to scale our production.
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Sales and Marketing Expenses
Sales and marketing expenses increased by 26% to $203 thousand for the six months ended June 30, 2025, compared to $161 thousand for the six months ended June 30, 2024. This increase was primarily attributable to an increase in salaries and related benefits, and payments to consultants.
General and Administrative Expenses
General and administrative expenses increased by 130% to $1,626 thousand for the six months ended June 30, 2025, compared to $707 thousand for the six months ended June 30, 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 $928 thousand in the six months ended June 30, 2025, compared to $118 thousand in the six months ended June 30, 2024.
Other income in settlement of liability
Other income was $210 thousand for the six months ended June 30, 2025. We recorded no other income in the six months ended June 30, 2024. The other income recorded in the six months ended June 30, 2025 was primarily attributable to modified contractual terms with a consultant and, as a result, the provision from prior year was cancelled and recorded against other income.
Loss from Operations
Loss from Operations increased by 55% to $2,261 thousand for the six months ended June 30, 2025, compared to $1,461 thousand for the six months ended June 30, 2024. This increase was primarily attributable to an increase in share-based compensation expenses mainly related to options granted to members of management in the six months ended June 30, 2025.
Financial Expenses (income), net
Financial expenses (income), net, increased to $5,368 thousand for the six months ended June 30, 2025, compared to financial income of $62 thousand for the six months ended June 30, 2024. This increase was primarily attributable to fair value measurement of options to investors presented as liability on the balance sheet, which totaled to an expense of $5,260 thousand due to an increase in our share price as of June 30, 2025 compared to June 30, 2024.
Net Loss
Net loss increased by 445% to $7,629 thousand for the six months ended June 30, 2025, compared to $1,399 thousand for the six months ended June 30, 2024. This increase was primarily attributable to an increase in finance expenses of $5,368 thousand, mainly due to fair value measurement of options to investors presented as liability on the balance sheet as of June 30, 2025, and increase in share-based compensation mainly related to options granted to members of management of $834 thousand in the six months ended June 30, 2025.
Year Ended December 31, 2024 and Year Ended December 31, 2023
Research and Development Expenses, net
Research and development expenses, net, decreased by 32% to $1,192 thousand for the year ended December 31, 2024, compared to $1,758 thousand for the year ended December 31, 2023. This decrease was primarily attributable to a decrease of $526 thousand in salaries and related expenses due to the reduction of our workforce as part of the Efficiency Plan, a decrease of $180 thousand in materials costs due to reducing the scale of our operations in 2024 and a decrease of $120 thousand in expenses related to contractors due to an overall decrease in research and development expenses.
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Sales and Marketing expenses
Sales and marketing expenses decreased by 55% to $273 thousand for the year ended December 31, 2024, compared to $609 thousand for the year ended December 31, 2023. This decrease was primarily attributable to reduction in salaries and related expenses of $175 thousand and decrease of $152 thousand in payments to consultants, which was the result of the implementation of the Efficiency Plan.
General and Administrative Expenses
General and administrative expenses decreased by 37% to $1,366 thousand for the year ended December 31, 2024, compared to $2,157 thousand for the year ended December 31, 2023. This decrease was primarily attributable to a reduction in salaries and related expenses of $718, of which $604 reflects the impact of higher share-based compensation in 2023 resulting from new option grants to key employees, including management. These grants led to share-based compensation expenses of $264 in 2024 compared to $868 in 2023.
Loss from Operations
Operating loss for the year ended December 31, 2024 was $2,831 thousand, compared to $4,524 thousand for the year ended December 31, 2023. The decrease in operating loss for the year ended December 31, 2024 was primarily attributable to the Efficiency Plan and resulted in a decrease in expenses mainly salaries, consultants and materials.
Financial Expenses (income), net
Financial expenses, net, for the year ended December 31, 2024 was $167 thousand, compared to financial expenses, net, of $835 thousand for the year ended December 31, 2023. The decrease in financial expenses, net, was primarily attributable to a decrease in expenses related changes in the fair value of convertible loans recorded on our balance sheet.
Net Loss
Net loss for the year ended December 31, 2024 decreased to $2,998 thousand, compared to net loss $3,539 thousand for the year ended December 31, 2023. The decrease in net loss was primarily attributable to implementation of our Efficiency Plan, which reduced expenses across salaries, consultants and materials, as well as a decrease in finance expenses, net, mainly related to the impact of the change in fair value of convertible loans recorded on our balance sheet.
Liquidity and Capital Resources
Overview
Since our inception through June 30, 2025, we have funded our operations primarily through fund raisings, convertible loans and grants from the IIA. As of June 30, 2025 and December 31, 2024, we had $3,364 thousand and $336 thousand in cash and cash equivalents, respectively.
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The table below presents our cash flows for the periods indicated:
| Year Ended December 31, | Six Months Ended June 30, | |||||||||||||||
| U.S. dollars in thousands | 2024 | 2023 | 2025 | 2024 | ||||||||||||
| Net cash used in operating activities | (1,718 | ) | (3,734 | ) | (1,432 | ) | (1,057 | ) | ||||||||
| Net cash used in investing activities | (2 | ) | (9 | ) | (2 | ) | ||||||||||
| Net cash provided by financing activities | 1,635 | 2,288 | 3,717 | 982 | ||||||||||||
| Effects on cash and cash equivalents from changes in foreign currency rates | (26 | ) | (22 | ) | 744 | (89 | ) | |||||||||
| Net decrease in cash, cash equivalents and restricted cash | (111 | ) | (1,477 | ) | 3,029 | (166 | ) | |||||||||
Operating Activities
During the six months ended June 30, 2025, net cash provided by operating activities was $1,432 thousand, compared to $1,057 thousand used in operating activities during the six months ended June 30, 2024, primarily attributable to payments to trade payables in 2025 . The principal drivers of working capital during this period was payments to trade payables.
During the year ended December 31, 2024, net cash used in operating activities was $1,718 thousand, compared to $3,734 thousand for the year ended December 31, 2023, primarily due to an increase in trade payables in 2024 and a decrease in operating loss resulting from Efficiency Plan, which reduced operating expenses such as salaries and related benefits, materials and consultants.
Investing Activities
Net cash used in investing activities was $0 thousand during the six months ended June 30, 2025 compared to $2 thousand during the six months ended June 30, 2024. The cash used in the investing activities was primarily attributable to purchase of property plant and equipment.
Net cash used in investing activities was $2 thousand during the year ended December 31, 2024, compared to $9 thousand during the year ended December 31, 2023. The cash used in the investing activities was primarily attributable to the purchase of property, plant and equipment.
Net cash provided by financing activities
Net cash flow used in financing activities was $3,717 during the six months ended June 30, 2025, compared to $982 provided by financing activities during the six months ended June 30, 2024. This increase was primarily attributable to fund raisings that took place during 2025.
Net cash flow provided by financing activities was $1,635 during the year ended December 31, 2024, compared to $2,288 provided by financing activities during the year ended December 31, 2023. This decrease was primarily attributable to proceeds from related parties loans in 2023, with no proceeds in 2024, and decrease in proceeds from convertible loans received in 2024 as compared to 2023.
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.
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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. |
| ● | 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. |
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 $1032,000). 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.”
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Loans Issued During 2024
In May 2024, we entered into a convertible loan agreement with Mr. Offer Eitan, 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.
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. Offer Eitan 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 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, subject to further downward adjustment if specified milestones are not achieved. In addition, we may issue up to 750,000 additional shares or share rights depending on future regulatory outcomes. For additional information regarding this settlement agreement, see “Prospectus Summary — Recent Developments — 2025 Settlement Agreement.”
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.
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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.
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.
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 June 30, 2025.
| Institution/Government Authority | Approved Grant | Aggregate Amount received up to June 30, 2025 | Aggregate Amount received up to November 23, 2025 | |||||||||
| U.S. Dollars in thousands | ||||||||||||
| IIA | $ | 3,556 | $ | 2,612 | $ | 2,812 | ||||||
| BIRD Energy | $ | 665 | 665 | 665 | ||||||||
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Current Outlook
As of June 30, 2025, our cash and cash equivalents were approximately $3.36 million, and we had a working capital deficit of $5.6 million and an accumulated deficit of $31.5 million. Based upon our currently expected level of operating expenditures and the anticipated proceeds from the 2025 Private Placement and 2025 Warrant Inducement Agreement, we expect that our existing cash and cash equivalents will be sufficient to fund operations through the end of 2027.
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 product candidates. 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 7, 2025, we had received aggregate grants of approximately $3 million from the IIA and approximately $665 thousand 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 0.71513%, 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.
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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 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.
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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 addition to the TG-40, 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 CHP systems, including a smaller and larger scale version of the TG-40, unit sizes, 23 KW for mobile systems, 32 KW and 80 KW for in building installation. In December 2025, we entered into a supplier agreement with a European Union-based company for the planned production of our microturbine systems. As of the date of this Prospectus, we have placed an order to buy twelve systems, into which we expect to integrate our proprietary technology, and anticipate continuing to place purchase orders to support system demand over the next 12 months, subject to successful installations.
As of the date of this Prospectus, we are a development stage company that possesses production capacity intended solely for demonstration purposes. As of the date of this Prospectus, we have not generated any revenues.
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, housing developments, 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 anticipate commercial deployment of our TG-40 systems by the end of 2026.
We intend to continue differentiating our products by leveraging our multi-fuel combustion capabilities, high-efficiency turbine and 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. Furthermore, in addition to the EAAS business model, we plan to explore the possibility of offering our customers a model of purchasing systems with full customer financing.
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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 micro turbines 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, thereby reducing emissions. 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.
The U.S. Department of Energy estimates that electricity and heat production derived from CHP is 25% more efficient than traditional methods, such as power grid and boiler sources. We believe that our CHP technology can reduce costs, contribute to energy security, make energy usage more efficient, and reduce carbon emissions. 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.
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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.
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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 are currently initiating production of the first developed model, the TG-40, and are designing a larger version which will provide 80KW of electricity.
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 are currently building the first batch of our TG-40 units. The TG-40, or the microturbine that is designed to generates 40 KW of energy, is designed to generate electricity and heat in medium sized residential buildings with 60 to 80 housing units. The TG-40 is designed for up to 33% lower heating value efficiency and designed to emit 25 parts per million of carbon oxide, designating it as a low emission microturbine, with an overall efficiency is up to 90%.
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.
By the end of 2026, we expect to have installed at least four systems in the U.S. By the end of 2027, we expect to have installed six more systems in the U.S., with some installations in Europe.
| 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). |
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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 88% efficiency for electric and heat energy output, an estimated weight of 1,800 kilograms, and is designed to emit fewer parts of carbon monoxide and nitrogen oxides per million than certain environmental codes would require. 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. By the end of 2026, we expect to manufacture four system prototypes for testing at our laboratories. By early 2027, we expect to install two demonstration systems. By the end of 2027, we expect to install eight demonstration systems.
80 KW System
The 80 KW system is a microturbine under development that is designed to generate 80 KW of electric energy and is being designed to generate energy in larger residential buildings numbering 100 to 120 housing units. The 80 KW will have an estimated weight of 1,800 kilograms, and is designed to emit fewer parts of carbon monoxide and nitrogen oxides per million than certain environmental codes would require. The 80 KW will be based on components developed together and cooperation with a U.S.-based company.
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.
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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.
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 and reduces energy production and reduces costs.
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. |
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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 20% 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 of over 5 MW. We, in contrast, develop microturbines with outputs of 40 KW to 1 MW to fit in existing and new buildings in urban settings.
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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
Super Stores Memorandum of Understanding
In August 2021, we entered into a memorandum of understanding with Super Stores, Ltd., or Super Stores, and Yossi Samira to cooperate in the promotion, marketing, manufacturing, and implementation of co-generation (electricity and heat) systems, integrating our microturbine technology with Super Stores and Mr. Samira’s business network and the rights to use the Caterpillar Inc., or Caterpillar, brand on our products. Under the agreement, we are responsible for development, manufacturing, installation, and operation of the systems, while Super Stores and Mr. Samira will lead business development and marketing efforts. We agreed to jointly promote a minimum of 36 co-generation systems and to form a joint venture company, with TurboGen holding a 70% interest and Super Stores holding 30%. The agreement has an initial term of 36 months, with certain obligations extending up to 60 months, and includes exclusivity and non-compete provisions with respect to our rights to use the Caterpillar brand in our products, as well as confidentiality and profit-sharing provisions. As of the date of this Prospectus, the memorandum of understanding is still valid and has been extended until August 2026.
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.
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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.
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.
PEG Memorandum of Understanding
In July 2023, we entered into a non-binding memorandum of understanding with Platinum Energy Group, or PEG, a group that manufactures, markets, and installs energy systems in residential buildings, offices, and industrial buildings. The memorandum of understanding seeks to examine potential business opportunities for the development of CHP systems based on PEG’s and our microturbine technology. Specifically, we seek to explore collaboration in developing advanced energy technologies by integrating our combined microturbine systems with PEG’s HVAC and boiler solutions. We intend to evaluate the joint marketing and commercialization opportunities in the United States and internationally. The memorandum of understanding is in effect for 36 months. As of the date of this prospectus, we have not signed a definitive agreement with PEG.
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Ludan Memorandum of Understanding
In March 2024, we signed a non-binding memorandum of understanding with Ludan Software and Control Systems Ltd., or Ludan, an Israeli company specializing in operational and process data management systems for utilities and power generation facilities. The memorandum of understanding outlines a potential collaboration to develop and market innovative energy management systems. The memorandum of understanding is effective for 36 months. As of the date of this Prospectus, we have not signed a definitive agreement with Ludan.
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.
Under the CSA LOI, during a negotiation period of up to two years from August 29, 2024, 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 serial 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 418,000 (approximately $130,000) of the downpayment. We believe this demonstration turbo-generator system unit will lead to the marketing, development, and serial 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.
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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.
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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.”
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.
In 2020, we conducted tests on the TG-40 prototype. We operated the system under controlled conditions at an operating temperature of 890 degrees Celsius with an efficiency at a rate of 9% without a recuperator and 26% with a recuperator and, as a result, successfully generated 20 KW of electric power.
Additionally, we are assembling two more microturbines for future installations in the U.S. By the first quarter of 2026, we plan to install demonstration systems in various locations across the U.S. to demonstrate our microturbine technology and explore commercial opportunities in the U.S. and Europe.
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.
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.
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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.”
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| 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 | February 24, 2026 | ||||||
| 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 80KW 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 80KW 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 is due to lapse in March 2027. We pay a monthly fee of NIS 53,000 (approximately $16,000) for our 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, we are seeking financing for our ongoing operations, achieving our objectives, and further evaluating additional operational and strategic measures.
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Employees
As of the date of this prospectus, we have 18 full-time employees and have contracted with one consultant who provides 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. As of the date of this prospectus, 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.
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Directors and Senior Management
The following table sets forth information regarding our executive officers, key employees and directors as of March 11, 2026:
| Name | Age | Position | ||
| Yaron Gilboa | 73 | Chief Executive Officer and President | ||
| Neta Zruya Hashai | 49 | Chief Financial Officer | ||
| Itzhak Natan Even Ari | 57 | Chairman of the Board of Directors | ||
| Dan Katz | 83 | Vice President of Manufacturing | ||
| Ziv Nir | 61 | Chief Operating Officer | ||
| Dov Friedman | 45 | Director and Chief Strategic and Business Development Officer | ||
| David Deri(5) | 62 | Director | ||
| Ziv Gafni(5) | 44 | Director | ||
| Ethy Levy (1)(2)(3)(5) | 48 | Director | ||
| Eli Zooker (1)(2)(3)(4)(5) | 63 | Director | ||
| Idan Ben Shitrit (1)(2)(4)(5) | 51 | 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 2026 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. |
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Yaron Gilboa, Chief Executive Officer and President
Mr. Yaron Gilboa has served as our Chief Executive Officer since June 2018 and previously served as our Chief Financial Officer from January 2025 to September 2025. 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 Masters in Business Administration 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.
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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.
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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 $74,000) 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 3.45 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 | $ | 292 | $ | 1,912 | $ | 2,204 | ||||||
| Amit Ferber, Vice President of Operation(1) | $ | 94 | $ | 26 | $ | 120 | ||||||
| Ziv Nir, Chief Operating Officer | $ | 170 | $ | 72 | $ | 242 | ||||||
| Dan Katz, Vice President of Production | $ | 77 | $ | 20 | $ | 97 | ||||||
| Neta Zruya Hashai, Chief Financial Officer(2) | $ | 80 | $ | 177 | $ | 257 | ||||||
| (1) | Mr. Ferber resigned as Vice President of Production on July 1, 2025. |
| (2) | Neta Zruya Hashai commenced employment as Chief Financial Officer on September 1, 2025. |
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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.
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.
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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.
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.
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.
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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.”
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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.
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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.
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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 Ms. Neta Zryua 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.
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 or more shareholders holding at least two (2) shareholders, in person or by proxy, holding at least 25% of the voting rights. in person or by proxy 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. |
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| ● | 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. |
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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.
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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.
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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.
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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); | |
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| ● | 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 Israel Securities Authority 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. In 2023, the general meeting of shareholders approved the appointment of Mrs. Levy as an external director for a three-year period as of March 23, 2023.
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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.
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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.
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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.
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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. |
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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.
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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.
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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.
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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 March 11, 2026, we currently have directors’ and officers’ liability insurance, providing total coverage of $10 million per occurrence and in the aggregate. Upon the listing on Nasdaq, we will have directors’ and officers’ liability insurance to cover the Nasdaq listing exposure (among other exposures), providing total coverage of some amount great than $10 million, which has not yet been determined as of the date of this prospectus. Such insurance may also include side A directors’ and officers’ liability insurance, for the benefit of all of our directors and officers, which will be determined upon finalization of the policy.
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:
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● | 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; | |
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| ● | 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.
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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. |
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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.
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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.
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BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of our Ordinary Shares as of March 11, 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 March 11, 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) | 6,806,017 | 31.1 | % | |||||
| Directors and senior management who are not 5% holders: | ||||||||
| Yaron Gilboa | 282,953 | 1.3 | % | |||||
| Itzhak Natan Even Ari(1)* | 30,649 | ** | % | |||||
| Dan Katz | 3,875 | ** | % | |||||
| Ziv Nir | 21,221 | ** | % | |||||
| Dov Friedman(1) | 37,944 | ** | % | |||||
| David Deri* | 36,123 | ** | % | |||||
| Ziv Gafni* | 81,676 | ** | % | |||||
| Ethy Levy* | - | - | % | |||||
| Eli Zooker* | - | - | % | |||||
| Idan Ben Shitrit* | - | - | % | |||||
| Alex Katz* | 1,234,072 | 5.6 | % | |||||
| Neta Zruya Hashai | - | - | % | |||||
| All directors and senior management as a group (12 persons) | 6,806,017 | 39.0 | % | |||||
| (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%. |
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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 March 11, 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.
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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. The exercise of Mr. Katz’s warrants under the Katz Warrant Inducement Agreement is expected to generate approximately $2.15 million in proceeds for us, while the exercise of the Tannenbaum Group’s warrants under the Tannenbaum Warrant Inducement Agreement is expected to generate approximately $350,000 in gross proceeds for us. In the aggregate, the 2025 Warrant Inducement Agreement is expected to provide us with total gross proceeds of approximately $2.5 million.
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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
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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 a settlement and conversion arrangement with certain lenders and assignees, including parties who may be considered related parties due to their business relationships with our controlling shareholders and directors, or the 2025 Settlement Agreement. 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 Arrangement, we agreed to allocate 595,744 ordinary shares to the relevant assignees at a conversion price of NIS 6.58 (approximately $2.01). If we do not achieve the milestone relating to the receipt of Nasdaq approval and submission of the request for the effectiveness of a registration statement on Form F-1 with the SEC by June 30, 2026, the effective conversion price will be reduced to NIS 2.91 ($0.90). If we achieve the milestone, we will allocate to Mr. Ofer Eytan 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 $2.00. If we do not achieve the milestone by June 30, 2026, we will instead allocate 750,000 share rights to Mr. Eitan, each convertible into one Ordinary Share subject to TASE approval.
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 arrangement may represent approximately 5.0% to 6.7% of our fully diluted share capital as of the date of the arrangement.
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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 March 11, 2026, our authorized share capital consisted of 100,000,000 Ordinary Shares, no par value per share, of which 21,894,321 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 8,214,292 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 2,592,835 Ordinary Shares to directors, officers, employees and investors with exercise prices ranging from NIS 5.38 to NIS 10.35 (approximately $1.74 to $3.40) per share.
Restricted Share Units
In the last three years, we have granted an aggregate of 699,642 RSUs to directors, officers and employees.
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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.
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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.
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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.
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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.
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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; |
| ● | subdivide our existing shares or any of them, our share capital or any of it, into shares of smaller nominal value than is fixed; and |
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.
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The 3,056,248 Ordinary Shares being offered by the Selling Shareholders are those that will be issued to the selling shareholders in connection with the 2025 Private Placement, the 2025 Warrant Inducement Agreement and the 2025 Settlement 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 March 11, 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 2025 Private Placement and in connection with the 2025 Warrant Inducement Agreement and 2025 Settlement 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) | 2,947,463 | 11.8 | % | 1,713,391 | 1,234,072 | 4.9 | % | |||||||||||||
| David Binyamin Greenberg(4) | 27,309 | * | % | 7,143 | 20,166 | * | % | |||||||||||||
| Dov Tannenbaum(5) | 246,053 | * | % | 14,286 | 231,767 | * | % | |||||||||||||
| Elliot Tannenbaum(6) | 464,261 | 1.9 | % | 121,428 | 342,833 | 1.4 | % | |||||||||||||
| Ofer Eytan(7) | 2,258,955 | 9.0 | % | 1,200,000 | 1,058,955 | 4.2 | % | |||||||||||||
| * | Less than 1% |
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| (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 March 11, 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 24,950,569 Ordinary Shares that will be issued and outstanding immediately after this offering. |
| (3) | Includes (i) 1,234,072 Ordinary Shares currently issued and outstanding, (ii) 921,621 Ordinary Shares in connection with the 2025 Private Placement, and (iii) 791,770 Ordinary Shares issued in connection with the 2025 Warrant Inducement Agreement. |
| (4) | Includes (i) 20,166 Ordinary Shares currently issued and outstanding and (ii) 7,143 Ordinary Shares issued in connection with the 2025 Warrant Inducement Agreement. Mr. David Binyamin Greenberg has the voting and dispositive power over the shares. |
| (5) | Includes (i) 40,367 Ordinary Shares currently issued and outstanding, (ii) 191,400 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 issued 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. |
| (6) | Includes (i) 342,833 Ordinary Shares currently issued and outstanding and (ii) 121,428 Ordinary Shares issued in connection with the 2025 Warrant Inducement Agreement. Mr. Elliot Tannenbaum has the voting and dispositive power over the shares. |
| (7) | Includes (i) 729,455 Ordinary Shares currently issued and outstanding, (ii) 1,200,000 Ordinary Shares underlying the Warrants, (iii) 200,000 Ordinary Shares issuable upon the exercise of options at an exercise price of NIS 14.00 that are held by Flash Projects K.E. Ltd., or Flash, of which Mr. Eytan is a beneficial owner, and (iv) 129,500 Ordinary Shares issuable upon the exercise of options at an exercise price of NIS 10.50 that are held by Flash. Mr. Ofer Eytan has the voting and dispositive power over the shares, including those held by Flash. |
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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. |
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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 2025 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 2025 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.
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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 2024, 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.
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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 0.71513%.
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.
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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.
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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 the 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.
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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.
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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.
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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.
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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.
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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, 2024 and 2023 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.
EXPENSES
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 |
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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.
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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, and, until March 18, 2026, our officers and directors 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.
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Financial Statements
For the Year Ended December 31, 2024
Table of Contents
Interim Condensed Financial
Statements (Unaudited)
As of and for the six months ended June 30, 2025
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, 2024 and 2023 and the related statements of comprehensive loss, shareholders’ deficiency and cash flows for each of the two years in the period ended December 31, 2024 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, 2024 and 2023 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, 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
December 12, 2025
We have served as the Company’s auditor since 2019.
F-2
TURBOGEN LTD.
(U.S dollar in thousands, except share and per share data)
| December 31 | ||||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 336 | $ | 456 | ||||
| Restricted cash | 17 | 8 | ||||||
| Other current assets | 66 | 159 | ||||||
| Total current assets | 419 | 623 | ||||||
| LONG-TERM ASSETS: | ||||||||
| Operating lease right-of-use assets, net | 356 | 59 | ||||||
| Property, plant and equipment, net | 91 | 142 | ||||||
| Other assets | 95 | 2 | ||||||
| Total long-term assets | 542 | 203 | ||||||
| Total assets | $ | 961 | $ | 826 | ||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Loans payable to related parties – current portion | $ | 405 | $ | 265 | ||||
| Operating lease liabilities – current portion | 151 | 53 | ||||||
| Trade payables | 105 | 345 | ||||||
| Other payables | 1,382 | 434 | ||||||
| Convertible loans | 3,050 | 3,766 | ||||||
| Warrants liability | 693 | 182 | ||||||
| Total current liabilities | 5,786 | 5,045 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Operating lease liabilities – net of current portion | 209 | - | ||||||
| Loans payable to related parties – net of current portion | 205 | 281 | ||||||
| Total long-term liabilities | 414 | 281 | ||||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
| SHAREHOLDERS’ DEFICIENCY | ||||||||
| Ordinary shares of 0.01 NIS par value – December 31, 2024: Authorized: 100,000,000 shares; issued and outstanding: 14,720,692 shares. December 31, 2023: Authorized: 100,000,000 shares; issued and outstanding: 13,792,765 shares | 42 | 39 | ||||||
| Additional paid-in capital | 18,075 | 16,460 | ||||||
| Proceeds on account of shares | 641 | - | ||||||
| Accumulated deficit | (23,997 | ) | (20,999 | ) | ||||
| Total shareholders’ deficiency | (5,239 | ) | (4,500 | ) | ||||
| Total liabilities and shareholders’ deficiency | $ | 961 | $ | 826 | ||||
The accompanying notes are an integral part of the financial statements.
F-3
TURBOGEN LTD.
STATEMENTS OF COMPREHENSIVE LOSS
(U.S dollar in thousands, except share and per share data)
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses, net | $ | 1,192 | $ | 1,758 | ||||
| Sales and marketing expenses | 273 | 609 | ||||||
| General and administrative expenses | 1,366 | 2,157 | ||||||
| Loss from operations | 2,831 | 4,524 | ||||||
| Financial expenses, net | 167 | 835 | ||||||
| Net loss and comprehensive loss | 2,998 | 5,359 | ||||||
| Basic loss per share of ordinary shares | (0.21 | ) | (0.39 | ) | ||||
| Diluted loss per share of ordinary shares | (0.21 | ) | (0.39 | ) | ||||
| Weighted average number of shares used in computing basic loss per share of ordinary shares | 14,251,689 | 13,851,161 | ||||||
| Weighted average number of shares used in computing diluted loss per share of ordinary shares | 14,458,415 | 13,863,966 | ||||||
The accompanying notes are an integral part of the financial statements.
F-4
TURBOGEN LTD.
STATEMENTS OF SHAREHOLDERS’ DEFICIENCY
(U.S dollar in thousands, except share and per share data)
| Ordinary shares | Additional paid in |
Proceeds on account of |
Accumulated | |||||||||||||||||||||
| Number | Amount | capital | shares | deficit | Total | |||||||||||||||||||
| Balance as of January 1, 2023 | 13,668,247 | $ | 39 | $ | 15,115 | $ | (15,640 | ) | $ | (486 | ) | |||||||||||||
| Exercise of investor warrants | 83,822 | (* | ) | 129 | 129 | |||||||||||||||||||
| Stock-based compensation | 1,153 | 1,153 | ||||||||||||||||||||||
| Capital contribution from controlling shareholder (benefit on shareholder loan) | 63 | 63 | ||||||||||||||||||||||
| Vesting of RSUs | 40,696 | |||||||||||||||||||||||
| Net loss | (5,359 | ) | (5,359 | ) | ||||||||||||||||||||
| 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 | $ | 18,075 | $ | 641 | $ | (23,997 | ) | $ | (5,239 | ) | ||||||||||||
| (*) | Represents an amount less than $1. |
The accompanying notes are an integral part of the financial statement.
F-5
TURBOGEN LTD.
(U.S dollar in thousands, except share and per share data)
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | (2,998 | ) | ((5,359 | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 53 | 104 | ||||||
| Net finance expenses | 189 | 692 | ||||||
| Stock-based compensation expense | 340 | 1,153 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in other assets | (1 | ) | 54 | |||||
| Decrease in trade payables | (237 | ) | (95 | ) | ||||
| Increase (decrease) in other payables | 937 | (283 | ) | |||||
| Change in operating lease right-of-use assets | 162 | 227 | ||||||
| Change in operating lease liabilities | (163 | ) | (227 | ) | ||||
| Net cash used in operating activities | (1,718 | ) | (3,734 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | (2 | ) | (9 | ) | ||||
| Net cash used in investing activities | (2 | ) | (9 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of ordinary shares and warrants, net of issuance costs | 1,100 | - | ||||||
| Proceeds from loans payable to related parties | - | 287 | ||||||
| Proceeds from issuance of convertible loans and warrants | 535 | 1,902 | ||||||
| Proceeds from exercise of warrants | - | 99 | ||||||
| Net cash provided by financing activity | 1,635 | 2,288 | ||||||
| Effects on cash and cash equivalents from changes in foreign currency rates | (26 | ) | (22 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (111 | ) | (1,477 | ) | ||||
| Cash, cash equivalents and restricted cash-beginning of period | 464 | 1,941 | ||||||
| Cash, cash equivalents and restricted cash-end of period | 353 | 464 | ||||||
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Right-of-use assets recognized with corresponding lease liability | 459 | - | ||||||
| Conversion of convertible loans | 1,134 | - | ||||||
| Exercise of warrants | - | 30 | ||||||
| Decrease in other payable against additional paid in capital | 32 | |||||||
| Increase in loans payable to related party against decrease in other payable | 108 | |||||||
The accompanying notes are an integral part of the financial statement.
F-6
TURBOGEN LTD.
(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.
| 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 of this report, the Company has raised approximately $8,025 from subsequent share issuances and approximately $4,122 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 $4,800.
As of December 31, 2024, 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 that 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, 2024, the Company recorded a working capital deficit of $5,367, and total shareholders’ deficiency of $5,239, and, for the year ended December 31, 2024, the Company has negative cash flows from operating activities totaling $1,718. 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.
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.
F-7
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
| c. | Impact of Geopolitical Events on Operations and Liquidity |
Iron Swords War Impact
On October 7, 2023, a surprise attack was launched by the terrorist organization Hamas against the State of Israel, leading to the outbreak of the “Iron Swords” war, which is still ongoing as of the date of these financial statements. At the same time, security tensions escalated along Israel’s northern border with the terrorist organization Hezbollah.
The impact of the war on the Israeli economy and on the capital markets has been significant, and is reflected, among other things, in
temporary closures and/or shortened operating hours of many businesses, restrictions on gatherings in workplaces and events, disruptions
to the education system, and other measures. These steps, together with the extensive mobilization of reserve forces, have led to a reduction
in economic activity, declines in financial markets, depreciation of the New Israeli Shekel against foreign currencies, and an increase
in yields on corporate bonds as a result of higher risk levels and uncertainty.
Upon the outbreak of the war, several of the Company’s employees in the technology field, including one senior officer, were called
up for reserve duty, which materially affected the Company’s development activities in the period immediately following the outbreak.
The aforementioned senior officer subsequently resigned from the Company. As of the date of these financial statements, the number of
the Company’s employees currently in reserve service is not material to the Company.
In addition, since the outbreak of the war, the Company’s ability to raise the funding urgently required for its ongoing operations has been significantly reduced, particularly with respect to raising funds from foreign financing sources. As of the date of these financial statements, the Company is unable to assess the full impact of the war on its operations, business, and results (both in the medium and long term), if any such impact occurs. However, the continuation of a prolonged military campaign, and certainly if it expands to additional fronts, is expected to have a materially adverse effect on the Company’s ability to raise financing, retain existing personnel, and recruit additional personnel.
| 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, 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. In addition, members of the Board of Directors entitled to remuneration informed the Company that they would irreversibly 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. As of January 11, 2024, the deferral of the CEO’s compensation was discontinued and reverted to the original compensation. |
| 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. dollar (“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. dollar 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 income (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 consist 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 greater 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.
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 |
| 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, 2024 and 2023, no impairments were recognized.
F-10
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| 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, 2024 and 2023, the Company recorded $66 and $107 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, 2024 and 2023 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.
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.
F-11
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
| 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 2(m) 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, 2024 and 2023, 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.
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.
F-12
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| 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, 2024 and 2023, 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, 2024 and 2023, 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.
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.
F-13
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
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, 2024 and 2023 the Company has no liability for unrecognized tax benefits.
| u. | New accounting pronouncements |
Recently adopted accounting pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. The Company adopted the new accounting standard for the fiscal year 2024. The adoption of this guidance did not have a material impact on the Company’s financial statements related disclosures.
Recently issued accounting pronouncements, not yet adopted
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 is currently evaluating this guidance to determine
the impact it may have on its financial statements disclosures.
In October 2023, the FASB issued ASU 2023-06 “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” which incorporates certain the Securities and Exchange Commission (the “SEC”) disclosure requirements into the FASB Accounting Standards Codification (“Codification”). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification topics, allow investors to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this ASU should be applied prospectively. For all entities within the scope of the affected Codification subtopics, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the associated amendment will be removed from the Codification and will not become effective for any entities. The Company is currently evaluating this guidance to determine the impact it may have on its financial statements disclosures.
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, 2024, 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.
The following table summarizes the Company’s lease-related assets and liabilities recorded in the balance sheets:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Assets: | ||||||||
| Operating lease right-of use assets | $ | 356 | $ | 59 | ||||
| Total lease assets | $ | 356 | $ | 59 | ||||
| Liabilities: | ||||||||
| Operating lease – current portion | $ | 151 | $ | 53 | ||||
| Operating lease – net of current portion | 209 | - | ||||||
| Total lease liabilities | $ | 360 | $ | 53 | ||||
The following tables presents certain information related to operating leases:
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating lease cost: | ||||||||
| Fixed payments and variable payments that depend on an index | 190 | 228 | ||||||
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating lease: | ||||||||
| Weighted average remaining leases term in years | 2.25 | 0.25 | ||||||
| Weighted average annual discount rate | 11.94 | % | 7.07 | % | ||||
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, | ||||
| 2024 | ||||
| 2025 | 176 | |||
| 2026 | 176 | |||
| 2027 | 45 | |||
| Total undiscounted operating lease payment | $ | 397 | ||
| Less imputed interest | (37 | ) | ||
| Operating lease liabilities | $ | 360 | ||
| Less current liabilities | (151 | ) | ||
| Lease liabilities – net of current portion | $ | 209 | ||
Note 4 – Property, Plant and Equipment, Net
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cost: | ||||||||
| Computers and peripheral equipment | $ | 107 | $ | 107 | ||||
| Furniture and equipment | 55 | 55 | ||||||
| Machinery | 110 | 110 | ||||||
| Leasehold improvements | 135 | 134 | ||||||
| Gross property, plant and equipment | 407 | 406 | ||||||
| Less – accumulated depreciation | (316 | ) | (264 | ) | ||||
| Total property, plant and equipment, net | $ | 91 | $ | 142 | ||||
Depreciation expenses for the years ended December 31, 2024 and 2023 were $53 and $104, respectively. No impairment charges were recorded for the years ended December 31, 2024 and 2023.
F-16
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Note 5 – Other payables
| December 31 | ||||||||
| 2024 | 2023 | |||||||
| Advance payment from the IIA | $ | 203 | $ | 18 | ||||
| Payroll-related liabilities | 135 | 119 | ||||||
| Accrued expenses | 1,044 | 297 | ||||||
| Total current liabilities | $ | 1,382 | $ | 434 | ||||
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 | ||||||||
| 2024 | 2023 | |||||||
| Anglo Turbo – short-term loans (2)(3) | $ | 405 | $ | 265 | ||||
| R-Jet (1) | $ | 205 | $ | 173 | ||||
| Anglo Turbo (2) | - | 108 | ||||||
| Total long-term shareholder loan | 205 | 281 | ||||||
| Total shareholder loan | $ | 610 | $ | 546 | ||||
| (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, 2023 and 2024, no changes were made to management’s estimates regarding the expected repayment cash flows.
Finance expenses recognized in the years ended December 2024 and 2023 were $32 and $23, 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%.
In the years ended December 2024 and 2023, finance expenses recognized with regards to Anglo Turbo loans were $117 and $41, respectively.
As of December 31, 2024, a balance of approximately $23 of account payable to Anglo Turbo is included in other payables.
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) with Anglo Turbo Limited Partnership, A.I.H Paris Holdings Ltd., Kar Eco Holdings Ltd., and R-Jet Engineering Ltd. (the “investment and share allocation agreement”). Under the agreement, 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.
F-18
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
The consideration under the license agreement and the investment and share allocation 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. |
| 2. | Issuance of 750,000 ordinary shares to R-Jet. |
| 3. | Contingent royalties based on TG-40 development cost thresholds. As of the issuance date of the financial statements, 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, which expired on January 1, 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 at the demonstration site, if the site owner does not cover such cost.
As of December 31, 2024, 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 site owner covering installation, service, maintenance, repair, and monitoring arrangements, and payment terms from the 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.
| c. | Joint Research Agreements |
| a. | 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 2024 2023 was $38.
| b. | 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 2024 and 2023 were $48 and $110, respectively.
F-19
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| d. | Government grants and grants from national funds |
| a. | 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 and $250 in 2024.
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 $549, representing 30% of the project budget, with a planned execution period of nine months from January 2024. In March 2024, the Company received $278 under this grant.
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 SOFR. These royalty obligations are contingent on future sales; in the absence of sales, no repayments are required.
As of December 31, 2024, the total contingent obligation to the IIA is in the amount of $2,824 (including interest in the amount of $258).
| b. | BIRD Energy Grant |
In March 2021, the Company was awarded a grant by BIRD Energy 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 total approved grant amounted to approximately up to $950, representing 50% of the actual costs of the project. The funding for the remaining 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 costs and ENPG 30%.
Under the terms of the grant agreement between the Company, BIRD Energy, 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, 2024 and 2023, the Company offset $36 and $186, respectively, against research and development expenses in connection with this grant.
The project was formally completed in July 2024, with the demonstration system successfully installed at the New York site.
As of December 31, 2024, no royalties have been incurred in relation to the BIRD Energy grant. As of December 31, 2024, the total contingent obligation to BIRD Energy is in the amount of $998.
F-20
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
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, 2024 and 2023.
The following table sets forth the Company’s assets and liabilities that were measured at fair value as of December 31, 2024 and 2023, by level within the fair value hierarchy:
| Fair value measurements as of | ||||||||||
| Assets: | Fair value hierarchy | December 31, 2024 | December 31, 2023 | |||||||
| Cash and cash equivalents | Level 1 | $ | 336 | $ | 456 | |||||
| Restricted cash | Level 1 | 17 | 8 | |||||||
| Liabilities: | ||||||||||
| Conversion option | Level 3 | 192 | 1,072 | |||||||
| Warrant liability | Level 3 | 693 | 182 | |||||||
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.
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 | ) | - | |||||
| Revaluation | (879 | ) | 82 | |||||
| Fair value as of December 31, 2024 | $ | 192 | $ | 693 | ||||
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.
F-21
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
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 March 21, 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. |
| (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 7, 2026. The fair value of the warrants was determined using Black-Scholes model, as described below. |
On April 6, 2025, the number of Series C and D warrants were modified such that the number of such warrants issued following the modification totaled 87,000, with an exercise price of NIS 6.58 (approximately $1.8), rather than the amounts previously stated (only Series C is outstanding following the modification). Finance expense in the amount of $178 was recognized in the six months ended June 30, 2025 for the difference in the fair value of the warrants.
| (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. |
| (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. The ordinary shares were issued after December 31, 2024 (in May 2025), and, therefore, presented as proceeds on account of shares in the statement of shareholders’ deficiency. |
| (7) | 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 | 58 | % | 4.2 | % | $ | 151 | |||||||||
| December 8, 2024 | 7.72 | 72.7 | % | 4.3 | % | $ | 92 | |||||||||
| December 21, 2024 | 10.29 | 70.9 | % | 4.6 | % | $ | 111 | |||||||||
F-22
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| (8) | The fair value of the warrant liabilities detailed above as of December 31, 2024 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 | 8.55 | 73.9 | % | 4.2 | % | $ | 257 | |||||||||
| December 8, 2024 | 8.55 | 72.7 | % | 4.3 | % | $ | 111 | |||||||||
| December 21, 2024 | 8.55 | 70.9 | % | 4.6 | % | $ | 76 | |||||||||
For the years ended December 31, 2024 and 2023, changes in the fair value of warrants liability was recognized within financial (income) expense, net. and totaled $82 and $79, respectively.
| 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-23
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 value 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. Series 2 options grant date fair value was $579. As of December 31, 2024, total of 800,000 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, 2024, no options are exercisable.
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 price (*in $) | Weighted average remaining contractual term in years | Aggregate intrinsic Value (in thousands of $) | ||||||||||||
| Outstanding as of December 31, 2022 (1) | 132,248 | $ | 1.45 | 4.40 | $ | 237 | ||||||||||
| Forfeited or expired | 12,045 | 2.71 | - | - | ||||||||||||
| Outstanding as of December 31, 2023 | 120,203 | 1.28 | 2.98 | 60 | ||||||||||||
| Exercisable as of December 31, 2023 (1) | 114,974 | 1.21 | 2.77 | 60 | ||||||||||||
| 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 | ||||||||||
F-24
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 price (*in $) | Weighted average remaining contractual term in years | Aggregate intrinsic Value (in thousands of $) | ||||||||||||
| Outstanding as of December 31, 2022 (1) | 116,512 | $ | 4.35 | 9.35 | - | |||||||||||
| Granted | 1,038,708 | 1.99 | 9.66 | 115 | ||||||||||||
| Forfeited or expired | 195,984 | 3.67 | - | - | ||||||||||||
| Outstanding as of December 31, 2023 | 959,236 | 1.92 | 9.7 | 115 | ||||||||||||
| Exercisable as of December 31, 2023 (1) | 219,524 | 2.03 | 9.63 | 23 | ||||||||||||
| 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 | |||||||||||
| (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, 2024 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. No employee stock options were exercised during the years ended December 31, 2024 and 2023.
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, 2022 | 34,544 | $ | 4.13 | |||||
| Granted | 448,508 | 1.71 | ||||||
| Vested | 88,468 | 1.84 | ||||||
| Forfeited | 67,192 | 2.68 | ||||||
| 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 | |||||
| (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. |
The January 2024 Grant, the October 2024 Grant and the December 2024 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.
F-25
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
Fair value estimation of stock options
The parameters used to implement the model are detailed below:
| Issue date | January 2023 | December 2023 | October 2024 | |||||||||
| Price of one ordinary share (in NIS) | 9.06 | 5.38 | 5.75 | |||||||||
| Exercise price per share option (in NIS) | 10.35 | 5.38 | 6 | |||||||||
| Expected volatility | 68 | % | 81 | % | 68.8 | % | ||||||
| Risk-free interest rate | 3.35 | % | 3.98 | % | 4.27 | % | ||||||
| Expected dividend rate | 0 | % | 0 | % | 0 | % | ||||||
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.
Stock-based compensation expenses
The Company recognized stock-based compensation expenses related to all stock-based payment awards in the statement of comprehensive loss for the years ended December 31, 2024 and 2023 as follows:
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Research and development | $ | 18 | $ | 157 | ||||
| Sales and marketing | 58 | 128 | ||||||
| General and administrative | 264 | 868 | ||||||
| Total stock-based compensation expenses | $ | 340 | $ | 1,153 | ||||
As of December 31, 2024, there were total unrecognized compensation expenses in the amount of $1,380 related to non-vested equity-based compensation arrangements granted. These expenses are expected to be recognized over a weighted average period of approximately 1.07 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 2017 tax year.
| c. | Deferred tax assets – Net operating loss carryforwards |
As of December 31, 2024, the Company had accumulated net operating loss carryforwards of $19,822 for Israeli income tax purposes ($16,285 as of December 31, 2023). 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 to offset the deferred tax asset.
F-26
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, | ||||||||
| 2024 | 2023 | |||||||
| Deferred tax assets, net: | ||||||||
| Research and development carryforward expenses | $ | 389 | $ | 636 | ||||
| Carryforward tax losses | 4,559 | 3,746 | ||||||
| Lease liabilities | 83 | 12 | ||||||
| Other | 6 | 9 | ||||||
| Total gross deferred tax assets, net | 5,026 | 4,403 | ||||||
| Less: Valuation allowance | (4,944 | ) | (4,389 | ) | ||||
| Total deferred tax assets, net | 82 | 14 | ||||||
| Deferred tax liabilities, net: | ||||||||
| Right-of-use assets | (82 | ) | (14 | ) | ||||
| (82 | ) | (14 | ) | |||||
| Recorded as: | ||||||||
| Deferred tax assets, net | 82 | 14 | ||||||
| Deferred tax liabilities, net | (82 | ) | (14 | ) | ||||
| 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. As a result, the Company’s effective tax rate was 0% for the years ended December 31, 2024 and 2023.
| f. | The changes in the valuation allowance were as follows: |
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Balance at the beginning of the year | (4,389 | ) | (1,023 | ) | ||||
| Changes during the year: | (566 | ) | (3,366 | ) | ||||
| Balance at the end of the year | (4,955 | ) | (4,389 | ) | ||||
| g. | Loss before income taxes are comprised as follows: |
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Domestic | 2,998 | 5,359 | ||||||
| Loss before income taxes | 2,998 | 5,359 | ||||||
F-27
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 ($3.3) 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 ($3.3), in accordance with the provisions of the loan agreements (“Adjusted Conversion Price”). As of December 31, 2024, the Adjusted Conversion Price was NIS 6.58 ($1.8) 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 ($3.8) per warrant. The exercise price is subject to adjustment if the Company issues shares at a price below NIS 12 ($3.3) per share (“Adjusted Exercise Price”). As of December 31, 2024, the Adjusted Exercise Price was NIS 7.68 ($2.1) per warrant. |
| (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 note 17.
| (b) | 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. The loan 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.
For further details regarding the full conversion of Loan B, refer to note 12(i) and note 17.
| (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. The loan 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.
F-28
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
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, as described in note 17.
| (d) | In April 2023, the Board of Directors approved a convertible loan agreement (“Loan D”) under which the lender provided gross proceeds of $273. The loan 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 is presented in the Company’s balance sheet as a short-term convertible loan. The associated conversion feature and the warrants granted in connection with the loan have expired.
For additional information regarding the full conversion of Loan D, refer to note 17.
| (e) | 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. The loan 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.
For additional information regarding the full conversion of Loan E, refer to note 17.
| (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. The loans mature in a single bullet repayment on July 2, 2025. |
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 note 17.
| (g) | In May 2024, the Board of Directors approved a convertible loan agreement (“Loan G”) with four lenders (“Lenders G”), pursuant to which Lenders G provided gross proceeds of $535. The loan 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, 2024.
For further details on the accounting treatment and the full conversion of Loan G, see notes 12(j) and 12(k).
| (h) | Upon receipt of 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-29
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, 2024 and 2023, were as follows:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Share price in NIS | 8.55 | 6.02 | ||||||
| Standard deviation | 55% - 71 | % | 83% - 103 | % | ||||
| Discount rate | 23 | % | 20 | % | ||||
| (i) | 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 ($2.1) 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.
| (j) | 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. The ordinary shares were issued after December 31, 2024, and, therefore, presented as proceeds on account of shares in the statement of shareholders’ deficiency. |
As part of the conversion, the exercise price of existing 32,142 warrants was adjusted to NIS 7.68 (approximately $2.1) per warrant. These warrants will remain exercisable until September 30, 2025.
| (k) | 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. The ordinary shares were issued after December 31, 2024, and, therefore, presented as proceeds on account of shares in the statement of shareholders’ deficiency. |
| (l) | In accordance with the agreement, the exercise price of existing 89,768 warrants was revised to NIS 3.73 ($1) per warrant, and the exercise price of existing 20,946 warrants was revised to NIS 4.51 ($1.2) per warrant. All warrants are exercisable until December 26, 2025. |
| (1) | 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 | - | |||||||||
F-30
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| (1) | As of December 31 2023, 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, B | 301 | 69 | 1,207 | |||||||||
| C, D, E | 201 | 45 | 836 | |||||||||
| F | 570 | 67 | 651 | |||||||||
| * | 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. |
| (m) | Consulting agreement - Loan 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 is entitled to a fixed monthly fee of $12.
For information regarding the conversion of accrued fixed monthly fees accumulated under this consulting agreement, refer to note 17.
F-31
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, | ||||||||
| 2024 | 2023 | |||||||
| Salaries and related expenses (*) | $ | 1,040 | $ | 1,566 | ||||
| Materials | 24 | 204 | ||||||
| Contractors | 68 | 188 | ||||||
| Depreciation | 181 | 222 | ||||||
| Consultants | 29 | 22 | ||||||
| Overseas travel | 77 | 10 | ||||||
| Others | 145 | 203 | ||||||
| Less – grants for participation in research and development expenses | (372 | ) | 657 | ) | ||||
| Total Research and Development Expenses, Net | 1,192 | 1,758 | ||||||
| * | Includes the effect of stock-based compensation expense. See note 10. |
Note 14 – General and administrative expenses
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Salaries and related expenses (*) | $ | 492 | $ | 1,210 | ||||
| Professional services (*) | 622 | 501 | ||||||
| Depreciation | 55 | 87 | ||||||
| Overseas travel | 25 | 52 | ||||||
| Others | 172 | 307 | ||||||
| Total General and Administrative Expenses | 1,366 | 2,157 | ||||||
| * | Includes the effect of stock-based compensation expense. See note 10. |
Note 15 – Financial (income) expense, net
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Bank interest and commissions | $ | 2 | $ | 2 | ||||
| Interest expense on shareholder loans | 149 | 64 | ||||||
| Income from deposits | (6 | ) | (9 | ) | ||||
| Changes in fair value of convertible loan embedded derivative | (42 | ) | 706 | |||||
| Changes in fair value of warrants liability | 82 | (79 | ) | |||||
| Foreign exchange losses (gains), net | (18 | ) | 151 | |||||
| Total financial expenses, net | 167 | 835 | ||||||
F-32
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, | ||||||||
| 2024 | 2023 | |||||||
| Basic EPS | ||||||||
| Numerator: | ||||||||
| Net income (loss) | (2,998 | ) | (5,359 | ) | ||||
| Denominator: | ||||||||
| Shares used in computing net profit (loss) per share of ordinary shares, basic | 14,251,689 | 13,851,161 | ||||||
| Diluted EPS: | ||||||||
| Numerator: | ||||||||
| Net income (loss) attributable to ordinary shares, basic | (2,998 | ) | (5,359 | ) | ||||
| Convertible loans effect | (74 | ) | - | |||||
| Capital offerings warrants effect | - | (47 | ) | |||||
| Net income (loss) attributable to ordinary shares, diluted | (3,072 | ) | (5,406 | ) | ||||
| Denominator: | ||||||||
| Shares used in computing net profit (loss) per share of ordinary shares, basic | 14,251,689 | 13,851,161 | ||||||
| Convertible loans effect | 206,726 | - | ||||||
| Capital offerings warrants effect | - | 12,805 | ||||||
| Shares used in computing net profit (loss) per share of ordinary shares, diluted | 14,458,415 | 13,863,966 | ||||||
| Profit (loss) per share: | $ | (0.21 | ) | $ | (0.39 | ) | ||
| Basic | $ | (0.21 | ) | $ | (0.39 | ) | ||
| Diluted | ||||||||
The following outstanding shares of ordinary shares equivalents were excluded from the calculation due to their antidilutive nature:
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
Stock options exercisable to 10 ordinary shares | 44,675 | 120,203 | ||||||
| Stock options exercisable to 1 ordinary share | 772,484 | 959,236 | ||||||
| Convertible loans | 966,667 | 995,833 | ||||||
| Warrants allocated as part of the convertible loans | 1,144,287 | 821,430 | ||||||
| Warrants allocated as part of capital offerings | 808,172 | - | ||||||
| RSU | 147,636 | 327,392 | ||||||
| Total shares excluded | 3,883,921 | 3,224,094 | ||||||
Note 17 – Subsequent Events
The Company evaluated subsequent events through December 12, 2025, 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:
| a. | Convertible Loans and Detachable Warrants: |
Lender A and Lenders F
On March 9, 2025, the general meeting of shareholders of the Company 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 of the Company. In lieu of the 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.
F-33
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
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 $3.3) per option, exercisable for a period of 12 months. The fair value of the 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 of the Company.
In March 2025, Lender A completed an additional investment of approximately $140, and the Company issued to Lender A 74,627 ordinary shares of the Company 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 general meeting of shareholders of the Company 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 $2,500 for the Company.
Lenders B and E
In March 2025, 180,000 warrants issued to Lenders B and E with an exercise price of NIS 10.50 (approximately $3.11) per warrant expired. 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.
Lenders C and E
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
The original maturity date of the loan from Lender D was extended to April 3, 2025 (the “Updated Maturity Date”), while the Company worked to update the conversion terms. As of June 30, 2025, the loan had not been converted and is recorded as a short-term loan. The conversion component and associated warrants have expired. The Updated Maturity Date has passed, and the Company is in negotiations with Lender D regarding a revised conversion mechanism, subject to the required legal approvals.
On 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 $1.8). If the Company will not 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 conversion price will be reduced to NIS 2.91 (approximately $0.8). If the Company will achieve the milestone, the Company will allocate to one of the assignees 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.
F-34
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| b. | Equity: |
| a. | Equity related transactions: |
| (1) | On April 6, 2025, the Company’s Board of Directors approved an investment agreement with an investor, pursuant to which the Company will issue, by way of a private placement, 1,118,163 ordinary shares for aggregate consideration of $2,917. |
In April and May of 2025, the Company had received an aggregated consideration of approximately $1,730, against which a 637,151 number of ordinary shares were issued. As of June 30, 2025, the investor is committed to provide an additional $1,187 in exchange for the remaining shares, and the Company is obligated to complete such issuance. The 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.
Additionally, the Board of Directors approved the issuance to a service provider who is related to the investor, of 78,252 ordinary shares, 200,000 warrants convertible into 200,000 ordinary shares at an exercise price of NIS 14 (approximately $4.2) per warrant, and 150,000 additional warrants convertible into 150,000 ordinary shares at an exercise price of NIS 10.5 (approximately $3.1) per warrant. These securities were granted for services rendered in connection with the investment transaction. The warrants are exercisable until October 2026.
| (2) | 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 $2,023. |
The share issuances were completed in two tranches: ordinary shares were issued in May 2025 for consideration of $1,012, and additional 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, each investor will be entitled to receive additional ordinary shares of the Company, in accordance with the adjustment mechanism specified in the investment agreement.
In addition, the Company separately allocated to the investors: (a) 200,000 warrants convertible into 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 convertible into 160,000 ordinary shares at an exercise price of NIS 22.50 (approximately $6.7) per warrant, exercisable until November 6, 2026.
| (3) | 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 an amount of Ordinary Shares equal to the up to $5 million subscription amount, 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. |
F-35
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| b. | Stock-based compensation: |
On January 29, 2025, the Company’s Board of Directors approved the grant of 150,885 options, exercisable into 150,885 ordinary shares of the Company, to five directors (30,177 options to each), under the Company’s option plan. The options have an exercise price of NIS 8.95 (approximately $2.65) per share and will vest over a two-year period.
On March 30, 2025, the Company’s Board of Directors approved the grant of options and RSUs to the Company’s officers and employees, under which 485,812 options were allocated, of which 398,076 options to the Company’s CEO, Mr. Yaron Gilboa, exercisable into 398,076 ordinary shares, 61,728 options to three Officers of the Company, exercisable into 61,728 shares, and 26,008 options to three employees, exercisable into 26,008 shares.
In addition, 181,134 RSUs, were granted, exercisable into 181,134 ordinary shares of which 143,316 RSUs to the Company’s CEO, exercisable into 143,316 shares, 22,224 RSUs to three Officers of the Company, exercisable into 22,224 ordinary shares, and 15,594 RSUs to three employees, exercisable into 15,594 shares.
The vesting period for the employees and Officers of the Company is four years, except for the Company’s CEO for whom the vesting period is three years. The exercise price of the options is NIS 10.16 (approximately $3.01). The grant to the Company’s CEO was approved by the shareholders’ meeting on November 26, 2025.
On March 9, 2025, the Company’s Board of Directors approved the grant of 19,696 options, exercisable into 19,696 ordinary shares of the Company, to a service provider, for services rendered to the Company in lieu of a cash payment. The options vest immediately and have an exercise price of NIS 10 (approximately $2.97) per share.
On October 5, 2025, the Company’s Board of Directors approved the grant of 150,000 options to its Chief Financial Officer (CFO), exercisable into 150,000 ordinary shares at an exercise price of NIS 16.6 (approximately $4.93) per share, and 70,000 RSUs exercisable into 70,000 ordinary shares; both awards have a vesting period of four years.
On August 27, 2025, the Board of Directors approved the grant of 45,000 options to a service provider, exercisable into 45,000 ordinary shares at an exercise price of NIS 10.50 (approximately $3.11) per share, vesting immediately, and 12,500 options to another service provider, exercisable into 12,500 ordinary shares at an exercise price of NIS 0.30 (approximately $0.09) per share, with a vesting period of two years.
In connection with the consultant option grant approved in October 2024 (the “October 2024 Grant”), which was subject to specified performance conditions, the Company reassessed its expectations and determined that achievement of those conditions is now considered probable.
On November 26, 2025, the Company entered into a 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, and 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 agreements, the Company will pay each of them a monthly fee of $9 and will grant each of them 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.
F-36
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
| c. | Loans Payable to Related Parties and Related Parties Transactions |
On March 30, 2025, the Company’s Board of Directors approved the extension of all loans provided by Anglo Turbo Limited Partnership (“Anglo Turbo”), 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 general meeting of shareholders approved the conversion of such loans.
| d. | Commitments and Contingencies |
Government grants and grants from national funds
In connection with the project approved by the IIA in July 2022, in March 2025, the Company received an additional grant in the amount of approximately $38.5.
In June 2025, the Company received approval from the IIA for new project budget to develop a multi-fuel combustor, in collaboration with the Israeli Ministry of Defense and the Technion – Israel Institute of Technology. The approved budget for the project is approximately $1,070, with the IIA’s participation set at 55%, representing a financial contribution of approximately $588. The project is scheduled to be executed through June 30, 2026 and is subject to royalties. In August 2025, the Company received an advance payment of approximately $200 from the IIA in respect of this project.
In July 2025, the Company received an additional approval from the IIA for a new project budget for the development and commissioning of a hybrid micro-turbine production line. The approved budget for this project is approximately $1,114, with the IIA’s participation set at 40%, representing a financial contribution of approximately $446. The project is scheduled to be executed through September 30, 2026 and is also subject to royalties.
Strategic Development and Revenue-Sharing Agreement for Multi-Fuel Microturbine Technology
On May 26, 2025, the Company entered into a binding agreement for the development and delivery of engine-generator energy production systems, based on a multi-fuel microturbine technology. Under the agreement, the parties will collaborate over 18 months from the signing date, 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, considering the relevant customer market and the party that generated the opportunity. This agreement is valid for a period of 10 years from the date of its entry into force, as defined in the agreement. Additionally, each party may terminate the agreement, subject to the occurrence of certain events defined therein. Furthermore, on June 22, 2025, the Company announced that it had received an order from the aforementioned defense company for the production of the demonstrator and approval for a first payment out of a total of approximately NIS 2,000 (approximately $548). Until the date of the report, a total of approximately $120 was received.
F-37
Interim Condensed Financial
Statements (Unaudited)
As of and for the six months ended June 30, 2025
Table of Contents
F-38
UNAUDITED INTERIM CONDENSED BALANCE SHEET
(U.S dollar in thousands, except share and per share data)
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 3,364 | $ | 336 | ||||
| Restricted cash | 18 | 17 | ||||||
| Other current assets | 271 | 66 | ||||||
| Total current assets | 3,653 | 419 | ||||||
| LONG-TERM ASSETS: | ||||||||
| Operating lease right-of use assets, net | 283 | 356 | ||||||
| Property, plant and equipment, net | 93 | 91 | ||||||
| Other assets | 103 | 95 | ||||||
| Total long-term assets | 479 | 542 | ||||||
| Total assets | $ | 4,132 | $ | 961 | ||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Loans payable to related parties – current portion | $ | 418 | $ | 405 | ||||
| Operating lease liabilities – current portion | 171 | 151 | ||||||
| Trade payables | 131 | 105 | ||||||
| Other payables | 1,348 | 1,382 | ||||||
| Convertible loans | 1,164 | 3,050 | ||||||
| Warrants liability | 6,110 | 693 | ||||||
| Total current liabilities | 9,342 | 5,786 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Operating lease liabilities – net of current portion | 139 | 209 | ||||||
| Loans payable to related parties – net of current portion | 242 | 205 | ||||||
| Total long-term liabilities | 381 | 414 | ||||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
| SHAREHOLDERS’ DEFICIENCY | ||||||||
| Ordinary shares of 0.01 NIS par value – June 30, 2025: Authorized: 100,000,000 shares; issued and outstanding: 18,882,238 shares. December 31, 2024: Authorized: 100,000,000 shares; issued and outstanding: 14,720,692 shares. | 53 | 42 | ||||||
| Additional paid-in capital | 25,982 | 18,075 | ||||||
| Proceeds on account of shares | - | 641 | ||||||
| Accumulated deficit | (31,626 | ) | (23,997 | ) | ||||
| Total shareholders’ deficiency | (5,591 | ) | (5,239 | ) | ||||
| Total liabilities and shareholders’ Deficiency | $ | 4,132 | $ | 961 | ||||
The accompanying notes are an integral part of the financial statements.
F-39
UNAUDITED INTERIM CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(U.S dollar in thousands, except share and per share data)
| Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses, net | $ | 642 | $ | 593 | ||||
| Sales and marketing expenses | 203 | 161 | ||||||
| General and administrative expenses | 1,626 | 707 | ||||||
| Other income in settlement of liability | (210 | ) | - | |||||
| Loss from operations | 2,261 | 1,461 | ||||||
| Financial (income) expense, net | 5,368 | (62 | ) | |||||
| Net loss | 7,629 | 1,399 | ||||||
| Basic loss per share of ordinary shares | (0.48 | ) | (0.10 | ) | ||||
| Diluted loss per share of ordinary shares | (0.49 | ) | (0.11 | ) | ||||
| Weighted average number of shares used in computing basic loss per share of ordinary shares | 15,995,672 | 14,049,533 | ||||||
| Weighted average number of shares used in computing diluted loss per share of ordinary shares | 16,006,804 | 15,159,720 | ||||||
The accompanying notes are an integral part of the financial statements.
F-40
UNAUDITED INTERIM CONDENSED STATEMENTS OF SHAREHOLDERS’ DEFICIENCY
(U.S dollars in thousands, except share and per share data)
| Ordinary shares | Additional paid | Proceeds on account of | Accumulated | |||||||||||||||||||||
| Number | Amount | in capital | shares | deficit | Total | |||||||||||||||||||
| Balance as of January 1, 2025 | 14,720,692 | $ | 42 | $ | 18,075 | $ | 641 | $ | (23,997 | ) | $ | (5,239 | ) | |||||||||||
| Proceeds from exercise of warrants | 427,615 | 1 | 1,261 | - | - | 1,262 | ||||||||||||||||||
| Issuance of ordinary shares | 1,148,165 | 3 | 2,445 | (157 | ) | - | 2,291 | |||||||||||||||||
| Issuance of ordinary shares upon conversion of convertible loans | 2,195,438 | 7 | 2,932 | (484 | ) | - | 2,455 | |||||||||||||||||
| Stock-based compensation | - | - | 1,035 | - | 1,035 | |||||||||||||||||||
| Capital contribution from controlling shareholder (benefit on shareholder loan | 48 | 48 | ||||||||||||||||||||||
| Issuance of ordinary shares to a service provider | 352,275 | - | 186 | - | - | 186 | ||||||||||||||||||
| Vesting of Restricted Share Units | 38,046 | - | - | - | - | - | ||||||||||||||||||
| Net loss | (7,629 | ) | (7,629 | ) | ||||||||||||||||||||
| Balance as of June 30, 2025 | 18,882,238 | $ | 53 | $ | 25,982 | - | $ | (31,626 | ) | $ | (5,591 | ) | ||||||||||||
| Balance as of January 1, 2024 | 13,792,765 | $ | 39 | $ | 16,460 | - | $ | (20,999 | ) | $ | (4,500 | ) | ||||||||||||
| Issuance of ordinary shares through rights offering | 262,064 | 1 | 446 | - | - | 447 | ||||||||||||||||||
| Stock-based compensation | - | - | 201 | - | - | 201 | ||||||||||||||||||
| Capital contribution from controlling shareholder (benefit on shareholder loan) | - | - | 40 | - | - | 40 | ||||||||||||||||||
| Vesting of Restricted Share Units | 97,148 | - | - | - | - | - | ||||||||||||||||||
| Net loss | - | - | - | - | (1,399 | ) | (1,399 | ) | ||||||||||||||||
| Balance as of June 30, 2024 | 14,151,977 | $ | 40 | $ | 17,147 | - | $ | (22,398 | ) | $ | (5,211 | ) |
F-41
UNAUDITED INTERIM CONDENSED STATEMENTS OF CASH FLOWS
(U.S dollars in thousands, except share and per share data)
| Six month ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | (7,629 | ) | (1,399 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 13 | 19 | ||||||
| Net finance expenses (income) | 5,454 | (274 | ) | |||||
| Stock-based compensation expense | 1,035 | 201 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in other assets | (188 | ) | (50 | ) | ||||
| Increase in trade payables | 18 | 8 | ||||||
| Increase (decrease) in other payables | (135 | ) | 439 | |||||
| Change in operating lease right-of-use assets | 73 | 92 | ||||||
| Change in operating lease liabilities | (73 | ) | (93 | ) | ||||
| Net cash used in operating activities | (1,432 | ) | (1,057 | ) | ||||
| 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 | 2,884 | 447 | ||||||
| Proceeds from issuance of convertible loans | - | 535 | ||||||
| Proceeds from exercise of warrants | 498 | - | ||||||
| Proceeds from exercise of options | 335 | - | ||||||
| Net cash provided by financing activity | 3,717 | 982 | ||||||
| Effects on cash and cash equivalents from changes in foreign currency rates | 744 | (89 | ) | |||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | 3,029 | (166 | ) | |||||
| Cash, cash equivalents and restricted cash-beginning of period | 353 | 465 | ||||||
| Cash, cash equivalents and restricted cash-end of period | 3,382 | 299 | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Right-of-use asset recognized with corresponding lease liability | - | 459 | ||||||
| Conversion of convertible loans | 2,448 | - | ||||||
| Exercise of warrants | 417 | - | ||||||
| Decrease in other payable against additional paid in capital | 186 | - | ||||||
The accompanying notes are an integral part of the financial statement.
F-42
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 issuance date of the financial statements, 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.
| b. | Liquidity and Going Concern |
As of June 30, 2025, the Company has accumulated deficit of $31,626. In the six months ended June 30, 2025, the Company generated losses of $7,629 and negative cash flows from operating activities of $1,432.
As of the issuance date of the accompanying financial statements, management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through issuance of equity securities, loans, and convertible loans.
Such conditions raise substantial doubts about the Company’s ability to continue as a going concern. 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. These financial statements do not include any adjustments relating to the recoverability and classification of assets, carrying amounts or the amount and classification of liabilities that may be required should the Company be unable to continue as a going concern.
Note 2 – Summary of Significant Accounting Policies
| a. | Basis of Presentation |
The unaudited interim condensed financial statements of the Company as of June 30, 2025 and for the six months period then ended have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. The information included in these interim unaudited condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2024 and accompanying notes. In the opinion of management, these unaudited interim condensed financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of results for the interim period. The results for the interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2025.
| b. | Use of estimates |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, costs and expenses, income taxes and related disclosures in the accompanying notes. Actual results could differ from those estimates.
F-43
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
| c. | Significant Accounting Policies |
The significant accounting policies followed in the preparation of these unaudited condensed interim financial statements are identical to those applied in the preparation of the latest annual financial statements.
| d. | New accounting pronouncements |
Recently adopted accounting pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB) issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. The Company adopted the new accounting standard for the fiscal year 2024. The adoption of this guidance did not have a material impact on the Company’s financial statements related disclosures.
Recently issued accounting pronouncements, not yet adopted
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 is currently evaluating this guidance to determine
the impact it may have on its financial statements disclosures.
In October 2023, the FASB issued ASU 2023-06 “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“Codification”). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification topics, allow investors to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this ASU should be applied prospectively. For all entities within the scope of the affected Codification subtopics, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the associated amendment will be removed from the Codification and will not become effective for any entities. The Company is currently evaluating this guidance to determine the impact it may have on its financial statements disclosures.
F-44
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
Note 3 – Loans payable to related parties and related parties transactions
On March 30, 2025, the Company’s Board of Directors approved the extension of all loans provided by Anglo Turbo Limited Partnership (“Anglo Turbo”), 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 shareholders, the conversion of the full remaining balance of the loans provided by Anglo Turbo, totaling $418, into 136,450 ordinary shares. As of June 30, 2025, the conversion had not yet been completed and the loan balances remained presented in the Company’s unaudited interim condensed balance sheets. On November 26, 2025, the shareholders approved the conversion of such loans.
The Company had outstanding loans from related parties as follows:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Anglo Turbo – current portion | $ | 418 | $ | 405 | ||||
| Total loans payable to related parties – current portion | 418 | 405 | ||||||
| Loans payable to related parties R-Jet – net of current portion | 242 | 205 | ||||||
| Total loans payable to related parties | $ | 660 | $ | 610 | ||||
Finance expenses in relation to shareholder’s loans recognized in the six months ended June 30, 2025 and 2024 were $85 and $81, respectively.
As of June 30, 2025, a balance of approximately $24 of other payable to Anglo Turbo is included in other payables.
Note 4 – Commitments and Contingencies
Government grants and grants from national funds
In connection with the grant approved by the Israel Innovation Authority (the “IIA”) in July 2022, the Company received an additional grant in the amount of approximately $38.5 in March 2025.
For the six months ended June 30, 2025 and 2024, the Company offset $239 and $190, respectively, against research and development expenses in connection with the Company’s grants.
As of June 30, 2025, the total contingent obligation to the IIA amounted to $2,939 (including interest in the amount of $334). Additionally, as of June 30, 2025, the total contingent obligation to The Israeli-United States Binational Industrial Research and Development (BIRD) Foundation amounted to $998.
In June 2025, the Company received approval from the IIA for new grant to develop a multi-fuel combustor, in collaboration with the Israeli Ministry of Defense and the Technion – Israel Institute of Technology. The approved budget for the project is approximately $1,070, with the IIA’s participation set at 55%, representing a financial contribution of approximately $588. The project is scheduled to be executed through June 30, 2026 and is subject to royalties. In August 2025, the Company received an advance payment of approximately $200 from the IIA in respect of this project.
In July 2025, the Company received an additional approval from the IIA for a new grant for the development and commissioning of a hybrid micro-turbine production line. The approved budget for this project is approximately $1,114, with the IIA’s participation set at 40%, representing a financial contribution of approximately $446. The project is scheduled to be executed through September 30, 2026 and is also subject to royalties.
F-45
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
Strategic Development Agreement for Multi-Fuel Microturbine Technology
On May 26, 2025, the Company entered into a binding agreement for the development and delivery of engine-generator energy production systems, based on a multi-fuel microturbine technology. 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 Non-Recurring Engineering (NRE) payments between the parties for future product sales, considering the relevant customer market and the party that generated the opportunity. 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 in the agreement (such as obtaining an approval from a third party). Furthermore, on June 22, 2025, the Company announced that it had received an order from the aforementioned defense company for the production of the demonstrator and approval for a first payment out of a total of approximately NIS 2 million (approximately $548). As of the date of issuance on the financial statements, a total of approximately $120 was received.
Note 5 – 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 (“CEO”).
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 6 – Equity
| a. | Equity related transactions: |
| (1) | On April 6, 2025, the Board of Directors approved an investment agreement with an investor, 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 had received an aggregated consideration of approximately $1,730 and issued 637,151 ordinary shares. As of June 30, 2025, the investor is committed to provide an additional $1,250 in exchange for the remaining shares, and the Company is 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 as of June 30, 2025, representing the fair value at that date
Additionally, the Board of Directors approved the issuance to a service provider 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 transaction. The warrants are exercisable until October 2026. As of June 30, 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.
F-46
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
| (2) | 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, each investor will be entitled to receive additional ordinary shares, in accordance with the adjustment mechanism specified in the investment agreement, for a period of 18 months from the issuance date of the shares.
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. As a result, the Company recognized warrants liability as of June 30, 2025 in the amount of $439.
| (3) | 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 in 2024. The shares were issued after December 31, 2024 (in May 2025), and, therefore, presented as additional paid in capital in the statement of shareholders’ deficiency. |
| b. | Stock-based compensation: |
The following provides information on the Company’s stock-based compensation awards, including stock options and restricted share units granted or modified during the six months ended June 30, 2025:
On January 29, 2025, the Board of Directors approved the grant of 150,585 options to purchase 150,585 ordinary shares to five directors (30,177 options to each), under the Company’s equity incentive plan. The share options have an exercise price of NIS 8.95 (approximately $2.65) 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.
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 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 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.
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 $3.01).
The aggregate fair value of the grants to the officers and employees was $267. The expenses related to CEO grant of share options and RSUs are recognized from the grant date, which is November 26, 2025.
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 $2.97) 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.
In connection with share options granted to a consultant in October 2024 (the “October 2024 Grant”), the specified performance conditions were met during May 2025. As a result, the Company recognized an expense of approximately $604 with respect of the October 2024 Grant during the six months ended June 30, 2025.
F-47
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
Note 7 - Convertible Loans and Detachable Warrants:
| a. | Lender A and Lenders 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 addition, in exchange for the warrants they previously held, the Company issued new 600,000 warrants with an exercise price of NIS 8.00 (approximately $2.37) per warrant, exercisable until December 20, 2025. As of June 30, 2025, the fair value of the warrants was $1,581.
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 $3.3) per option, exercisable for a period of 12 months. The fair value of the options at the issuance date was determined based on the value of the services provided, amounting to approximately $155. In addition, accrued expenses 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. As of June 30, 2025, the fair value of these warrants was approximately $130.
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 undertaking, the exercise of the warrants under the agreement is expected to generate proceeds of approximately $2,500.
| b. | Lenders B and E |
In March 2025, 180,000 warrants with an exercise price of NIS 10.50 (approximately $3.11) per warrant expired. 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.
| c. | Lenders C and E |
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 $582, as well as a conversion notice from Lender E for the full convertible loan balance of approximately $223. The conversion is subject to certain required legal approvals. As of June 30, 2025, the conversion had not occurred due to outstanding legal requirements, and the total loan balance amounted to approximately $805.
| d. | Lender D |
The original maturity date of the loan from Lender D was extended to April 3, 2025 (the “Updated Maturity Date”), while the Company worked to update the conversion terms. As of June 30, 2025, the loan had not been converted and is recorded as a short-term loan. The conversion feature and associated warrants have expired. The Updated Maturity Date has passed, and the Company is in negotiations with Lender D regarding a revised conversion mechanism, subject to the required legal approvals.
On 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.
F-48
TURBOGEN LTD.
NOTES TO FINANCIAL STATEMENTS
(U.S dollars in thousands, except share and per share data)
Under the agreement, the Company agreed to issue 595,744 ordinary shares to the assignees at a conversion price of NIS 6.58 (approximately $1.8). If the Company will not 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 conversion price will be reduced to NIS 2.91 (approximately $0.8). If the Company will achieve the milestone, the Company will allocate to one of the assignees 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.
| e. | Lenders G |
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. The shares were issued after December 31, 2024 and during the six months ended June 30, 2025, and therefore presented as additional paid in capital in the statement of shareholders’ deficiency.
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. The shares were issued after December 31, 2024 and during the six months ended June 30, 2025, and therefore presented as additional paid in capital in the statement of shareholders’ deficiency.
Note 8 - 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 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, 2024 | $ | 193 | $ | 693 | ||||
| Issuance | 0 | 589 | ||||||
| Conversion | -180 | -428 | ||||||
| Revaluation | -13 | 5,256 | ||||||
| Fair value as of June 30, 2025 | $ | 0 | $ | 6,110 | ||||
Note 9 - Subsequent Events
The Company evaluated subsequent events through December 12, 2025, 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 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 an amount of Ordinary Shares equal to the up to $5 million subscription amount, 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.
On November 26, 2025, the Company entered into a 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, and 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 agreements, the Company will pay each of them a monthly fee of $9 and will grant each of them 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.
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 $4.93) per share, and 70,000 RSUs; both awards have a vesting period of four years.
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 $3.11) per share, vesting immediately, and 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.
See also notes 3, 4, 6 and 7.
F-49
Up to 3,056,248 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.
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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. Offer Eitan, 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. Eitan 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.
II-3
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.
On December 3, 2025, we issued 595,744 Ordinary Shares at a conversion price of NIS 6.58 (approximately $1.80) per share, subject to further adjustment, and up to 750,000 share rights contingent on future regulatory outcomes, pursuant to a settlement and conversion agreement entered into in October 2025 with Mr. Rappaport, Ms. Zvi, and certain assignees.
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.
Item 8. Exhibits and Financial Statement Schedules
Exhibits:
| * | Filed herewith. |
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
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 registration statement on Form F-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Petah Tikva, Israel on March 11, 2026.
| TURBOGEN LTD. | ||
| By: | /s/ Yaron Gilboa | |
| Yaron Gilboa | ||
| Chief Executive Officer | ||
POWER OF ATTORNEY
The undersigned officers and directors of TurboGen Ltd. hereby constitute and appoint each of Yaron Gilboa and Neta Zruya Hashai with full power of substitution, each of them singly our true and lawful attorneys-in-fact and agents to take any actions to enable the Company to comply with the Securities Act, and any rules, regulations and requirements of the SEC, in connection with this registration statement on Form F-1, including the power and authority to sign for us in our names in the capacities indicated below any and all further amendments to this registration statement and any other registration statement filed pursuant to the provisions of Rule 462 under the Securities Act.
Pursuant to the requirements of the Securities Act of 1933, this 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 | March 11, 2026 | ||
| Yaron Gilboa | (Principal Executive Officer) | |||
| /s/ Neta Zruya Hashai | Chief Financial Officer | March 11, 2026 | ||
| / Neta Zruya Hashai | (Principal Financial and Accounting Officer) | |||
| /s/ Itzhak Natan Even Ari | Chairman of the Board of Directors | March 11, 2026 | ||
| Itzhak Natan Even Ari | ||||
| /s/ Dov Fridman | Director | March 11, 2026 | ||
| Dov Fridman | ||||
| /s/ David Deri | Director | March 11, 2026 | ||
| David Deri | ||||
| /s/ Ziv Gafni | Director | March 11, 2026 | ||
| Ziv Gafni | ||||
| /s/ Eli Zooker | Director | March 11, 2026 | ||
| Eli Zooker | ||||
| /s/ Idan Ben Shitrit | Director | March 11, 2026 | ||
| /s/ Idan Ben Shitrit | ||||
| /s/ Ethy Levy | Director | March 11, 2026 | ||
| Ethy Levy | ||||
| /s/ Alex Katz | Director | March 11, 2026 | ||
| Alex Katz |
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 March 11, 2026.
| Puglisi & Associates | ||
| By: | /s/ Donald J. Puglisi | |
| Donald J. Puglisi | ||
| Managing Director | ||
II-7
Exhibit 3.1
AMENDED AND RESTATED ARTICLES
THE COMPANIES LAW, 5759-1999
A LIMITED LIABILITY COMPANY
ARTICLES OF ASSOCIATION
OF
TURBOGEN LTD.
| 1. | Definitions; Interpretation. |
(a) In these Articles, the following terms (whether or not capitalized) shall bear the meanings set forth opposite to them respectively, unless inconsistent with the subject or context.
| “Articles” | shall mean these Articles of Association, as amended from time to time. |
| “Board of Directors” | shall mean the Board of Directors of the Company. |
| “Chairperson” | shall mean the Chairperson of the Board of Directors, or the Chairperson of the General Meeting, as the context provides; |
| “Company” | shall mean TURBOGEN LTD. |
| “Companies Law” | shall mean the Israeli Companies Law, 5759-1999 and the regulations promulgated thereunder. The Companies Law shall include reference to the Companies Ordinance (New Version), 5743-1983, of the State of Israel, to the extent in effect according to the provisions thereof. |
| “Director(s)” | shall mean the member(s) of the Board of Directors holding office at any given time, including alternate directors. | ||
| “External Directors” | shall mean as defined in the Companies Law. |
| “General Meeting” | shall mean an Annual General Meeting or Special General Meeting of the Shareholders, as the case may be. |
| “NIS” | shall mean New Israeli Shekels. |
| “Office” | shall mean the registered office of the Company at any given time. |
| “Office Holder” or “Officer” | shall mean as defined in the Companies Law. |
| “RTP Law” | shall mean the Israeli Restrictive Trade Practices Law, 5758-1988. |
| “Securities Law” | shall mean the Israeli Securities Law, 5728-1968. |
| “Shareholder(s)” | shall mean the shareholder(s) of the Company, at any given time. |
| “in writing” or “writing” | shall mean written, printed, photocopied, photographic, typed, sent via email, facsimile or produced by any visible substitute for writing, or partly one and partly another, and signed shall be construed accordingly. |
PETAH TIKVA, 22 EFAL St. 4951122 | 03-579-5452 | WWW.TURBOGENCHP.COM
1
(b) Unless otherwise defined in these Articles or required by the context, terms used herein shall have the meaning provided therefor under the Companies Law.
(c) Unless the context shall otherwise require: words in the singular shall also include the plural, and vice versa; any pronoun shall include the corresponding masculine, feminine and neuter forms; the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; the words “herein”, “hereof” and “hereunder” and words of similar import refer to these Articles in its entirety and not to any part hereof; all references herein to Articles, Sections or clauses shall be deemed references to Articles, Sections or clauses of these Articles; any references to any agreement or other instrument or law, statute or regulation are to it as amended, supplemented or restated, from time to time (and, in the case of any law, to any successor provisions or re-enactment or modification thereof being in force at the time); any reference to “law” shall include any supranational, national, federal, state, local, or foreign statute or law and all rules and regulations promulgated thereunder (including, any rules, regulations or forms prescribed by any governmental authority or securities exchange commission or authority, if and to the extent applicable); any reference to a “day” or a number of “days” (without any explicit reference otherwise, such as to business days) shall be interpreted as a reference to a calendar day or number of calendar days; reference to month or year means according to the Gregorian calendar; any reference to a “company”, “corporate body” or “entity” shall include a, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof, and reference to a “person” shall mean any of the foregoing or an individual.
(d) The captions in these Articles are for convenience only and shall not be deemed a part hereof or affect the construction or interpretation of any provision hereof.
Limited Liability
| 2. | The Company is a limited liability company and therefore each shareholder’s obligations to the Company shall be limited to the payment of the nominal value of the shares held by such shareholder, subject to the provisions of the Companies Law. |
Public Company; Company’s Objectives
| 3. | Public Company; Objectives. |
(a) The Company is a Public Company as such term is defined in and as long as it so qualifies under the Companies Law.
(b) The Company’s objectives are to carry on any business, and do any act, which is not prohibited by law.
| 4. | Donations. |
The Company may donate a reasonable amount of money (in cash or in kind, including the Company’s securities) for any purpose that the Board of Directors finds appropriate.
Share Capital
| 5. | Authorized Share Capital. |
(a) The share capital of the Company shall consist of 100,000,000 ordinary shares of the Company, no par value each (the “Shares”).
(b) The Shares shall rank pari passu in all respects.
2
| 6. | Increase of Authorized Share Capital. |
(a) The Company may, from time to time, by a Shareholders’ resolution, whether or not all the shares then authorized have been issued, and whether or not all the shares theretofore issued have been called up for payment, increase its authorized share capital by the creation of new shares. Any such increase shall be in such amount and shall be divided into shares of such nominal amounts, and such shares shall confer such rights and preferences, and shall be subject to such restrictions, as such resolution shall provide.
(b) Except to the extent otherwise provided in such resolution, any new shares included in the authorized share capital increased as aforesaid shall be subject to all the provisions of these Articles which are applicable to shares of such class included in the existing share capital without regard to class (and, if such new shares are of the same class as a class of shares included in the existing share capital, to all of the provisions which are applicable to shares of such class included in the existing share capital).
| 7. | Special or Class Rights; Modification of Rights. |
(a) If at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class, unless otherwise provided by the Companies Law or these Articles, may be modified or cancelled by the Company by a resolution of the General Meeting of the holders of all shares as one class, without any required separate resolution of any class of shares.
(b) The provisions of these Articles relating to General Meetings shall, mutatis mutandis, apply to any separate General Meeting of the holders of the shares of a particular class, it being clarified that the requisite quorum at any such separate General Meeting shall be two or more shareholders present in person or by proxy and holding not less than twenty five (25%) percent of the issued shares of such class.
(c) Unless otherwise provided by these Articles, an increase in the authorized share capital, the creation of a new class of shares, an increase in the authorized share capital of a class of shares, or the issuance of additional shares thereof out of the authorized and unissued share capital, shall not be deemed, for purposes of this Article 7, to modify or derogate or cancel the rights attached to previously issued shares of such class or of any other class.
| 8. | Consolidation, Division, Cancellation and Reduction of Share Capital. |
(a) The Company may, from time to time, by or pursuant to an authorization of a Shareholders’ resolution, and subject to applicable law:
(i) consolidate all or any part of its issued or unissued authorized share capital into shares of a per share nominal value which is larger, equal to or smaller than the per share nominal value of its existing shares;
(ii) divide or sub-divide its shares (issued or unissued) or any of them, into shares of smaller or the same nominal value (subject, however, to the provisions of the Companies Law), and the resolution whereby any share is divided may determine that, as among the holders of the shares resulting from such subdivision, one or more of the shares may, in contrast to others, have any such preferred or deferred rights or rights of redemption or other special rights, or be subject to any such restrictions, as the Company may attach to unissued or new shares;
(iii) cancel any shares which, at the date of the adoption of such resolution, have not been taken or agreed to be taken by any person, and reduce the amount of its share capital by the amount of the shares so canceled; or
(iv) reduce its share capital in any manner.
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(b) With respect to any consolidation of issued shares and with respect to any other action which may result in fractional shares, the Board of Directors may settle any difficulty which may arise with regard thereto, as it deems fit, and, in connection with any such consolidation or other action which could result in fractional shares, may, without limiting its aforesaid power:
(i) determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into a share of a larger, equal or smaller nominal value per share;
(ii) issue, in contemplation of or subsequent to such consolidation or other action, shares sufficient to preclude or remove fractional share holdings;
(iii) redeem such shares or fractional shares sufficient to preclude or remove fractional share holdings;
(iv) round up, round down or round to the nearest whole number, any fractional shares resulting from the consolidation or from any other action which may result in fractional shares; or
(v) cause the transfer of fractional shares by certain shareholders of the Company to other shareholders thereof so as to most expediently preclude or remove any fractional shareholdings, and cause the transferees of such fractional shares to pay the transferors thereof the fair value thereof, and the Board of Directors is hereby authorized to act in connection with such transfer, as agent for the transferors and transferees of any such fractional shares, with full power of substitution, for the purposes of implementing the provisions of this sub-Article 8(b)(v).
| 9. | Issuance of Share Certificates, Replacement of Lost Certificates. |
(a) To the extent that the Board of Directors determines that all shares shall be certificated or, if the Board of Directors does not so determine, to the extent that any shareholder requests a share certificate, share certificates shall be issued under the corporate seal of the Company or its written, typed or stamped name and may bear the signature of one Director, the Company’s Chief Executive Officer or of any other person or persons authorized therefor by the Board of Directors. Signatures may be affixed in any mechanical or electronic form, as the Board of Directors may prescribe. For the avoidance of doubt, any transfer agent designated by the Company may issue share certificates on behalf of the Company even if the signatories on the share certificate no longer serve in the relevant capacities at the time of such issuance.
(b) Subject to the Article 9(a), each Shareholder shall be entitled to one numbered certificate for all the shares of any class registered in his name. Each certificate may also specify the amount paid up thereon. The Company (as determined by an officer of the Company to be designated by the Chief Executive Officer) shall not refuse a request by a Shareholder to obtain several certificates in place of one certificate, unless such request is, in the opinion of such officer, unreasonable. Where a Shareholder has sold or transferred some of such Shareholder’s shares, such Shareholder shall be entitled to receive a certificate in respect of such Shareholder’s remaining shares, provided that the previous certificate is delivered to the Company before the issuance of a new certificate.
(c) A share certificate registered in the names of two or more persons shall be delivered to the person first named in the Register of Shareholders in respect of such co-ownership.
(d) A share certificate which has been defaced, lost or destroyed, may be replaced, and the Company shall issue a new certificate to replace such defaced, lost or destroyed certificate upon payment of such fee, and upon the furnishing of such evidence of ownership and such indemnity, as the Board of Directors in its discretion deems fit.
| 10. | Registered Holder. |
Except as otherwise provided in these Articles or the Companies Law, the Company shall be entitled to treat the registered holder of each share as the absolute owner thereof, and accordingly, shall not, except as ordered by a court of competent jurisdiction, or as required by the Companies Law, be obligated to recognize any equitable or other claim to, or interest in, such share on the part of any other person.
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| 11. | Issuance and Repurchase of Shares. |
(a) The unissued shares from time to time shall be under the control of the Board of Directors (and to the full extent permitted by law any Committee thereof), which shall have the power to issue or otherwise dispose of shares and of securities convertible or exercisable into or other rights to acquire from the Company to such persons, on such terms and conditions (including inter alia terms relating to calls set forth in Article 13(f) hereof), and either at par or at a premium, or subject to the provisions of the Companies Law, at a discount and/or with payment of commission, and at such times, as the Board of Directors (or the Committee, as the case may be) deems fit, and the power to give to any person the option to acquire from the Company any shares or securities convertible or exercisable into or other rights to acquire from the Company, either at par or at a premium, or, subject as aforesaid, at a discount and/or with payment of commission, during such time and for such consideration as the Board of Directors (or the Committee, as the case may be) deems fit.
(b) The Company may at any time and from time to time, subject to the Companies Law, repurchase or finance the purchase of any shares or other securities issued by the Company, in such manner and under such terms as the Board of Directors shall determine, whether from any one or more shareholders. Such purchase shall not be deemed as payment of dividends and no shareholder will have the right to require the Company to purchase his shares or offer to purchase shares from any other shareholders.
| 12. | Payment in Installment. |
If pursuant to the terms of issuance of any share, all or any portion of the price thereof shall be payable in installments, every such installment shall be paid to the Company on the due date thereof by the then registered holder(s) of the share or the person(s) then entitled thereto.
| 13. | Calls on Shares. |
(a) The Board of Directors may, from time to time, as it, in its discretion, deems fit, make calls for payment upon shareholders in respect of any sum (including premium) which has not been paid up in respect of shares held by such shareholders and which is not, pursuant to the terms of issuance of such shares or otherwise, payable at a fixed time, and each shareholder shall pay the amount of every call so made upon him (and of each installment thereof if the same is payable in installments), to the person(s) and at the time(s) and place(s) designated by the Board of Directors, as any such times may be thereafter extended and/or such person(s) or place(s) changed. Unless otherwise stipulated in the resolution of the Board of Directors (and in the notice hereafter referred to), each payment in response to a call shall be deemed to constitute a pro rata payment on account of all the shares in respect of which such call was made.
(b) Notice of any call for payment by a shareholder shall be given in writing to such shareholder not less than fourteen (14) days prior to the time of payment fixed in such notice, and shall specify the time and place of payment, and the person to whom such payment is to be made. Prior to the time for any such payment fixed in a notice of a call given to a shareholder, the Board of Directors may in its absolute discretion, by notice in writing to such shareholder, revoke such call in whole or in part, extend the time fixed for payment thereof, or designate a different place of payment or person to whom payment is to be made. In the event of a call payable in installments, only one notice thereof needs to be given.
(c) If pursuant to the terms of issuance of a share or otherwise, an amount is made payable at a fixed time (whether on account of such nominal value of such share or by way of premium), such amount shall be payable at such time as if it were payable by virtue of a call made by the Board of Directors and for which notice was given in accordance with paragraphs (a) and (b) of this Article 13, and the provision of these Articles with regard to calls (and the non-payment thereof) shall be applicable to such amount or such installment (and the non-payment thereof).
(d) Joint holders of a share shall be jointly and severally liable to pay all calls for payment in respect of such share and all interest payable thereon.
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(e) Any amount called for payment which is not paid when due shall bear interest from the date fixed for payment until actual payment thereof, at such rate (not exceeding the then prevailing debitory rate charged by leading commercial banks in Israel), and payable at such time(s) as the Board of Directors may prescribe.
(f) Upon the issuance of shares, the Board of Directors may provide for differences among the holders of such shares as to the amounts and times for payment of calls for payment in respect of such shares.
| 14. | Prepayment. |
With the approval of the Board of Directors, any shareholder may pay to the Company any amount not yet payable in respect of such shareholder’s shares, and the Board of Directors may approve the payment by the Company of interest on any such amount until the same would be payable if it had not been paid in advance, at such rate and time(s) as may be approved by the Board of Directors. The Board of Directors may at any time cause the Company to repay all or any part of the money so advanced, without premium or penalty. Nothing in this Article 14 shall derogate from the right of the Board of Directors to make any call for payment before or after receipt by the Company of any such advance.
| 15. | Forfeiture and Surrender. |
(a) If any shareholder fails to pay an amount payable by virtue of a call, installment or interest thereon as provided for in accordance herewith, on or before the day fixed for payment of the same, the Board of Directors, may at any time after the day fixed for such payment, so long as such amount (or any portion thereof) or interest thereon (or any portion thereof) remains unpaid, forfeit all or any of the shares in respect of which such payment was called for. All expenses incurred by the Company in attempting to collect any such amount or interest thereon, including, without limitation, attorneys’ fees and costs of legal proceedings, shall be added to, and shall, for all purposes (including the accrual of interest thereon) constitute a part of, the amount payable to the Company in respect of such call.
(b) Upon the adoption of a resolution as to the forfeiture of a shareholder’s share, the Board of Directors shall cause notice thereof to be given to such shareholder, which notice shall state that, in the event of the failure to pay the entire amount so payable by a date specified in the notice (which date shall be not less than fourteen (14) days after the date such notice is given and which may be extended by the Board of Directors), such shares shall be ipso facto forfeited, provided, however, that, prior to such date, the Board of Directors may cancel such resolution of forfeiture, but no such cancellation shall stop the Board of Directors from adopting a further resolution of forfeiture in respect of the non-payment of the same amount.
(c) Without derogating from Articles 52 and 56 hereof, whenever shares are forfeited as herein provided, all dividends, if any, theretofore declared in respect thereof and not actually paid shall be deemed to have been forfeited at the same time.
(d) The Company, by resolution of the Board of Directors, may accept the voluntary surrender of any share.
(e) Any share forfeited or surrendered as provided herein, shall become the property of the Company as a dormant share, and the same, subject to the provisions of these Articles, may be sold, re-issued or otherwise disposed of as the Board of Directors deems fit.
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(f) Any person whose shares have been forfeited or surrendered shall cease to be a shareholder in respect of the forfeited or surrendered shares, but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the time of forfeiture or surrender until actual payment, at the rate prescribed in Article 13(e) above, and the Board of Directors, in its discretion, may, but shall not be obligated to, enforce or collect the payment of such amounts, or any part thereof, as it shall deem fit. In the event of such forfeiture or surrender, the Company, by resolution of the Board of Directors, may accelerate the date(s) of payment of any or all amounts then owing to the Company by the person in question (but not yet due) in respect of all shares owned by such shareholder, solely or jointly with another.
(g) The Board of Directors may at any time, before any share so forfeited or surrendered shall have been sold, re-issued or otherwise disposed of, nullify the forfeiture or surrender on such conditions as it deems fit, but no such nullification shall stop the Board of Directors from re-exercising its powers of forfeiture pursuant to this Article 15.
| 16. | Lien. |
(a) Except to the extent the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares registered in the name of each shareholder (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for his debts, liabilities and engagements to the Company arising from any amount payable by such shareholder in respect of any unpaid or partly paid share, whether or not such debt, liability or engagement has matured. Such lien shall extend to all dividends from time to time declared or paid in respect of such share. Unless otherwise provided, the registration by the Company of a transfer of shares shall be deemed to be a waiver on the part of the Company of the lien (if any) existing on such shares immediately prior to such transfer.
(b) The Board of Directors may cause the Company to sell a share subject to such a lien when the debt, liability or engagement giving rise to such lien has matured, in such manner as the Board of Directors deems fit, but no such sale shall be made unless such debt, liability or engagement has not been satisfied within fourteen (14) days after written notice of the intention to sell shall have been served on such shareholder, his executors or administrators.
(c) The net proceeds of any such sale, after payment of the costs and expenses thereof or ancillary thereto, shall be applied in or toward satisfaction of the debts, liabilities or engagements of such shareholder in respect of such share (whether or not the same have matured), and the residue (if any) shall be paid to the shareholder, his executors, administrators or assigns.
| 17. | Sale After Forfeiture of Surrender or in Enforcement of Lien. |
Upon any sale of a share after forfeiture or surrender or for enforcing a lien, the Board of Directors may appoint any person to execute an instrument of transfer of the share so sold and cause the purchaser’s name to be entered in the Register of Shareholders in respect of such share. The purchaser shall be registered as the shareholder and shall not be bound to see to the regularity of the sale proceedings, or to the application of the proceeds of such sale, and after his name has been entered in the Register of Shareholders in respect of such share, the validity of the sale shall not be impeached by any person, and person, and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively.
| 18. | Redeemable Shares. |
The Company may, subject to applicable law, issue redeemable shares or other securities and redeem the same upon terms and conditions to be set forth in a written agreement between the Company and the holder of such shares or in their terms of issuance.
Transfer of Shares
| 19. | Registration of Transfer. |
No transfer of shares shall be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory to the Board of Directors) has been submitted to the Company (or its transfer agent), together with any share certificate(s) and such other evidence of title as the Board of Directors may reasonably require. Notwithstanding anything to the contrary herein, shares registered in the name of The Depository Trust Company or its nominee shall be transferrable in accordance with the policies and procedures of The Depository Trust Company. Until the transferee has been registered in the Register of Shareholders in respect of the shares so transferred, the Company may continue to regard the transferor as the owner thereof. The Board of Directors, may, from time to time, prescribe a fee for the registration of a transfer, and may approve other methods of recognizing the transfer of shares in order to facilitate the trading of the Company’s shares on the Nasdaq or on any other stock exchange on which the Company’s shares are then listed for trading.
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| 20. | Suspension of Registration. |
The Board of Directors may, in its discretion to the extent it deems necessary, close the Register of Shareholders of registration of transfers of shares for a period determined by the Board of Directors, and no registrations of transfers of shares shall be made by the Company during any such period during which the Register of Shareholders is so closed.
Transmission of Shares
| 21. | Decedents’ Shares. |
(a) In case of a share registered in the names of two or more holders, the Company may recognize the survivor(s) as the sole owner(s) thereof unless and until the provisions of Article 21(b) have been effectively invoked.
(b) Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grant of probate or letters of administration or declaration of succession (or such other evidence as the Board of Directors may reasonably deem sufficient (or to an officer of the Company to be designated by the Chief Executive Officer)), shall be registered as a shareholder in respect of such share, or may, subject to the provisions as to transfer contained herein, transfer such share.
| 22. | Receivers and Liquidators. |
(a) The Company may recognize any receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate shareholder, and a trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceeding with respect to a shareholder or its properties, as being entitled to the shares registered in the name of such shareholder.
(b) Such receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate shareholder and such trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceedings with respect to a shareholder or its properties, upon producing such evidence as the Board of Directors (or an officer of the Company to be designated by the Chief Executive Officer) may deem sufficient as to his authority to act in such capacity or under this Article, shall with the consent of the Board of Directors (which the Board of Directors may grant or refuse in its absolute discretion), be registered as a shareholder in respect of such shares, or may, subject to the regulations as to transfer herein contained, transfer such shares.
General Meetings
| 23. | General Meetings. |
(a) An annual General Meeting (“Annual General Meeting”) shall be held at such time and at such place, either within or out of the State of Israel, as may be determined by the Board of Directors in accordance with the Companies Law.
(b) All General Meetings other than Annual General Meetings shall be called “Special General Meetings”.
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| 24. | Record Date for General Meeting. |
Notwithstanding any provision of these Articles to the contrary, and to allow the Company to determine the shareholders entitled to notice of or to vote at any General Meeting or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or grant of any rights, or entitled to exercise any rights in respect of or to take or be the subject of any other action, the Board of Directors may fix a record date, which shall not be more than the maximum period and not less than the minimum period permitted by law. A determination of shareholders of record entitled to notice of or to vote at a meeting shall apply to any adjournment or postponement of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned or postponed meeting.
| 25. | Shareholder Proposal Request. |
(a) Any Shareholder or Shareholders of the Company holding at least one percent (1%) or a higher percent, as may be required by the Companies Law from time to time, of the voting rights of the Company (the “Proposing Shareholder(s)”) may request, subject to the Companies Law, that the Board of Directors include a matter on the agenda of a General Meeting to be held in the future, provided that the Board determines that the matter is appropriate to be considered in a General Meeting (a “Proposal Request”). In order for the Board of Directors to consider a Proposal Request and whether to include the matter stated therein in the agenda of a General Meeting, notice of the Proposal Request must be timely delivered in accordance with applicable laws, and the Proposal Request must comply with the requirement of these Articles (including this Article 25) and any applicable law and stock exchange rules and regulations. The Proposal Request must be in writing, signed by all of the Proposing Shareholder(s) making such request, delivered, either in person or by certified mail, postage prepaid, and received by the Secretary (or, in the absence thereof by the Chief Executive Officer of the Company). To be considered timely, a Proposal Request must be received within the time periods prescribed by applicable law. The announcement of an adjournment or postponement of a General Meeting shall not commence a new time period (or extend any time period) for the delivery of a Proposal Request as described above. In addition to any information required to be included in accordance with applicable law, the Proposal Request must include the following: (i) the name, address, telephone number, fax number and email address of the Proposing Shareholder (or each Proposing Shareholder, as the case may be) and, if an entity, the name(s) of the person(s) that controls or manages such entity; (ii) the number of Shares held by the Proposing Shareholder(s), directly or indirectly (and, if any of such Shares are held indirectly, an explanation of how they are held and by whom), which shall be in such number no less than as is required to qualify as a Proposing Shareholder, accompanied by evidence satisfactory to the Company of the record holding of such Shares by the Proposing Shareholder(s) as of the date of the Proposal Request, and a representation that the Proposing Shareholder(s) intends to appear in person or by proxy at the meeting; (iii) the matter requested to be included on the agenda of a General Meeting, all information related to such matter, the reason that such matter is proposed to be brought before the General Meeting, the complete text of the resolution that the Proposing Shareholder proposes to be voted upon at the General Meeting and, if the Proposing Shareholder wishes to have a position statement in support of the Proposal Request, a copy of such position statement that complies with the requirement of any applicable law (if any), (iv) a description of all arrangements or understandings between the Proposing Shareholders and any other Person(s) (naming such Person or Persons) in connection with the matter that is requested to be included on the agenda and a declaration signed by all Proposing Shareholder(s) of whether any of them has a personal interest in the matter and, if so, a description in reasonable detail of such personal interest; (v) a description of all Derivative Transactions (as defined below) by each Proposing Shareholder(s) during the previous twelve (12) month period, including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such Derivative Transactions; and (vi) a declaration that all of the information that is required under the Companies Law and any other applicable law and stock exchange rules and regulations to be provided to the Company in connection with such matter, if any, has been provided to the Company. The Board of Directors, may, in its discretion, to the extent it deems necessary, request that the Proposing Shareholder(s) provide additional information necessary so as to include a matter in the agenda of a General Meeting, as the Board of Directors may reasonably require.
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A “Derivative Transaction” means any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of, any Proposing Shareholder or any of its affiliates or associates, whether of record or beneficial: (1) the value of which is derived in whole or in part from the value of any class or series of shares or other securities of the Company, (2) which otherwise provides any direct or indirect opportunity to gain or share in any gain derived from a change in the value of securities of the Company, (3) the effect or intent of which is to mitigate loss, manage risk or benefit of security value or price changes, or (4) which provides the right to vote or increase or decrease the voting power of, such Proposing Shareholder, or any of its affiliates or associates, with respect to any shares or other securities of the Company, which agreement, arrangement, interest or understanding may include, without limitation, any option, warrant, debt position, note, bond, convertible security, swap, stock appreciation right, short position, profit interest, hedge, right to dividends, voting agreement, performance-related fee or arrangement to borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any proportionate interest of such Proposing Shareholder in the securities of the Company held by any general or limited partnership, or any limited liability company, of which such Proposing Shareholder is, directly or indirectly, a general partner or managing member.
(b) The information required pursuant to this Article shall be updated as of (i) the record date of the General Meeting, (ii) five business days before the General Meeting, and (iii) as of the General Meeting, and any adjournment or postponement thereof.
(c) The provisions of Articles 25(a) and 25(b) shall apply, mutatis mutandis, on any matter to be included on the agenda of a Special General Meeting which is convened pursuant to a request of a Shareholder duly delivered to the Company in accordance with the Companies Law.
| 26. | Notice of General Meetings; Omission to Give Notice. |
(a) The Company is not required to give notice of a General Meeting, subject to any mandatory provision of the Companies Law, and any other requirements applicable to the Company. Notwithstanding anything herein to the contrary, to the extent permitted under the Companies Law, with the consent of all Shareholders entitled to vote thereon, a resolution may be proposed and passed at such meeting although a lesser notice period than hereinabove prescribed has been given.
(b) The accidental omission to give notice of a General Meeting to any Shareholder, or the non-receipt of notice sent to such Shareholder, shall not invalidate the proceedings at such meeting or any resolution adopted thereat.
(c) No Shareholder present, in person or by proxy, at any time during a General Meeting shall be entitled to seek the cancellation or invalidation of any proceedings or resolutions adopted at such General Meeting on account of any defect in the notice of such meeting relating to the time or the place thereof, or any item acted upon at such meeting.
(d) The Company may add additional places for Shareholders to review the full text of the proposed resolutions to be adopted at a General Meeting, including an internet site.
Proceedings at General Meetings
| 27. | Quorum. |
(a) No business shall be transacted at a General Meeting, or at any adjournment thereof, unless the quorum required under these Articles for such General Meeting or such adjourned meeting, as the case may be, is present when the meeting proceeds to business.
(b) In the absence of contrary provisions in these Articles, two or more shareholders (not in default in payment of any sum referred to in Article 13 hereof), present in person or by proxy and holding shares conferring in the aggregate at least twenty five percent (25%) of the voting power of the Company, shall constitute a quorum of the General Meetings. A proxy may be deemed to be two (2) or more Shareholders pursuant to the number of Shareholders represented by the proxy holder.
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(c) If within half an hour from the time appointed for the meeting a quorum is not present, then the meeting shall be canceled if it was convened upon requisition under Section 63 of the Companies Law, and in any other case, without any further notice the meeting shall be adjourned either (i) to the same day in the next week, at the same time and place, (ii) to such day and at 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 Chairperson of the General Meeting shall determine (which may be earlier or later than the date pursuant to clause (i) above). No business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called. At such adjourned meeting any shareholder (not in default as aforesaid) present in person or by proxy, shall constitute a quorum.
| 28. | Chairperson of General Meeting. |
The Chairperson of the Board of Directors shall preside as Chairperson of every General Meeting of the Company. If at any meeting the Chairperson is not present within fifteen (15) minutes after the time fixed for holding the meeting or is unwilling to act as Chairperson, any of the following may preside as Chairperson of the meeting (and in the following order): Director, Chief Executive Officer, Chief Financial Officer, Secretary or any person designated by any of the foregoing. If at any such meeting none of the foregoing persons is present or all are unwilling to act as Chairperson, the Shareholders present (in person or by proxy) shall choose a Shareholder or its proxy present at the meeting to be Chairperson. The office of Chairperson shall not, by itself, entitle the holder thereof to vote at any General Meeting nor shall it entitle such holder to a second or casting vote (without derogating, however, from the rights of such Chairperson to vote as a shareholder or proxy of a shareholder if, in fact, he is also a shareholder or such proxy).
| 29. | Adoption of Resolutions at General Meetings. |
(a) Except as required by the Companies Law or these Articles, including, without limitation, Articles 38, 39, 41 and 42(e) below, a resolution of the Shareholders shall be adopted if approved by the holders of a simple majority of the voting power represented at the General Meeting in person or by proxy and voting thereon, as one class, and disregarding abstentions from the count of the voting power present and voting. Without limiting the generality of the foregoing, a resolution with respect to a matter or action for which the Companies Law prescribes a higher majority or pursuant to which a provision requiring a higher majority would have been deemed to have been incorporated into these Articles, but resolutions with respect to which the Companies Law allows the Articles to provide otherwise, shall be adopted by a simple majority of the voting power represented at the General Meeting in person or by proxy and voting thereon, as one class, and disregarding abstentions from the count of the voting power present and voting.
(b) Every question submitted to a General Meeting shall be decided by a show of hands, but the Chairperson of the General Meeting may determine that a resolution shall be decided by a written ballot. A written ballot may be implemented before the proposed resolution is voted upon or immediately after the declaration by the Chairperson of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such written ballot.
(c) A declaration by the Chairperson of the General Meeting that a resolution has been carried unanimously, or carried by a particular majority, or rejected, and an entry to that effect in the minute book of the Company, shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such resolution.
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| 30. | Power to Adjourn. |
A General Meeting, the consideration of any matter on its agenda or the resolution on any matter on its agenda, may be postponed or adjourned, from time to time and from place to place or canceled: (i) by the Chairperson of a General Meeting at which a quorum is present (and he shall if so directed by the meeting, with the consent of the holders of a majority of the voting power represented in person or by proxy and voting on the question of adjournment), but no business shall be transacted at any such adjourned meeting except business which might lawfully have been transacted at the meeting as originally called, or a matter on its agenda with respect to which no resolution was adopted at the meeting originally called; or (ii) by the Board (whether prior to or at the General Meeting).
| 31. | Voting Power. |
Subject to the provisions of Article 32(a) and to any provision hereof conferring special rights as to voting, or restricting the right to vote, every Shareholder shall have one vote for each share held by him of record, on every resolution, without regard to whether the vote thereon is conducted by a show of hands, by written ballot or by any other means.
| 32. | Voting Rights. |
(a) No shareholder shall be entitled to vote at any General Meeting (or be counted as a part of the quorum thereat), unless all calls then payable by him in respect of his shares in the Company have been paid.
(b) A company or other corporate body being a Shareholder of the Company may duly authorize any person to be its representative at any meeting of the Company or to execute or deliver a proxy on its behalf. Any person so authorized shall be entitled to exercise on behalf of such Shareholder all the power which the Shareholder could have exercised if it were an individual. Upon the request of the Chairperson of the General Meeting, written evidence of such authorization (in form acceptable to the Chairperson) shall be delivered to him.
(c) Any Shareholder entitled to vote may vote either in person or by proxy (who need not be Shareholder of the Company), or, if the Shareholder is a company or other corporate body, by representative authorized pursuant to Article (b) above.
(d) If two or more persons are registered as joint holders of any share, the vote of the senior who tenders a vote, in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s). For the purpose of this Article 32(d), seniority shall be determined by the order of registration of the joint holders in the Register of Shareholder.
(e) A Shareholder who wishes to vote at a General Meeting shall prove his title to a share to the Company as required under the Companies Law and regulations promulgated thereunder. Without prejudice to the aforesaid, the Board of Directors may prescribe regulations and procedures with regard to proof of title to the Company’s shares.
Proxies
| 33. | Instrument of Appointment. |
(a) An instrument appointing a proxy shall be in writing and shall be substantially in the following form:
| “I | of | |||
| (Name of Shareholder) | (Address of Shareholder) | |||
| Being a shareholder of TURBOGEN LTD. hereby appoints | ||||
| of | ||||
| (Name of Proxy) | (Address of Proxy) | |||
| as my proxy to vote for me and on my behalf at the General Meeting of the Company to be held on the ___ day of _______, _______ and at any adjournment(s) thereof. | |
| Signed this ____ day of ___________, ______. | |
| (Signature of Appointor)” |
or in any such form as may be approved by the Board of Directors.
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(b) Subject to the Companies Law, the original instrument appointing a proxy or a copy thereof (and the power of attorney or other authority, if any, under which such instrument has been signed) shall be delivered to the Company (at its Office, at its principal place of business, or at the offices of its registrar or transfer agent, or at such place as notice of the meeting may specify) not less than forty eight (48) hours (or such shorter period as the notice shall specify) before the time fixed for such meeting. Notwithstanding the above, the Chairperson shall have the right to waive the time requirement provided above with respect to all instruments of proxies and to accept any and all instruments of proxy until the beginning of a General Meeting. A document appointing a proxy shall be valid for every adjourned meeting of the General Meeting to which the document relates.
| 34. | Effect of Death of Appointor of Transfer of Share and or Revocation of Appointment. |
(a) A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the prior death or bankruptcy of the appointing shareholder (or of his attorney-in-fact, if any, who signed such instrument), or the transfer of the share in respect of which the vote is cast, unless written notice of such matters shall have been received by the Company or by the Chairperson of such meeting prior to such vote being cast.
(b) Subject to the Companies Law, an instrument appointing a proxy shall be deemed revoked (i) upon receipt by the Company or the Chairperson, subsequent to receipt by the Company of such instrument, of written notice signed by the person signing such instrument or by the Shareholder appointing such proxy canceling the appointment thereunder (or the authority pursuant to which such instrument was signed) or of an instrument appointing a different proxy (and such other documents, if any, required under Article 33(b) for such new appointment), provided such notice of cancellation or instrument appointing a different proxy were so received at the place and within the time for delivery of the instrument revoked thereby as referred to in Article 33(b) hereof, or (ii) if the appointing shareholder is present in person at the meeting for which such instrument of proxy was delivered, upon receipt by the Chairperson of such meeting of written notice from such shareholder of the revocation of such appointment, or if and when such shareholder votes at such meeting. A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the revocation or purported cancellation of the appointment, or the presence in person or vote of the appointing shareholder at a meeting for which it was rendered, unless such instrument of appointment was deemed revoked in accordance with the foregoing provisions of this Article 34(b) at or prior to the time such vote was cast.
Board of Directors
| 35. | Powers of Board of Directors. |
(a) The Board of Directors may exercise all such powers and do all such acts and things as the Board of Directors is authorized by law or as the Company is authorized to exercise and do and are not hereby or by law required to be exercised or done by the General Meeting. The authority conferred on the Board of Directors by this Article 35 shall be subject to the provisions of the Companies Law, these Articles and any regulation or resolution consistent with these Articles adopted from time to time at a General Meeting, provided, however, that no such regulation or resolution shall invalidate any prior act done by or pursuant to a decision of the Board of Directors which would have been valid if such regulation or resolution had not been adopted.
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(b) Without limiting the generality of the foregoing, the Board of Directors may, from time to time, set aside any amount(s) out of the profits of the Company as a reserve or reserves for any purpose(s) which the Board of Directors, in its absolute discretion, shall deem fit, including without limitation, capitalization and distribution of bonus shares, and may invest any sum so set aside in any manner and from time to time deal with and vary such investments and dispose of all or any part thereof, and employ any such reserve or any part thereof in the business of the Company without being bound to keep the same separate from other assets of the Company, and may subdivide or re-designate any reserve or cancel the same or apply the funds therein for another purpose, all as the Board of Directors may from time to time think fit.
(c) The Board of Directors may, at any time in its sole discretion, subject to applicable law, adopt protective measures to prevent or delay a coercive takeover of the Company, including without limitation, the adoption of a “Shareholder Rights Plan.”
| 36. | Exercise of Powers of Board of Directors. |
(a) A meeting of the Board of Directors at which a quorum (as defined in Section 46 below) is present shall be competent to exercise all the authorities, powers and discretion vested in or exercisable by the Board of Directors.
(b) A resolution proposed at any meeting of the Board of Directors shall be deemed adopted if approved by a majority of the Directors present, entitled to vote and voting thereon when such resolution is put to a vote.
(c) The Board of Directors may adopt resolutions, without convening a meeting of the Board of Directors, in writing or in any other manner permitted by the Companies Law.
| 37. | Delegation of Powers. |
(a) The Board of Directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees (in these Articles referred to as a “Committee of the Board of Directors”, or “Committee”), each consisting of one or more persons (who may or may not be Directors), and it may from time to time revoke such delegation or alter the composition of any such Committee. No regulation imposed by the Board of Directors on any Committee and no resolution of the Board of Directors shall invalidate any prior act done pursuant to a resolution by the Committee which would have been valid if such regulation or resolution of the Board had not been adopted. The meeting and proceedings of any such Committee of the Board of Directors shall, mutatis mutandis, be governed by the provisions herein contained for regulating the meetings of the Board of Directors, so far as not superseded by any regulations adopted by the Board of Directors or by the Companies Law. Unless otherwise expressly prohibited by the Board of Directors in delegating powers to a Committee of the Board of Directors, such Committee shall be empowered to further delegate such powers.
(b) Without derogating from the provisions of Article 49, the Board of Directors may from time to time appoint a Secretary to the Company, as well as officers, agents, employees and independent contractors, as the Board of Directors deems fit, and may terminate the service of any such person. The Board of Directors may, subject to the provisions of the Companies Law, determine the powers and duties, as well as the salaries and compensation, of all such persons.
(c) The Board of Directors may from time to time, by power of attorney or otherwise, appoint any person, company, firm or body of persons to be the attorney or attorneys of the Company at law or in fact for such purposes(s) and with such powers, authorities and discretions, and for such period and subject to such conditions, as it deems fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board of Directors deems fit, and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him.
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| 38. | Number of Directors. |
(a) The Board of Directors shall consist of such number of Directors, not less than three (3) nor more than eleven (11), including the External Directors, which will be elected if and as required under the Companies Law, as may be fixed from time to time by the Board of Directors.
(b) Notwithstanding anything to the contrary herein, this Article 38 may only be amended or replaced by a resolution adopted at a General Meeting by a majority of 70% of the voting power represented at the General Meeting in person or by proxy and voting thereon, disregarding abstentions from the count of the voting power present and voting.
| 39. | Election and Removal of Directors. |
(a) The Directors, excluding the External Directors if any (who shall be elected and serve in office in strict accordance with the provisions of the Companies Law, if so required by the Companies Law), shall be classified, with respect to the term for which they each severally hold office, into three classes, as nearly equal in number as practicable, hereby designated as Class I, Class II and Class III.
(i) The term of office of the initial Class I directors shall expire at the first Annual General Meeting to be held following the consummation of the IPO and when their successors are elected and qualified,
(ii) The term of office of the initial Class II directors shall expire at the first Annual General Meeting following the Annual General Meeting referred to in clause (i) above and when their successors are elected and qualified, and
(iii) The term of office of the initial Class III directors shall expire at the first Annual General Meeting following the Annual General Meeting referred to in clause (ii) above and when their successors are elected and qualified.
(b) Directors (other than External Directors), may be elected only in Annual Meetings. At each Annual General Meeting, commencing with the Annual General Meeting to be held in accordance with Companies Law and subject to the provisions of these Articles, each of the successors elected to replace the Directors of a Class whose term shall have expired at such Annual General Meeting shall be elected to hold office until the third Annual General Meeting next succeeding his or her election and until his or her respective successor shall have been elected and qualified. Notwithstanding anything to the contrary, each Director shall serve until his or her successor is elected and qualified or until such earlier time as such Director’s office is vacated.
(c) If the number of Directors (excluding External Directors) that constitutes the Board of Directors is hereafter changed, the then-serving Directors shall be redesignated to other Classes and/or any newly created directorships or decrease in directorships shall be apportioned by the Board of Directors among the classes so as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director.
(d) Prior to every Annual General Meeting of the Company at which Directors are to be elected, and subject to clauses 39(a) and (h) of this Article, the Board of Directors (or a Committee thereof) shall select, by a resolution adopted by a majority of the Board of Directors (or such Committee), a number of Persons to be proposed to the Shareholders for election as Directors at such Annual General Meeting (the “Nominees”).
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(e) Any Proposing Shareholder requesting to include on the agenda of an Annual General Meeting a nomination of a Person to be proposed to the Shareholders for election as Director (such person, an “Alternate Nominee”), may so request provided that it complies with this Article 39(e) and Article 25 and applicable law. Unless otherwise determined by the Board, a Proposal Request relating to Alternate Nominee is deemed to be a matter that is appropriate to be considered only in an Annual General Meeting. In addition to any information required to be included in accordance with applicable law, such a Proposal Request shall include information required pursuant to Article 25, and shall also set forth: (i) the name, address, telephone number, fax number and email address of the Alternate Nominee and all citizenships and residencies of the Alternate Nominee; (ii) a description of all arrangements, relations or understandings between the Proposing Shareholder(s) or any of its affiliates and each Alternate Nominee; (iii) a declaration signed by the Alternate Nominee that he consents to be named in the Company’s notices and proxy materials relating to the Annual General Meeting, if provided or published, and, if elected, to serve on the Board of Directors and to be named in the Company’s disclosures and filings, (iv) a declaration signed by each Alternate Nominee as required under the Companies Law and any other applicable law and stock exchange rules and regulations for the appointment of such an Alternate Nominee and an undertaking that all of the information that is required under law and stock exchange rules and regulations to be provided to the Company in connection with such an appointment has been provided (including, information in respect of the Alternate Nominee as would be provided in response to the applicable disclosure requirements under Form 20-F or any other applicable form prescribed by the U.S. Securities and Exchange Commission); (v) a declaration made by the Alternate Nominee of whether he or she meets the criteria for an independent director and/or External Director of the Company under the Companies Law and/or under any applicable law, regulation or stock exchange rules, and if not, then an explanation of why not; and (vi) any other information required at the time of submission of the Proposal Request by applicable law, regulations or stock exchange rules. In addition, the Proposing Shareholder shall promptly provide any other information reasonably requested by the Company. The Board of Directors may refuse to acknowledge the nomination of any person not made in compliance with the foregoing. The Company shall be entitled to publish any information provided by a Proposing Shareholder pursuant to this Article 39(e) and Article 25, and the Proposing Shareholder shall be responsible for the accuracy and completeness thereof.
(f) The Nominees or Alternate Nominees shall be elected by a resolution adopted at the Annual General Meeting at which they are subject to election.
(g) Notwithstanding anything to the contrary herein, this Article 39 and Article 42(e) may only be amended, replaced or suspended by a resolution adopted at a General Meeting by a majority of 70% of the voting power represented at the General Meeting in person or by proxy and voting thereon, disregarding abstentions from the count of the voting power present and voting.
(h) Notwithstanding anything to the contrary in these Articles, the election, qualification, removal or dismissal of External Directors shall be only in accordance with the applicable provisions set forth in the Companies Law.
(i) Directors whose terms of office have expired or terminated may be re-elected. The aforesaid will not apply to external directors, whose reappointment shall be in accordance with the provisions of the Companies Law and the regulations promulgated thereunder.
| 40. | Commencement of Directorship. |
Without derogating from Article 39, the term of office of a Director shall commence as of the date of his appointment or election, or on a later date if so specified in his appointment or election.
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| 41. | Continuing Directors in the Event of Vacancies. |
(a) The Board may at any time and from time to time appoint any person as a Director to fill a vacancy (whether such vacancy is due to a Director no longer serving or due to the number of Directors serving being less than the maximum number stated in Article 38 hereof). In the event of one or more such vacancies in the Board of Directors, the continuing Directors may continue to act in every matter, provided, however, that if they number less than the minimum number provided for pursuant to Article 38 hereof, they may only act in an emergency or to fill the office of director which has become vacant up to a number equal to the minimum number provided for pursuant to Article 38 hereof. The office of a Director that was appointed by the Board of Directors to fill any vacancy shall only be for the remaining period of time during which the Director whose service has ended was filled would have held office, or in case of a vacancy due to the number of Directors serving being less than the maximum number stated in Article 38 hereof, the Board shall determine at the time of appointment the class pursuant to Article 39 to which the additional Director shall be assigned.
(b) Notwithstanding anything to the contrary herein, this Article 41 may only be amended, replaced or suspended by a resolution adopted at a General Meeting by a majority of 70% of the voting power represented at the General Meeting in person or by proxy and voting thereon, disregarding abstentions from the count of the voting power present and voting.
| 42. | Vacation of Office. |
The office of a Director shall be vacated and he or she shall be dismissed or removed:
(a) ipso facto, upon his or her death;
(b) if he or she is prevented by applicable law from serving as a Director;
(c) if the Board determines that due to his or her mental or physical state he or she is unable to serve as a director;
(d) if his or her directorship expires pursuant to these Articles and/or applicable law;
(e) by a resolution adopted at an Annual Meeting by a majority of 70% of the voting power represented at the Annual Meeting in person or by proxy and voting thereon, disregarding abstentions from the count of the voting power present and voting. Such removal shall become effective on the date fixed in such resolution;
(f) by his or her written resignation, such resignation becoming effective on the date fixed therein, or upon the delivery thereof to the Company, whichever is later; or
(g) with respect to an External Director, and notwithstanding anything to the contrary herein, only pursuant to applicable law.
| 43. | Conflict of Interests; Approval of Related Party Transactions. |
Subject to the provisions of the Companies Law and these Articles, no Director shall be disqualified by virtue of his office from holding any office or place of profit in the Company or in any company in which the Company shall be a shareholder or otherwise interested, or from contracting with the Company as vendor, purchaser or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the Company in which any Director shall be in any way interested, be avoided, nor, other than as required under the Companies Law, shall any Director be liable to account to the Company for any profit arising from any such office or place of profit or realized by any such contract or arrangement by reason only of such Director’s holding that office or of the fiduciary relations thereby established, but the nature of his interest, as well as any material fact or document, must be disclosed by him at the meeting of the Board of Directors at which the contract or arrangement is first considered, if his interest then exists, or, in any other case, at no later than the first meeting of the Board of Directors after the acquisition of his interest.
| 44. | Alternate Directors. |
(a) Subject to the provisions of the Companies Law, a Director may, by written notice to the Company, appoint, remove or replace any person as an alternate for himself; provided that the appointment of such person shall have effect only upon and subject to its being approved by the Board (in these Articles, an “Alternate Director”). Unless the appointing Director, by the instrument appointing an Alternate Director or by written notice to the Company, limits such appointment to a specified period of time or restricts it to a specified meeting or action of the Board of Directors, or otherwise restricts its scope, the appointment shall be for all purposes, and for a period of time concurrent with the term of the appointing Director.
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(b) Any notice to the Company pursuant to Article 44(a) shall be given in person to, or by sending the same by mail to the attention of the Chairperson of the Board of Directors at the principal office of the Company or to such other person or place as the Board of Directors shall have determined for such purpose, and shall become effective on the date fixed therein, upon the receipt thereof by the Company (at the place as aforesaid) or upon the approval of the appointment by the Board, whichever is later.
(c) An Alternate Director shall have all the rights and obligations of the Director who appointed him, provided however, that (i) he may not in turn appoint an alternate for himself (unless the instrument appointing him otherwise expressly provides), and (ii) an Alternate Director shall have no standing at any meeting of the Board of Directors or any Committee thereof while the Director who appointed him is present.
(d) Any individual, who qualifies to be a member of the Board of Directors, may act as an Alternate Director. One person may not act as Alternate Director for several directors.
(e) The office of an Alternate Director shall be vacated under the circumstances, mutatis mutandis, set forth in Article 42, and such office shall ipso facto be vacated if the office of the Director who appointed such Alternate Director is vacated, for any reason.
Proceedings of the Board of Directors
| 45. | Meetings. |
(a) The Board of Directors may meet and adjourn its meetings and otherwise regulate such meetings and proceedings as the Directors think fit.
(b) Any Director may at any time, and the Secretary, upon the request of such Director, shall, convene a meeting of the Board of Directors, but not less than forty-eight (48) hours’ notice shall be given of any meeting so convened, unless such notice is waived by all of the Directors as to a particular meeting or unless the matters to be discussed at such meeting are of such urgency and importance, as determined by the Chairperson, that notice ought reasonably to be waived under the circumstances.
(c) Notice of any such meeting shall be given in writing.
(d) Notwithstanding anything to the contrary herein, failure to deliver notice to a director of any such meeting in the manner required hereby may be waived by such Director, and a meeting shall be deemed to have been duly convened notwithstanding such defective notice if such failure or defect is waived prior to action being taken at such meeting, by all Directors entitled to participate at such meeting to whom notice was not duly given as aforesaid. Without derogating from the foregoing, no Director present at any time during a meeting of the Board of Directors shall be entitled to seek the cancellation or invalidation of any proceedings or resolutions adopted at such meeting on account of any defect in the notice of such meeting relating to the date, time or the place thereof or the convening of the meeting.
| 46. | Quorum. |
(a) Until otherwise unanimously decided by the Board of Directors, a quorum at a meeting of the Board of Directors shall be constituted by the presence in person or by any means of communication of a majority of the Directors then in office who are lawfully entitled to participate and vote in the meeting. No business shall be transacted at a meeting of the Board of Directors unless the requisite quorum is present (in person or by any means of communication) when the meeting proceeds to business.
(b) If within half an hour from the time appointed for the meeting a quorum is not present, then the meeting shall be adjourned to such day and at such time and place as determined by the Board of Directors. If a quorum was not present within half an hour of such adjourned meeting, the attending Directors will constitute a quorum.
| 47. | Chairperson of the Board of Directors. |
The Board of Directors shall, from time to time, elect one of its members to be the Chairperson of the Board of Directors, remove such Chairperson from office and appoint in his place. The Chairperson of the Board of Directors shall preside at every meeting of the Board of Directors, but if there is no such Chairperson, or if at any meeting he is not present within fifteen (15) minutes of the time fixed for the meeting or if he is unwilling to take the chair, the Directors present shall choose one of the Directors present at the meeting to be the Chairperson of such meeting. In case of an equality of votes on any question at a meeting of the Board of Directors, the Chairman of the Board shall not have a second or casting vote.
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| 48. | Validity of Acts Despite Defects. |
All acts done or transacted at any meeting of the Board of Directors, or of a Committee of the Board of Directors, or by any person(s) acting as Director(s), shall, notwithstanding that it may afterwards be discovered that there was some defect in the appointment of the participants in such meeting or any of them or any person(s) acting as aforesaid, or that they or any of them were disqualified, be as valid as if there were no such defect or disqualification.
Chief Executive Officer
| 49. | Chief Executive Officer. |
(a) The Board of Directors shall from time to time appoint one or more persons, whether or not Directors, as Chief Executive Officer of the Company and may confer upon such person(s), and from time to time modify or revoke, such titles and such duties and authorities of the Board of Directors as the Board of Directors may deem fit, subject to such limitations and restrictions as the Board of Directors may from time to time prescribe. Such appointment(s) may be either for a fixed term or without any limitation of time, and the Board of Directors may from time to time (subject to any additional approvals required under, and the provisions of, the Companies Law and of any contract between any such person and the Company) fix their salaries and compensation, remove or dismiss them from office and appoint another or others in his or their place or places.
(b) Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall have authority with respect to the management and operations of the Company in the ordinary course of business.
Minutes
| 50. | Minutes. |
Any minutes of the General Meeting or the Board of Directors or any committee thereof, if purporting to be signed by the Chairperson of the General Meeting, the Board or a committee thereof, as the case may be, or by the Chairperson of the next succeeding General Meeting, meeting of the Board or meeting of a committee thereof, as the case may be, shall constitute prima facie evidence of the matters recorded therein.
Dividends
| 51. | Declaration of Dividends. |
The Board of Directors may from time declare, and cause the Company to pay, such dividend as may appear to the Board of Directors to be justified by the profits of the Company and as permitted by the Companies Law. The Board of Directors shall determine the time for payment of such dividends and the record date for determining the shareholders entitled thereto.
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| 52. | Amount Payable by Way of Dividends. |
(a) Subject to the provisions of these Articles and subject to the rights or conditions attached at that time to any share in the capital of the Company granting preferential, special or deferred rights or not granting any rights with respect to dividends, any dividend paid by the Company shall be allocated among the shareholders (not in default in payment of any sum referred to in Article 13 hereof) entitled thereto in proportion to their respective holdings of the shares in respect of which such dividends are being paid.
(b) Whenever the rights attached to any shares or the terms of issue of the shares do not provide otherwise, shares which are fully paid up or which are credited as fully or partly paid within any period which in respect thereof dividends are paid shall entitle the holders thereof to a dividend in proportion to the amount paid up or credited as paid up in respect of the nominal value of such shares and to the date of payment thereof (pro rata temporis).
| 53. | Interest. |
No dividend shall carry interest as against the Company.
| 54. | Capitalization of Profits, Reserves, etc. |
The Board of Directors may determine that the Company (i) may cause any moneys, investments, or other assets forming part of the undivided profits of the Company, standing to the credit of a reserve fund, or to the credit of a reserve fund for the redemption of capital, or in the hands of the Company and available for dividends, or representing premiums received on the issuance of shares and standing to the credit of the share premium account, to be capitalized and distributed among such of the shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportion, on the footing that they become entitled thereto as capital, or may cause any part of such capitalized fund to be applied on behalf of such shareholders in paying up in full, either at par or at such premium as the resolution may provide, any unissued shares or debentures or debenture stock of the Company which shall be distributed accordingly, in payment, in full or in part, of the uncalled liability on any issued shares or debentures or debenture stock; and (ii) may cause such distribution or payment to be accepted by such shareholders in full satisfaction of their interest in the said capitalized sum.
| 55. | Implementation of Powers. |
For the purpose of giving full effect to any resolution under Article 54, and without derogating from the provisions of Article 56 hereof, the Board of Directors may settle any difficulty which may arise in regard to the distribution as it thinks expedient, and, in particular, may fix the value for distribution of any specific assets and may determine that cash payments shall be made to any shareholders upon the footing of the value so fixed, or that fractions of less value than a certain determined value may be disregarded in order to adjust the rights of all parties, and may vest any such cash, shares, debentures, debenture stock or specific assets in trustees upon such trusts for the persons entitled to the dividend or capitalized fund as may seem expedient to the Board of Directors. Where requisite, a proper contract shall be filed in accordance with Section 291 of the Companies Law, and the Board of Directors may appoint any person to sign such contract on behalf of the persons entitled to the dividend or capitalized fund.
| 56. | Deductions from Dividends. |
The Board of Directors may deduct from any dividend or other moneys payable to any Shareholder in respect of a share any and all sums of money then payable by such Shareholder to the Company on account of calls or otherwise in respect of shares of the Company and/or on account of any other matter of transaction whatsoever.
| 57. | Retention of Dividends. |
(a) The Board of Directors may retain any dividend or other moneys payable or property distributable in respect of a share on which the Company has a lien, and may apply the same in or toward satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.
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(b) The Board of Directors may retain any dividend or other moneys payable or property distributable in respect of a share in respect of which any person is, under Articles 21 or 22, entitled to become a Shareholder, or which any person is, under said Articles, entitled to transfer, until such person shall become a Shareholder in respect of such share or shall transfer the same.
| 58. | Unclaimed Dividends. |
All unclaimed dividends or other moneys payable in respect of a share may be invested or otherwise made use of by the Board of Directors for the benefit of the Company until claimed. The payment by the Directors of any unclaimed dividend or such other moneys into a separate account shall not constitute the Company a trustee in respect thereof, and any dividend unclaimed after a period of seven years from the date of declaration of such dividend, and any such other moneys unclaimed after a like period from the date the same were payable, shall be forfeited and shall revert to the Company, provided, however, that the Board of Directors may, at its discretion, cause the Company to pay any such dividend or such other moneys, or any part thereof, to a person who would have been entitled thereto had the same not reverted to the Company. The principal (and only the principal) of any unclaimed dividend of such other moneys shall be, if claimed, paid to a person entitled thereto.
| 59. | Mechanics of Payment. |
Any dividend or other moneys payable in cash in respect of a share may be paid by check or warrant sent through the post to, or left at, the registered address of the person entitled thereto or by transfer to a bank account specified by such person (or, if two or more persons are registered as joint holders of such share or are entitled jointly thereto in consequence of the death or bankruptcy of the holder or otherwise, to the joint holder whose name is registered first in the Register of Shareholders or his bank account or the person who the Company may then recognize as the owner thereof or entitled thereto under Article 21 or 22 hereof, as applicable, or such person’s bank account), or to such person and at such other address as the person entitled thereto may by writing direct, or in any other manner the Board deems appropriate. Every such check or warrant or other method of payment shall be made payable to the order of the person to whom it is sent, or to such person as the person entitled thereto as aforesaid may direct, and payment of the check or warrant by the banker upon whom it is drawn shall be a good discharge to the Company.
| 60. | Receipt from a Joint Holder. |
If two or more persons are registered as joint holders of any share, or are entitled jointly thereto in consequence of the death or bankruptcy of the holder or otherwise, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable in respect of such share.
Accounts
| 61. | Books of Account. |
The Company’s books of account shall be kept at the Office of the Company, or at such other place or places as the Board of Directors may think fit, and they shall always be open to inspection by all Directors. No shareholder, not being a Director, shall have any right to inspect any account or book or other similar document of the Company, except as conferred by law or authorized by the Board of Directors. The Company shall make copies of its annual financial statements available for inspection by the Shareholders at the principal offices of the Company. The Company shall not be required to send copies of its annual financial statements to the Shareholders.
| 62. | Auditors. |
The appointment, authorities, rights and duties of the auditor(s) of the Company, shall be regulated by applicable law, provided, however, that in exercising its authority to fix the remuneration of the auditor(s), the shareholders in General Meeting may act (and in the absence of any action in connection therewith shall be deemed to have so acted) to authorize the Board of Directors (with right of delegation to management) to fix such remuneration subject to such criteria or standards, and if no such criteria or standards are so provided, such remuneration shall be fixed in an amount commensurate with the volume and nature of the services rendered by such auditor(s).
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| 62A. | Internal auditor. |
To the extent required by the Companies Law the Board of Directors will appoint an internal auditor according to the audit committee’s recommendation (“Internal Auditor”).
The Internal Auditor shall submit, for the approval of the Board of Directors or the audit committee, as determined by the Board of Directors, a proposal for an annual or periodic work plan, and the Board of Directors or the audit committee shall approve such plan with such changes as it deems fit. Unless the Board of Directors determines otherwise, the work plan shall be submitted to the Board of Directors and approved by it.
Supplementary Registers
| 63. | Supplementary Registers. |
Subject to and in accordance with the provisions of Sections 138 and 139 of the Companies Law, the Company may cause supplementary registers to be kept in any place outside Israel as the Board of Directors may think fit, and, subject to all applicable requirements of law, the Board of Directors may from time to time adopt such rules and procedures as it may think fit in connection with the keeping of such branch registers.
Exemption, Indemnity and Insurance
| 64. | Insurance. |
Subject to the provisions of the Companies Law with regard to such matters, the Company may enter into a contract for the insurance of the liability, in whole or in part, of any of its Office Holders imposed on such Office Holder due to an act performed by or an omission of the Office Holder in the Office Holder’s capacity as an Office Holder of the Company arising from any matter permitted by law, including the following:
(a) a breach of duty of care to the Company or to any other person;
(b) a breach of duty of loyalty to the Company, provided that the Office Holder acted in good faith and had reasonable grounds to assume that the act that resulted in such breach would not prejudice the interests of the Company;
(c) a financial liability imposed on such Office Holder in favor of any other person; and
(d) any other event, occurrence, matter or circumstance under any law with respect to which the Company may, or will be able to, insure an Office Holder, and to the extent such law requires the inclusion of a provision permitting such insurance in these Articles, then such provision is deemed to be included and incorporated herein by reference (including, without limitation, in accordance with Section 56h(b)(1) of the Securities Law, if and to the extent applicable, and Section 50P of the RTP Law).
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| 65. | Indemnity. |
(a) Subject to the provisions of the Companies Law, the Company may retroactively indemnify an Office Holder of the Company with respect to the following liabilities and expenses, provided that such liabilities or expenses were imposed on such Office Holder or incurred by such Office Holder due to an act performed by or an omission of the Office Holder in such Office Holder’s capacity as an Office Holder of the Company:
(i) a financial liability imposed on an Office Holder in favor of another person by any court judgment, including a judgment given as a result of a settlement or an arbitrator’s award which has been confirmed by a court in respect of an act performed by the Office Holder;
(ii) reasonable litigation expenses, including attorneys’ fees, expended by the Office Holder as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, or in connection with a financial sanction, 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 in lieu of a 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 offence that does not require proof of criminal intent;
(iii) reasonable litigation costs, including attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder by the Company or in its name or by any other person or in a criminal charge in respect of which the Office Holder was acquitted or in a criminal charge in respect of which the Office Holder was convicted for an offence which did not require proof of criminal intent; and
(iv) any other event, occurrence, matter or circumstance under any law with respect to which the Company may, or will be able to, indemnify an Office Holder, and to the extent such law requires the inclusion of a provision permitting such indemnity in these Articles, then such provision is deemed to be included and incorporated herein by reference (including, without limitation, in accordance with Section 56h(b)(1) of the Securities Law, if and to the extent applicable, and Section 50P(b)(1) of the RTP Law).
(b) Subject to the provisions of the Companies Law, the Company may undertake to indemnify an Office Holder, in advance, with respect to those liabilities and expenses described in the following Articles:
(i) Sub-Article 65(a)(ii) to 65(a)(iv); and
(ii) Sub-Article 65(a)(i), provided that:
(1) the undertaking to indemnify is limited to such events which the Board of Directors shall deem to be likely to occur in light of the operations of the Company at the time that the undertaking to indemnify is made and for such amounts or criterion which the Directors may, at the time of the giving of such undertaking to indemnify, deem to be reasonable under the circumstances; and
(2) the undertaking to indemnify shall set forth such events which the Directors shall deem to be likely to occur in light of the operations of the Company at the time that the undertaking to indemnify is made, and the amounts and/or criterion which the Directors may, at the time of the giving of such undertaking to indemnify, deem to be reasonable under the circumstances.
The maximum amount of indemnification payable by the Company with respect to those liabilities and expenses described in Sub-Article 65(a)(i), for each Office Holder and for all Office Holders together, individually or in aggregate, under all letters of indemnification issued or to be issued by the Company, shall not exceed the amount stated in the Company’s compensation policy, as amended from time to time, if applicable, or as approved according to applicable law.
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| 66. | Exemption. |
Subject to the provisions of the Companies Law and the Securities Law, the Company may exempt and release, in advance, any Office Holder from any liability to the Company for damages arising out of a breach of the Office Holder’s duty of care towards the Company.
Notwithstanding the foregoing, the Company may not exempt a Director in advance from his liability for damages with respect to violation of his duty of care to the Company with respect to distributions. In addition, the Company may not exempt an Office Holder from his liability to the Company with regard to a resolution and/or a transaction in which the controlling Shareholder and/or any Office Holder has a personal interest.
| 67. | Subject to the provisions of the Companies Law and the provisions of any other law, the Company may exempt, insure and/or indemnify (whether retroactively or by way of advance indemnity undertaking) a person who has held, holds or will hold office and/or who was employed, is employed or will be employed on the Company’s behalf or in another company in which the Company holds securities, directly or indirectly, or in which the Company has any interest due to liability, payment or cost imposed upon him or expensed by him in consequence of an action made by him in his capacity as an officer or an employee in such company, and Articles 64 through 66 shall apply, mutatis mutandis, in that respect. |
| 68. | The provisions of Articles 64 through 66 shall also apply to an alternate director. |
| 69. | General. |
(a) Any amendment to the Companies Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to Articles 64 to 68 and any amendments to Articles 64 to 68 shall be prospective in effect and shall not affect the Company’s obligation or ability to indemnify or insure an Office Holder for any act or omission occurring prior to such amendment, unless otherwise provided by applicable law.
(b) The provisions of Articles 64 to 68 (i) shall apply to the maximum extent permitted by law (including, the Companies Law, the Securities Law and the RTP Law); and (ii) are not intended, and shall not be interpreted so as to restrict the Company, in any manner, in respect of the procurement of insurance and/or in respect of indemnification (whether in advance or retroactively) and/or exemption, in favor of any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder; and/or any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under law.
Winding Up
| 70. | Winding Up. |
If the Company is wound up, then, subject to applicable law and to the rights of the holders of shares with special rights upon winding up, the assets of the Company available for distribution among the shareholders shall be distributed to them in proportion to the nominal value of their respective holdings of the shares in respect of which such distribution is being made.
Exclusive Forum
| 71. | Exclusive Forum. |
Unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the United States Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in any security of the Company shall be deemed to have notice of and consented to this exclusive forum provision. This exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the United States Securities Exchange Act of 1934, as amended.
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Notices
| 72. | Notices. |
(a) Any written notice or other document may be served by the Company upon any shareholder either personally, by facsimile, email or other electronic transmission, or by sending it by prepaid mail (airmail if sent internationally) addressed to such shareholder at his address as described in the Register of Shareholders or such other address as he may have designated in writing for the receipt of notices and other documents.
(b) Any written notice or other document may be served by any shareholder upon the Company by tendering the same in person to the Secretary or the Chief Executive Officer of the Company at the principal office of the Company, by facsimile transmission, or by sending it by prepaid registered mail (airmail if posted outside Israel) to the Company at its Office.
(c) Any such notice or other document shall be deemed to have been served:
(i) in the case of mailing, forty-eight (48) hours after it has been posted, or when actually received by the addressee if sooner than forty-eight hours after it has been posted;
(ii) in the case of overnight air courier, on the next business day following the day sent, with receipt confirmed by the courier, or when actually received by the addressee if sooner than three business days after it has been sent;
(iii) in the case of personal delivery, when actually tendered in person, to such addressee; or
(iv) in the case of facsimile, email or other electronic transmission, on the first business day (during normal business hours in place of addressee) on which the sender receives automatic electronic confirmation by the addressee’s facsimile machine that such notice was received by the addressee or delivery confirmation from the addressee’s email or other communication server.
(d) If a notice is, in fact, received by the addressee, it shall be deemed to have been duly served, when received, notwithstanding that it was defectively addressed or failed, in some other respect, to comply with the provisions of this Article 71.
(e) All notices to be given to the shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first in the Register of Shareholders, and any notice so given shall be sufficient notice to the holders of such share.
(f) Any shareholder whose address is not described in the Register of Shareholders, and who shall not have designated in writing an address for the receipt of notices, shall not be entitled to receive any notice from the Company.
(g) Notwithstanding anything to the contrary contained herein, notice by the Company of a General Meeting, containing the information required by applicable law and these Articles to be set forth therein, which is published, within the time otherwise required for giving notice of such meeting, in the manner required by applicable law, will be considered as duly delivered notice.
* * *
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Exhibit 5.1
 |
Sullivan & Wocester Tel Aviv 28 HaArba’a St. HaArba’a Towers North Tower, 35th Floor Tel-Aviv, Israel |
+972-747580480 sullivanlaw.com |
March 11, 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 up to 3,056,248 ordinary shares, no par value per share, of the Company (the “Ordinary Shares”), consisting of: (i) 921,621 Ordinary Shares (the “Shares”) issued under that certain securities purchase agreement between the Company and certain shareholders, dated August 23, 2025 (the “2025 Private Placement); (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 (“2025 Warrant Inducement Agreement”); and (iii) 1,200,000 Ordinary Shares (the Additional Warrant Shares”) issuable upon the exercise of certain warrants (the “Additional Warrants”) under the settlement and conversion arrangement (the “Settlement Agreement”) between the Company and certain shareholders, dated October 22, 2025 (the Additional Warrants together with the Inducement Warrants, the “Warrants”, and the Additional Warrant Shares together with the Inducement Warrant Shares, the “Warrant Shares”).
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 and the Additional 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 Warrant Shares, once exercised will be validly issued, fully paid and non-assessable.
|
Sullivan & Wocester Tel Aviv 28 HaArba’a St. HaArba’a Towers North Tower, 35th Floor Tel-Aviv, Israel |
+972-747580480 sullivanlaw.com |
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 10.1
Letter of Undertaking to Indemnify Officers and Directors of the Company
Entered into and signed on [______]
| 1. | Without derogating from the right of TurboGen Ltd. (the “Company”) to indemnify you retroactively, as permitted under the Company’s articles of association, the Company hereby undertakes to indemnify you for any liability, payment, or expense to be imposed on you due to any act or omission performed by you (including your acts or omissions prior to the date of this undertaking) and/or that you will perform in your capacity as officer of the Company, or of a subsidiary, or of a company that is not under the control of or wholly-owned by the Company in which you were appointed by the Company as an officer (the “Other Company”), including: |
| 1.1 | A financial liability to be imposed on you in favor of another person pursuant to a judgment, including a compromise judgment and/or arbitration award approved by a court, in connection with one or more of the events listed in the addendum hereto (the “Addendum”), directly or indirectly, subject to the amount determined by the Board of Directors of the Company to be reasonable under the circumstances of such event and foreseeable in view of the Company’s actual operations at the time of reference to the indemnification, provided that the amount of indemnification shall not exceed the Maximum Indemnification Amount (as this term is defined below). |
| 1.2 | Reasonable litigation expenses, including legal fees, incurred by you as a result of an investigation or proceeding to be conducted against you by an authority authorized to conduct such investigation or proceeding, which concluded without the filing of an indictment against you and without the imposition of any financial liability in lieu of criminal proceedings, or which concluded without the filing of an indictment against you but with the imposition of a financial liability in lieu of criminal proceedings for a criminal offense that does not require proof of criminal intent, all in accordance with Section 260(a)(1a) of the Companies Law, 5759-1999 (the “Companies Law”), or in connection with a financial sanction. |
“Conclusion of a proceeding without the filing of an indictment in a matter in which a criminal investigation was opened” – the closing of the case pursuant to Section 62 of the Criminal Procedure Law [Consolidated Version], 5742-1982 (the “Criminal Procedure Law”), or a stay of proceedings ordered by the Attorney General pursuant to Section 231 of the Criminal Procedure Law; “Financial liability in lieu of a criminal proceeding” – a financial liability imposed by law in lieu of a criminal proceeding, including an administrative fine under the Administrative Offenses Law, 5746-1985, a fine for an offense classified as an infraction under the provisions of the Criminal Procedure Law, an administrative fine or a sanction.
| 1.3 | Reasonable litigation expenses, including legal fees, that you incurred or with which you were charged by a court, in proceedings filed against you by the Company or on its behalf, or by another person, or in criminal proceedings in which you were acquitted or in which you were convicted of an offense that does not require proof of criminal intent. |
| 1.4 | Reasonable litigation expenses, including legal fees, that you incurred or with which you are charged by a court, in proceedings filed against you by the Company or on its behalf, or by any other person, or in criminal proceedings from which you were acquitted, or in criminal proceedings in which you were convicted of an offense that does not require proof of criminal intent. In this section, “any other person” – including in the case of a claim filed against you by way of a derivative action. |
| 1.5 | Expenses you incur or with which you are charged in connection with an administrative enforcement proceeding conducted against you, including reasonable litigation expenses including legal fees. |
“Administrative proceeding” – an administrative enforcement proceeding in accordance with any applicable law, including the Improvement of Enforcement Proceedings in the ISA Law (Legislative Amendments), 5771-2011, as updated from time to time (the “Improvement of Enforcement Proceedings Law”); proceedings under Chapters H3 (imposition of an administrative fine by the Israel Securities Authority), H4 (imposition of administrative enforcement measures by the Administrative Enforcement Committee), or I1 (arrangement for refraining from initiating proceedings or for terminating proceedings subject to conditions) of the Securities Law, 5728-1968 (the “Securities Law”), as amended from time to time; and an administrative fine under Title D of Chapter Four of Part Nine of the Companies Law, as amended from time to time; an administrative fine under Chapter G1 of the Economic Competition Law, 5748-1988, as amended from time to time; and any additional administrative proceeding for which indemnification may be granted by law in respect of payments made in connection therewith or expenses incurred in connection therewith.
| 1.6 | Payment to an injured party as referred to in Section 52-54(a)(1)(a) of the Securities Law, as amended by the Improvement of Enforcement Proceedings Law and/or by virtue of any administrative proceeding. |
| 2. | The amount of indemnification to be paid by the Company to all of the officers, cumulatively, pursuant to all letters of indemnity issued to them by the Company in accordance with the indemnification resolution, in respect of financial liabilities imposed on them as set forth in Section 1.1 above, for one or more of the types of events specified in the Addendum, shall not exceed, in the aggregate, 25% of the Company’s equity according to the most recent consolidated financial statements of the Company released prior to the actual payment of the indemnification amount, or a total amount of USD $5 million (whichever is higher), plus amounts to be received (if any) from an insurance company under a liability insurance policy entered into by the Company (the “Insurance Policy” and the “Maximum Indemnification Amount”). |
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| 3. | If and to the extent that the total amounts for which the officers are held liable in any of the matters contemplated in the indemnification, in respect of financial liabilities imposed on them as set forth in Section 1.1 above, exceed the Maximum Indemnification Amount or exceed the remaining balance of the Maximum Indemnification Amount available at such time, the Maximum Indemnification Amount or such remaining balance (as applicable) shall be allocated between the relevant officers such that the indemnification amount actually received by each one of them shall be calculated according to the ratio between the amount due to each one of the officers, and the total cumulative amount due to all the officers for the same matter. |
| 4. | The indemnification amount actually paid by the Company shall be limited solely to amounts that are not covered by the Insurance Policy and that have not been paid in practice. You shall not be entitled to any payment from the Company for damage for which full indemnification has already been received from another party and/or from the Company. |
| 5. | The indemnification shall not apply in the event that you file a counter-claim against the Company following a claim filed and/or to be filed against you by the Company, or in any counter-claim proceeding brought by the Company against you in response to your claim against the Company, except where such claim is for reserving protective rights under labor law arising from law and/or from a personal employment agreement between you and the Company. |
| 6. | In any event in which indemnifiable events occur, the indemnification shall be subject to the following: |
| 6.1 | You shall notify the Company of any legal proceeding instituted against you, and of any threat made to you that such a legal proceeding will be instituted against you, as soon as reasonably practicable after you first become aware thereof, and shall, without delay, deliver to the Company or to anyone designated thereby any and all documents delivered to you in connection with such proceeding. |
| 6.2 | The Company shall be entitled to assume the conduct of such legal proceeding and/or to deliver its conduct to any attorney selected by the Company for such purpose (except for an attorney who is unacceptable to the officer for reasonable grounds, in which case the handling attorney and the terms of his remuneration shall be determined with the Company’s consent, provided that it is given in advance and in writing). The Company and/or such attorney shall be entitled to act exclusively in the conduct of such a proceeding and to bring it to an end, all as they deem fit. At the Company’s request, you shall sign any document authorizing the Company and/or such attorney to act in your name in conducting your defense in such proceeding and to represent you in connection therewith, as set forth above. For the avoidance of doubt, it is clarified that the Company and/or such attorney shall not, in the context of a criminal proceeding, admit any of the charges on your behalf or agree to a plea bargain without your consent. In addition, the Company and/or such attorney shall not, in the context of a civil proceeding, admit on your behalf (whether before a court or as part of a settlement arrangement) the occurrence of any of the events that are not indemnifiable under this Letter and/or under the law, without your consent. Notwithstanding the foregoing, nothing herein shall prevent the Company and/or such attorney, with the Company’s approval, from reaching a financial arrangement with a plaintiff in a civil proceeding without your consent, provided that such arrangement does not constitute an admission of the occurrence of any of the events that are not indemnifiable under this Letter and/or under the law. |
| 6.3 | You are required to cooperate with the Company and/or with any such attorney in any reasonable manner as may be required of you by either one of them in their handling of such legal proceeding, provided that the Company shall make sure to cover any and all expenses incurred in connection therewith, such that you will not be required to bear or finance them yourself. |
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| 6.4 | The Company shall not be obligated to indemnify you as aforesaid in respect of any amount paid by you pursuant to an arbitral award in arbitration proceedings or pursuant to the terms of a settlement reached in any claim, demand, or other proceeding, unless the Company’s prior written consent was given to the arbitration proceedings or to the settlement arrangement, as applicable. |
| 7. | If, within 14 days of receipt of the notice referred to in Section 6.1 above, the Company has not assumed the handling of your defense, or if the Company and/or the Company’s counsel objects to representing you under the circumstances set forth in Section 6.2 above (and in any case, where the insurance company does not assume the handling of your defense), you shall be entitled to entrust the handling of your defense to an attorney of your own choosing who is acceptable to the Company (the “Other Counsel”), provided that the amount of legal fees payable to such counsel shall be approved by the Audit Committee, which shall examine his reasonableness and provide reasons for its decision (and in the absence of an Audit Committee, by the Company’s Board of Directors), all within a reasonable time from the date of your request for such payment. It is agreed that the legal fees agreed with the Company’s counsel shall constitute a reasonable benchmark for examining the fees of the Other Counsel. You shall be afforded the opportunity to present arguments before the Audit Committee regarding the fees of the Other Counsel. If you dispute the decision of the Audit Committee, you shall be entitled to appeal the same before the Company’s Board of Directors and, for such purpose, appear and present arguments before the Company’s Board. If the full amount of the requested legal fees is not approved, you shall be entitled to receive from the Company the amount of the reasonable legal fees approved for you, and the balance will be paid by you at your own expense. For the avoidance of doubt, it is clarified that the provisions of this section are subject to the terms of the Insurance Policy with respect to the identity of the representing counsel, and the provisions of this section shall not apply in any case where the appointment of the Other Counsel would enable the insurance company to be released from its liability under the Insurance Policy or to reduce such liability. |
| 8. | The provisions below shall apply to payments made by the Company pursuant to this Letter, whether paid as an advance or in any other manner: |
| 8.1 | If it transpires, after payment, that you are required to repay such payment, in whole or in part, due to the fact that you were not entitled to indemnification pursuant to the provisions of Section 263 of the Companies Law or pursuant to any other provision of law, the repaid amount shall bear CPI linkage differentials together with interest at the rate prescribed in the Income Tax Regulations (Determination of Interest Rate), 5745-1985, as being from time to time, from the day on which the amount was paid until the day of its repayment. |
| 8.2 | If, after payment, the liability in respect of which the amount was paid is cancelled or reduced for whatever reason, you shall assign to the Company all of your rights to restitution of such amount from the plaintiff in the proceeding, and shall do everything necessary to ensure that such assignment is valid and enforceable by the Company; upon doing so, you shall be released from repaying the amount in respect of which the right to restitution has been assigned. If you fail to do so, you shall be obligated to repay such amount, together with linkage differentials and interest, at the rates and for the period according to which you would have been entitled to recover such amount from the plaintiff. |
| 9. | It is clarified that the Company’s undertaking to indemnification as set forth herein shall be in accordance with the provisions of Section 263 of the Companies Law. |
| 10. | The Company’s undertaking to indemnify you pursuant to this Letter shall be available to your credit also after conclusion of your office as an officer of the Company, provided that the acts in respect of which the indemnification undertaking is given were performed and/or will be performed during your term of office as an officer of the Company. |
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| 11. | If, in order to give effect to any of the undertakings set forth above, any act, resolution, approval, or other additional or alternative proceeding is required, the Company undertakes to cause such act to be performed and/or obtained, as applicable, in a manner that will enable the Company to fully perform all of its undertakings as aforesaid. |
| 12. | Nothing herein shall derogate from any exemption granted to you by the Company (if any). Furthermore, nothing herein shall limit the Company or prevent it from granting additional or special indemnification, or from deciding to grant indemnification retroactively in accordance with the provisions of any law, provided that it does not prejudice the Company’s undertakings herein. |
| 13. | This Letter does not constitute a contract in favor of a third party and is not assignable. In the event of death, this Letter shall apply to you and your estate. |
| 14. | This letter of indemnification may not be amended other than by your signature and the signature of the Company. However, the Company may, at its sole discretion and at any time, cancel its undertakings herein, or reduce the Maximum Indemnification Amount, or limit the types of events set forth in Section 1 above, whether with respect to all officers or some of them, insofar as such changes relate to events occurring after the date of such change, provided that the officer is given prior written notice of such intention at least 30 days in advance. For the avoidance of doubt, it is clarified that any such decision which adversely affects the terms and conditions of this Letter or cancels it shall not have any retroactive effect of any kind, and this Letter, as in effect prior to its amendment or cancellation (as applicable), shall continue to apply and remain in full force and effect for all purposes with respect to any event that occurred prior to such amendment or cancellation (as applicable), even if the proceeding in respect of which, was filed against the officer after the amendment or cancellation of this agreement (as applicable), all subject to the provisions of any law. It is clarified that any amendment or change to this Letter shall not be deemed a deterioration of employment terms where employment relations exist, without such determination constituting any statement or interpretation regarding the existence of employment relations. |
| 15. | The Company’s undertakings herein shall be interpreted broadly, with the intention of fulfilling them, to the fullest extent permitted by law and for the purposes for which they were intended. In the event of a discrepancy between any provision herein and mandatory provisions of law that may not be conditioned upon, amended, or supplemented, the applicable provision of law shall prevail; however, it shall not impair or derogate from the validity of the remaining provisions of this Letter. |
| 16. | In the event that a dispute arises regarding your entitlement to indemnification, whether under the provisions hereof or under any other provision of law, such dispute shall be referred to the decision of an arbitrator who shall be appointed by mutual agreement of the parties within 7 days from the date on which either party requests such appointment. If the parties fail to reach an agreement regarding the identity of the arbitrator, the arbitrator shall be appointed by the Chair of the Israel Bar Association. It is clarified that the Company shall bear the costs of the arbitration, including legal fees, unless the arbitrator determines in his decision that you acted in bad faith in the arbitration proceedings, or alternatively, that the arbitrator’s ruling was in favor of the Company. |
| 17. | This Letter shall be governed by the laws of the State of Israel. Any actions relating to or arising from this Letter shall be filed exclusively before the court of competent subject matter jurisdiction located in Tel Aviv. |
| 18. | This letter of indemnification revokes any prior indemnification undertakings that you have received from the Company or from any Other Company. |
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Sincerely,
TurboGen Ltd.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------
I hereby confirm receipt of this Letter and confirm my consent to all of its terms and conditions.
Date: _____________
| Officer’s signature |
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The Addendum
(this addendum is an integral part of the letter of indemnification)
Subject to the provisions of any law, the following are the types of events which, in the opinion of the Company’s Board of Directors, may be foreseen in advance in view of the Company’s actual operations at the time the indemnification undertaking is given, and in respect of which the Company hereby grants, in advance, an undertaking to indemnify its officers with respect to Section 1.1 above, and subject to the provisions of any law:
| 1. | An act in connection with a transaction and an Irregular Transaction as defined in Section 1 of the Companies Law, including actions and/or transactions specified in the Joint Investment Trust Law, 5754-1994 (the “Joint Investments Trust Law”) and/or in the Regulation of the Practice of Investment Advice, Investment Marketing and Investment Portfolio Management Law, 5755-1995 (the “Regulation of Practice Law”), in the Regulations of the Tel Aviv Stock Exchange (the “TASE”) or any other stock exchange, including negotiations, and including the receipt of credit, the sale or purchase of assets or liabilities, including securities, or the granting or receipt of any right in any of the foregoing, as well as any action directly or indirectly related to such transaction, including the provision of information and documents. |
| 2. | Acts of sale, purchase or holding, lending or borrowing of assets, including marketable or non-marketable securities, or any undertaking for the performance of such actions, including by way of a tender offer or sale on behalf of the Company or a subsidiary, including such actions in connection with the securities of the Company and/or affiliates. |
| 3. | Any claim or demand in connection with a tender offer and/or an offer for sale, and any proceeding, opinion, document and/or report related thereto. |
| 4. | Any act in connection with voting rights in held companies (on behalf of the Company and/or for its customers) and/or participation or non-participation in general meetings of the Company’s shareholders and/or class meetings (on behalf of the Company and/or for its customers). |
| 5. | Any report, notice, or application submitted by the Company, by the Other Company, or by companies under the Company’s control, or in connection with the Company and its activities, pursuant to any law, including, but without derogating from the generality of the aforesaid, the Companies Law, the Securities Law and the regulations promulgated thereunder, and laws and regulations addressing similar matters outside of Israel, or pursuant to rules or directives applicable on the TASE or on a trading venue in or out of Israel, including any failure to disclose or to provide any type of information, as well as any omission to submit such report or notice. |
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| 6. | Any act that caused bodily injury and/or damage to property, including loss of use thereof. |
| 7. | Any act that resulted in the failure to take out appropriate insurance arrangements. |
| 8. | Any act in connection with the Company’s restructuring or reorganization, or any decision relating thereto, including, but without derogating from the generality of the aforesaid, a merger, split, liquidation, arrangement between the Company and its shareholders and/or creditors of the Company, a change in the Company’s share capital, the allotment of any type of security of the Company, the making of a Distribution (as defined in the Companies Law), or a tender offer by or in connection with the Company or the Other Company. |
| 9. | Any statement or expression, including the expression of a position or opinion, made in good faith by the officer in the course of, and by virtue of his position, including within the framework of the Company’s general meetings or board of directors meetings, or committees of the Company’s board of directors. |
| 10. | The allotment, offering, issuance, and buyback of the Company’s securities by the Company and/or a subsidiary or an affiliate, including, without derogating from the generality of the aforesaid, a public offering of securities pursuant to a prospectus, a private placement, or any other form of offering of securities, as well as any other actions relating to the Company’s equity. |
| 11. | Acts in connection with: the Company’s business plans, work plans, the Company’s policies and procedures, examination of the Company’s financial position, the Company’s financing arrangements, the appointment of a CEO for the Company and supervision of management activities, the Company’s oversight and control system, and the Company’s insurance arrangements. |
| 12. | Engagements with agents, marketers and financial advisers and/or investment advisers and/or investment marketers, including any act or omission arising from their activities. Actions arising from the making of agreements with third parties for the provision of various services to the Company and/or for investment management and/or investment advice and/or investment marketing, including trading agreements and brokerage services agreements, and agreements with members of the TASE or any other stock exchange. |
| 13. | Acts in connection with approvals, licenses and permits enabling the Company to operate in accordance with any law in its field of business, including, without derogating from the generality of the aforesaid, a portfolio management license and/or an investment marketing license (within the meaning of these terms in the Regulation of Practice Law), as well as approvals and/or exemptions relating to the Capital Market, Insurance and Savings Authority, the Economic Competition Authority, or the Israel Innovation Authority. |
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| 14. | Reports, notices, and applications for approval (and the underlying actions) of judicial and administrative authorities, including the Capital Market, Insurance and Savings Authority, the Economic Competition Authority, the Israel Innovation Authority, the Income Tax Authority, the Registrar of Databases, the Registrar of Companies and Trademarks, the Registrar of Pledges, the Registrar of Land, the Israel Securities Authority, the TASE, etc., whether in Israel or in other countries worldwide. |
| 15. | Acts in connection with the splitting of investments among customers’ portfolios, and transactions in splitting accounts. |
| 16. | Acts in connection with investment management and/or investment marketing of mutual funds, including the method of management of investments and/or holding securities and/or assets held in mutual fund accounts and/or in the Company’s accounts, the performance of transactions and/or actions therein, and the achievement or non-achievement of yield on assets managed by the Company and/or assets for which the Company has provided investment marketing services, including actions relating to the execution of transactions pursuant to telephone instructions in assets managed by the Company and/or the performance of a marketing act by the Company by telephone or by any other means of communication. |
| 17. | Acts in connection with the management of investment portfolios and/or investment advice and/or investment marketing provided to the Company’s customers (as such terms are defined in the Regulation of Practice Law) (the “Customers”), including the method of management of the investments and/or holding securities and/or assets of the Customers and/or of the Company and the performance of transactions and/or actions therein, and the achievement or non-achievement of yield on assets of the portfolios managed by the Company and/or assets in respect of which the Company has provided advice, including actions relating to the execution of transactions pursuant to telephone instructions in portfolios managed by the Company and/or the provision of advice by the Company by telephone or by any other means of communication. |
| 18. | The management of the Company’s bank accounts, including foreign currency deposits, securities, loans and credit facilities, charge cards, bank guarantees, letters of credit, investment advisory agreements including with portfolio managers, hedging transactions, warrants, futures contracts, etc. |
| 19. | Events related to investments made by the Company and/or the Company’s subsidiaries in any corporations, before, during, and after the making of such investments, throughout the engagement, signing, development, and monitoring stages, including actions taken on behalf of the Company as a director, officer, employee, or board observer in a corporation in which the investment is made. |
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| 20. | Failure to carry out due diligence investigations in investments of the Company, which resulted in the full or partial loss of such investments and/or harmed the Company’s business and/or breached an obligation vis-à-vis a third party. |
| 21. | Any act performed in good faith which is contrary to the Company’s articles of association. |
| 22. | Any act directly or indirectly related to the Company’s trade relations, including with external contractors, clients, insurance agents, advisers, lessors, lessees, suppliers, and other service providers, including negotiations, the entering into and performance and/or non-performance of contracts with any of the foregoing, as well as any claim or demand filed by any of them in connection with the Company’s fields of operation. |
| 23. | Acts related to the submission of bids for tenders, concessions, and/or licenses, of any kind whatsoever. |
| 24. | Acts in connection with the Company’s marketing and advertising. |
| 25. | Any act relating to the Company’s ordinary and ongoing course of business, and to irregular transactions of the Company. |
| 26. | Events that have materially affected or may have materially affected the Company’s profitability, assets, rights, or liabilities. |
| 27. | Any act relating to claims filed against an officer in connection with the liquidation or receivership of the Company. |
| 28. | Any act relating to derivative actions or class actions in connection with the Company. |
| 29. | Any act relating to claims concerning merger, split, reorganization proceedings, etc. |
| 30. | Any act or decision relating to the preparation or approval of financial statements, business plans, or forecasts in connection with the Company, including acts or omissions relating to the adoption of International Financial Reporting Standards (IFRS) or any financial reporting standards replacing them, as being from time to time. |
| 31. | Any act in connection with claims concerning documents related to, or in connection with actions or decisions relating to the matters listed above, or in connection with representations and undertakings given regarding the matters listed above, including such representations and undertakings given to third parties, to the Company or to anyone on its behalf, including, but not limited to, its advisers, accountants, attorneys, etc. |
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| 32. | Any act in connection with any claim or demand relating to a decision or activity of the Company or of an officer in the course of his duties with the Company, including resolutions adopted by the Company’s general meeting of shareholders, the Company’s board of directors, or any committee thereof. |
| 33. | Any legal proceeding, whether in or out of Israel, relating, directly or indirectly, to economic competition, including restrictive trade practices, mergers, and monopolies. |
| 34. | An act, omission, or failure in the taking out and/or activation and/or handling of insurance and/or in risk management. |
| 35. | An act or decision, as well as any claim or demand filed by employees, consultants, or other individuals or entities employed by or providing services to the Company, in connection with employment relations or employees’ rights, including with respect to severance pay owed to them or damage or liabilities incurred by them in the course of their employment by or engagement with the Company, including events relating to employees’ terms of employment and employment relations, including the engagement and implementation of individual employment agreements, employee benefits, terms of work and employment, recruitment, employment and non-employment, occupational health and safety and work-related injuries, employee promotion, the conduct of negotiations regarding terms of employment or their termination, the handling of pension arrangements, insurance policies, provident or savings funds, employee loans, the grant of options, securities, and other benefits. |
| 36. | Any action, act and/or omission in connection with the taking of loans, the amendment of their terms, the pledge of assets and liabilities, the granting and/or receipt of collateral, and any matter relating to the Company’s relationships with its creditors and/or the Company’s obligations thereto. |
| 37. | The enforcement of a personal guarantee given by an officer to the Company as security for the Company’s obligations and/or representations. |
| 38. | Events relating to occupational health and safety, whether resulting in bodily injury and/or property damage. |
| 39. | Any action, act and/or omission that caused bodily injury, illness, death and/or damage to property, including loss of use thereof. |
| 40. | Bodily injury and/or damage to the property of a third party, including business interruption, arising from an accidental event or from damage originating from a gradual and cumulative process. |
| 41. | Any claim or demand filed by a third party who has suffered bodily injury or damage to a business or to personal property, including loss of use thereof, arising from any act or omission attributed to the Company, or, as applicable, to its employees, agents, or other persons acting or purporting to act on behalf of the Company. |
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| 42. | Any decision regarding a Distribution (as defined in the Companies Law). |
| 43. | Actions and/or decisions relating to an administrative enforcement proceeding constituting a violation of the Securities Law, the Joint Investments in Trust Law, or the Regulation of Practice Law, as amended by the Improvement of Enforcement Proceedings Law. |
| 44. | The Company’s restructuring or reorganization, or any decision relating thereto, including, without derogating from the generality of the foregoing, a merger, split, changes in the Company’s share capital, the establishment of subsidiaries, their dissolution or sale, allotment or distribution. |
| 45. | An act which is contrary to the Company’s articles of association. |
| 46. | Actions, including (but not only) payment, reporting and/or documentation, relating to tax authorities, local authorities and/or any other governmental or public authority, carried out in connection with his position in the Company. |
| 47. | Proceedings pertaining to decisions and/or actions concerning the Protection of Privacy Law, 5741-1981 and/or orders and/or regulations promulgated thereunder. |
| 48. | Decisions and/or actions relating to laws intended to protect consumers or concerning standard form contracts. |
| 49. | Any claim or demand relating to the Company’s intellectual property rights, their registration and protection thereof. |
| 50. | Events relating to information systems, including the management of customer registration and reporting systems. |
| 51. | Any of the types of events listed above, in connection with the officer’s position in a corporation controlled by the Company or in an affiliated corporation of the Company (as these terms are defined in the Securities Law). |
It is clarified that all terms and expressions appearing in this Addendum shall have the meanings ascribed to them in the Letter of Indemnification set forth above.
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Exhibit 10.2
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of August 23, 2025, 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 Section 4(a)(2) thereof, 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 listed on and fully tradable immediately after their issuance on a Trading Market in the United States 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.
“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 approval for listing on a tier of the Nasdaq Stock Market LLC of the Company’s Ordinary Shares and (ii) the effectiveness of the Registration Statement from the Commission.
“Ordinary Shares” means the ordinary shares of the Company, NIS 0.01 par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Per Share Purchase Price” equals NIS 18.5, 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 shall apply.
“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.
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“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.
“Shareholders Approval” means the approval by the Company’s shareholders of the transaction contemplated herein in a special meeting to be called by the Company.
“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 thereof published by the Bank of Israel shall apply.
“TASE” shall have the meaning ascribed to such term in the Recitals hereto.
“TASE Approval” shall have the meaning ascribed to such term in Section 2.3(a).
“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.
“Undertaking” means the Israel Innovation Authority (the “IIA”) undertaking letter in the IIA’s standard form.
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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 two (2) Business Days 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 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.
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 Audit Committee (to the extent required) and the Board of Directors consent to the Company’s execution, delivery and performance of the Transaction Documents;
(iii) a copy of a document evidencing the Shareholders Approval (to the extent required);
(iv) an Undertaking to the IIA executed by each purchaser (to the extent required); and
(v) the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer.
(vi) a copy of a TASE approval;
(vii) a copy of the Registration Statement, including the preliminary prospectus contained therein, that was declared effective by 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) if such Purchaser is “an accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act, an executed copy of the accredited investor questionnaire set forth on Exhibit B.
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2.3 Closing Conditions.
(a) It is hereby agreed that the consummation of the investment and the issuance of the Shares are subject to (i) the Company’s timely filing of an immediate report regarding the issuance of Shares in accordance with Israeli Securities Regulations (Private Offering of Securities of a Listed Company) 2000, (ii) the approval of the TASE to list the Shares for trading (the “TASE Approval”), and (iii) the Shareholders Approval (to the extent required).
(b) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) receipt of the TASE Approval and the Shareholders Approval (to the extent required);
(ii) 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);
(iii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and
(iv) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(c) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) receipt of the TASE Approval;
(ii) 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);
(iii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iv) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; and
(v) the Milestone shall have been satisfied such that the Shares will be freely tradable on a Trading Market in the United States immediately after their issuance.
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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 in connection with receipt of the TASE Approval, receipt of the Shareholders Approval (to the extent required), the approval relating to meeting the Milestone, compliance with the requirements of the Israeli Securities Regulations (Private Offering of Securities of a Listed Company) 2000, and receipt of the TASE Approval and the Shareholders Approval (to the extent required).
(c) 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.
(d) 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 issuance and sale of the Shares hereunder does not contravene the Securities Law and the rules and regulations of the applicable Trading Market.
(e) No Disqualification Events. With respect to the Shares to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.
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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):
(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.
(b) Own Account. Such Purchaser understands that it is acquiring the Shares as principal for its own account 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, 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 understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting 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. 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 other “accredited investors” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or “qualified institutional buyers” as defined in Rule 144A(a) under the Securities Act, 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.
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(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof is, and as of the Closing Date will be: (i) either (a) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (b) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.
(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.
(e) General Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any other general solicitation or general advertisement.
(f) Israel Innovation Authority. Such Purchaser acknowledges and confirms that it is aware that the Company is subject to the provisions of the Israeli Encouragement of Research, Development and Technological Innovation in the Industry Law, 5744-1984 (as amended from time to time), including regulations, directives, procedures and rules that have been or will be promulgated thereunder and/or by virtue thereof, including any regulations, directives, guidelines and rules as issued from time to time by the IIA. Such Purchaser is aware of the restrictions imposed upon the Company regarding transfer of know-how and/or production rights. Such Purchaser is aware that the Company may be required to report the transaction contemplated herein to the IIA. If so required by applicable law, such Purchaser will execute a standard undertaking towards the IIA, in the form provided by the Company.
(g) 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.
(h) 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.
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ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Legends.
(a) Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.1 hereof), (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 may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser
(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.
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. Concurrently with the Closing, the Company shall have listed the Shares on a Trading Market in the United States.
4.5 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.
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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 nine (9) months from the date of this Agreement.
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. Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction Documents that apply to the “Purchasers.” Any such right of assignment shall be valid for a period of two (2) months from the date of execution of this Agreement.
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.
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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.
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.
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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.
5.15 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.
(Signature Pages Follow)
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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: | /s/ Dov Fridman | Email: | ||
| Name: | Dov Fridman | Fax: | ||
| Title: | Director | |||
| With a copy to (which shall not constitute notice): | ||||
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
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[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: Alex Katz
Signature of Authorized Signatory of Purchaser: /s/ Alex Katz.
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: Up to US$5,000,000. The final investment amount for the Closing shall be determined by the Company, in its sole discretion, no later than seven (7) Business Days before the Closing Date.
Shares: The number of Shares equal to the Investment Amount on the Closing Date divided by NIS 18.5.
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Exhibit A
| Name of Purchaser | Investment Amount (US$) | Number of Shares | Address of Purchaser | Contact Person |
| TOTAL | US$ |
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EXHIBIT B
Accredited Investor Questionnaire
The undersigned understands that the representations contained below are made for the purpose of qualifying him or her as an “accredited investor” as that term is defined in Regulation D of the General Rules and Regulations promulgated under the Securities Act of 1933, as amended (the “Act”), and for the purpose of inducing a sale of the securities to him or her. The undersigned hereby represents that the statement or statements initialed below are true and correct in all respects. The undersigned understands that a false representation may constitute a violation of law, and that any person who suffers damage as a result of a false representation may have a claim against the undersigned for damages.
| (a) | Accredited individual investors must initial at least one of the following statements: |
| ____(1) | I certify that I am an accredited investor because I had individual income in excess of $200,000 in each of the two most recent years or joint income with my spouse or spousal equivalent in excess of $300,000 in each of those years and have a reasonable expectation of reaching the same income level in the current year; |
| ____(2) | I certify that I am an accredited investor because I have an individual net worth, or joint net worth with my spouse and I have an individual net worth or spousal equivalent, in excess of exceeds $1,000,000. For purposes of calculating net worth under this paragraph my primary residence is not included as an asset; indebtedness that is secured by my primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, is not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess is included as a liability); and indebtedness that is secured by my primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities is included as a liability. |
| ____(3) | I certify that I am an accredited investor because I am a director or executive officer of TurboGen Ltd. |
| ____(4) | I hold one of the following licenses in good standing: General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), or the Investment Adviser Representative license (Series 65). |
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| (b) | Accredited partnerships, corporations or other entities must initial one or more of the following statements: |
| ____(1) | The undersigned hereby certifies that all of the beneficial equity owners of the undersigned qualify as accredited individual investors under items (a)(1) to (a)(4) above or (b)(2) to (b)(11) below; |
| ____(2) | The undersigned is a bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; |
| ____(3) | The undersigned is a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended; |
| ____(4) | The undersigned is an investment adviser registered pursuant to section 203 of the Investment Advisers Act of 1940, as amended, or registered pursuant to the laws of a state; |
| ____(5) | The undersigned is an investment adviser relying on the exemption from registering with the Securities and Exchange Commission under section 203(l) or (m) of the Investment Advisers Act of 1940, as amended; |
| ____(6) | The undersigned is an insurance company as defined in section 2(a)(13) of the Act; |
| ____(7) | The undersigned is an investment company registered under the Investment Company Act of 1940, as amended or a business development company as defined in section 2(a)(48) of that Act; |
| ____(8) | The undersigned is a Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958, as amended; |
| ____(9) | The undersigned is a Rural Business Investment Company as defined in section 384A of the Consolidated Farm and Rural Development Act; |
| ____(10) | The undersigned is a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
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| ____(11) | The undersigned is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and either (check one or more, as applicable): |
| ____(a) | the investment decision is made by a plan fiduciary, as defined therein, in Section 3(21), which is either a bank, savings and loan association, insurance company, or registered investment adviser; or |
| ____(b) | the employee benefit plan has total assets in excess of $5,000,000; or |
| ____(c) | the plan is a self-directed plan with investment decisions made solely by persons who are “accredited investors” as defined therein. |
| ____(12) | The undersigned is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. |
| ____(13) | The undersigned has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring the securities offered and is one or more of the following (check one or more, as appropriate): |
| ____(a) | an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended; |
| ____(b) | a corporation, partnership or limited liability company; | |
| ____(c) | a Massachusetts or similar business trust, or | |
| ____(d) | a limited liability company. |
| ____(14) | The undersigned is a trust with total assets exceeding $5,000,000, which was not formed for the specific purpose of acquiring the securities offered and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the investment in the securities offered. |
| ____(15) | The undersigned is an entity, of a type not listed in paragraphs (b)(1) to (b)(14), not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000. |
| ____(16) | The undersigned is a “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1): (i) with assets under management in excess of $5,000,000, (ii) that is not formed for the specific purpose of acquiring the securities offered, and (iii) whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment. |
| ____(17) | The undersigned is a “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (b)(15) above and whose prospective investment in the issuer is directed by such family |
[Signature page follows]
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| Date: | ______________, 2025 | ||
| SIGNATURE FOR INDIVIDUAL: | SIGNATURE FOR PARTNERSHIP, CORPORATION, TRUST OR OTHER ENTITY: | ||
| (Signature) | (Print Name) | ||
| (Print Name) | (Signature of Authorized Signatory) | ||
| (Signature of any joint tenant or co-holder of any security issued by TurboGen Ltd.) | (Name of Authorized Signatory) | ||
| (Print Name) | (Title) | ||
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Exhibit 10.3
This is a translation into English of the official Hebrew version of this agreement. In the event of a conflict between the English and Hebrew texts, the Hebrew text shall prevail.
Convertible Loan Agreement
Entered into and signed on December 1, 2022
| Between: | TurboGen Ltd. |
Company no. 515086056
of 22 Efal Street, Petah Tikva 4951122
(the “Borrower”)
of the first part;
| And: | Alex Katz |
(the “Lender”)
of the second part;
| Whereas: | the Borrower wishes to receive a loan from the Lender in accordance with the terms and conditions set forth herein below, and the Lender agrees to provide such loan to the Borrower; and |
| Whereas: | the parties wish that the loan to be provided by the Lender to the Borrower pursuant to This Agreement shall be convertible into shares, such that immediately upon the fulfillment of the conditions for conversion, the Lender shall have the right, but not the obligation, to receive from the Borrower the conversion shares by way of an allotment. In addition, the Borrower shall allot to the Lender, for no consideration, within a period of up to 60 days, warrants exercisable into the Company’s ordinary shares, all in accordance with and subject to the provisions of This Agreement; and |
| Whereas: | the parties wish to establish and set forth in This Agreement the legal relations between them with respect to the terms of provision of the loan contemplated herein, its conversion (in whole or in part) or its repayment, and the terms of the warrants to be allotted and exercise thereof, all in accordance with and subject to the provisions of This Agreement; |
Now therefore it has been stipulated, represented and agreed by and between the parties as follows:
| 1. | General; interpretation |
| 1.1 | The preamble to This Agreement and its annex constitutes an integral part hereof. |
| 1.2 | The division of This Agreement into sections and subsections, and the headings appearing herein, are made for convenience only and shall not be used for purposes of interpretation. |
| 1.3 | In This Agreement, the singular shall include the plural, and vice versa, and the masculine gender shall include the feminine gender, and vice versa, all as the context may require, unless expressly stated otherwise. |
| 1.4 | In This Agreement, the following terms shall have the meanings set forth next to them, unless the content of the provisions or the context prescribes otherwise: |
| 1.4.1 | “Allotted Warrants” – as this term is defined in Section 7.1.1 below; |
| 1.4.2 | “Loan” or the “Loan Principal” – as this term is defined in Section 4.1.1 below; |
| 1.4.3 | “This Agreement” – this agreement, as may be amended (if amended) from time to time with the parties’ consent; |
| 1.4.4 | “Loan Conversion” – as detailed in Section 9 below; |
| 1.4.5 | “Outstanding Debt” – the Loan Principal together with interest and together with any and all amounts of any kind that the Borrower shall be obligated to pay to the Lender in connection with the Loan, as being from time to time. |
| 1.4.6 | “Companies Law” – the Companies Law, 5759-1999, including its regulations, as amended from time to time; |
| 1.4.7 | “Insolvency Law” – Insolvency and Economic Rehabilitation Law, 5778-2018, including its regulations, as amended from time to time; |
| 1.4.8 | “Securities Law” – The Securities Law, 5728-1968, including its regulations, as amended from time to time; |
| 1.4.9 | “Business Day” – Sunday through Thursday of each week, provided that such day is not a holiday, public holiday, holiday eve, or day of rest. |
| 1.4.10 | “Conversion Shares” – as this term is defined in Section 9.1 below; |
| 1.4.11 | “Exercise Shares” – as this term is defined in Section 7.1.1 below. |
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| 2. | The Borrower’s representations |
The Borrower represents to the Lender that it is aware that the Lender agreed to engage in This Agreement in full reliance on the representations and statements made by the Borrower herein, and it undertakes that each of the representations and statements set forth in This Agreement is true and accurate in all respects as of the date of signing of This Agreement, as detailed below:
| 2.1 | The Borrower is a public company whose shares are listed on the Tel Aviv Stock Exchange Ltd. (“TASE”), duly incorporated under the laws of the State of Israel and duly registered with the Registrar of Companies. |
| 2.2 | The Borrower’s authorized share capital consists of a total of 100,000,000 ordinary shares of par value ILS 0.01 each (the “Ordinary Shares”). The issued and paid-up share capital of the Borrower consists of 13,668,247 Ordinary Shares. The Borrower’s register of securities is as specified in the Borrower’s immediate report released thereby on Magna on August 4, 2022 (Ref. no: 2022-01-080544). |
| 2.3 | There is no impediment under any agreement and/or any law, including under the Borrower’s incorporation documents, to its engagement in This Agreement and to its fulfillment of all of its undertakings hereunder. |
| 2.4 | This Agreement has been duly signed by the Borrower, and the Borrower’s undertakings hereunder constitute valid, binding and enforceable undertakings. |
| 2.5 | The Conversion Shares, if allotted to the Lender, shall rank pari passu in all respects with the Ordinary Shares and shall be fully paid and free and clear of any debt, charge, pledge, lien or any other third-party right. |
| 2.6 | The Borrower has obtained any and all consents, authorizations, and approvals required, including under its incorporation documents and procedures, as well as any and all permits and approvals required under any law, in connection with its engagement in This Agreement and the fulfillment of its undertakings hereunder. |
| 2.7 | The Borrower undertakes to notify the Lender of any change in any of the representations set forth in this section immediately upon its occurrence, and in any event no later than 12 hours from the occurrence of such change. |
| 2.8 | The Borrower undertakes that all public reports made up to the date of signing of This Agreement do not include any Misleading Detail, as defined in the Securities Law, 5728-1968. |
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| 3. | The Lender’s representations |
The Lender represents to the Borrower that she is aware that the Borrower agreed to engage with her in This Agreement in full reliance on her representations and statements herein, and that each of her representations and statements set forth below is true and accurate in all respects as of the date of signing of This Agreement, as detailed below:
| 3.1 | The Lender is an individual. |
| 3.2 | The Lender has all of the means to fully and properly perform all of her undertakings under This Agreement, and has sufficient business ability and experience to evaluate the business risks inherent in This Agreement. |
| 3.3 | The Lender has considered the transaction’s tax aspects applicable to her, and the Borrower has not made any representation to the Lender in any of these matters. The Lender agrees that she alone shall bear all tax liabilities in respect of the Loan Conversion and/or the exercise of the Allotted Warrants in connection with the Conversion Shares and/or the Allotted Warrants and/or the Exercise Shares. The Lender is aware that the Borrower shall withhold taxes as required by law. Without derogating from the foregoing, the Lender is aware that the allotment/sale of the Conversion Shares and/or the Allotted Warrants and/or the Exercise Shares may have tax implications. It is clarified that it is recommended that the Lender consult a tax advisor regarding the tax implications arising from these events. |
| 3.4 | The Lender has obtained any and all consents, authorizations and approvals required, including under its incorporation documents and procedures, as well as any and all permits and approvals required under any law, in connection with her engagement in This Agreement and the fulfillment of her undertakings hereunder. |
| 3.5 | This Agreement was duly signed by the Lender and the Lender’s undertakings thereunder constitute valid, binding and enforceable undertakings. |
| 3.6 | The Lender is not affiliated with any of the controlling shareholders of the Borrower and/or their relatives and/or any of the Borrower’s officers and/or their relatives, directly and/or indirectly. Taking into account the Loan Conversion and the full exercise of the Allotted Warrants, and immediately following the Loan Conversion and the full exercise of the Allotted Warrants, the Lender’s total holdings in the Borrower (including any additional holdings of the Lender in the Borrower’s securities, if any, and including holdings together with others, if any) shall be less than 5% of the Borrower’s issued and paid-up share capital and of the voting rights therein, as of the date of signing of This Agreement. |
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| 3.7 | No securities of the Company have been allotted to the Lender or to anyone on her behalf, to her relative, to a controlling shareholder of hers, to a corporation controlled by its controlling shareholder, or to a relative of its controlling shareholder. |
| 3.8 | There are no agreements, whether written or oral, between the Lender and any shareholder of the Borrower and/or any holder of the Borrower’s securities or others (all or part of them), regarding the purchase or sale of the Borrower’s securities, or regarding voting rights in the Borrower. |
| 3.9 | The Lender is a Classified Investor, as defined in Section 15A(b)(1) of the Securities Law, who meets the terms and conditions of the First Schedule to the Securities Law. |
| 3.10 | The Lender is aware that the Conversion Shares and/or the Exercise Shares shall be subject to transfer restrictions (lock-up) with respect to transactions therein, in accordance with the provisions of Section 15C of the Securities Law and by virtue of the Securities Regulations (Details Regarding Sections 15A to 15C of the Law), 5760-2000 (the “Restrictions”), and undertakes to comply with such Restrictions. For convenience only, the Restrictions arising from the aforesaid provisions of law are attached hereto as Annex A, in the language in effect as of the date of signing of This Agreement. For the avoidance of doubt, it is clarified that the Restrictions shall also apply in the event that the Exercise Shares and/or the Conversion Shares are transferred to another party. |
| 3.11 | The Lender is aware that the Allotted Warrants are acquired by her on an as-is basis, without any representation, warranty, or indemnity on behalf of the Borrower, and she shall have no right of action and/or demand and/or argument against the Borrower or anyone on its behalf in connection with the Borrower and its condition (other than in connection with her representations above) and/or in connection with the Allotted Warrants. |
| 3.12 | The Lender is aware that the Borrower may, from time to time, grant rights and/or allot shares, additional options, and other securities to various entities and individuals, all at the Borrower’s sole discretion. |
| 3.13 | In order to enable the Borrower to allot Ordinary Shares following the Loan Conversion and/or the exercise of the Allotted Warrants, the Lender undertakes to sign any document that may be required and necessary under any law and/or under the Borrower’s articles of association. |
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| 3.14 | The Lender is aware that, in accordance with the provisions of the Securities Law, upon receipt of approval by the Borrower’s authorized organs, or at a later date, the Borrower shall release an immediate report regarding This Agreement, including about the details of the Lender, the Conversion Shares and the terms for the Loan Conversion, and the Allotted Warrants and the terms for their exercise. |
| 3.15 | The Lender is aware that she shall not be entitled to receive the Conversion Shares and/or the Exercise Shares from the Borrower prior to full payment of any tax that the Borrower may be required, if any, to withhold at source, as required by law. |
| 3.16 | The Lender undertakes to notify the Borrower of any change in any of the representations in this section immediately upon its occurrence, and in any event no later than 12 hours from the occurrence of such change. |
| 4. | The Loan |
| 4.1 | The Loan Principal |
| 4.1.1 | The Lender shall provide the Borrower, and the Borrower shall receive from the Lender, a monetary loan of ILS 3,500,000 (three million five hundred thousand New Israeli Shekels) (the “Loan” or the “Loan Principal”, as applicable). |
| 4.1.2 | No later than 2 Business Days from the date of signing of This Agreement, the Lender shall provide an amount of ILS 1,500,000 (one million five hundred thousand New Israeli Shekels) from the Loan Principal by way of a RTGS bank transfer to a bank account in the name of the Borrower, the details of which shall be provided by the Borrower to the Lender in writing (together with a bank account management confirmation) (the “Borrower’s Account”). |
| 4.1.3 | No later than 30 Business Days from the date of signing of This Agreement, and subject to receipt of the TASE’s approval of the convertible letter of undertaking and the TASE’s approval of the warrants, as detailed below, the Lender shall provide the balance of the Loan Principal to the credit of the Borrower’s Account. |
| 4.2 | Interest |
| 4.2.1 | The outstanding balance of the Loan Principal shall bear annual interest at a rate of 10% (the “Loan Interest”), which shall be added to the outstanding balance of the Loan Principal at the end of the Loan Period (as such term is defined below). |
| 4.2.2 | Lawful VAT shall be added to the payment of the Loan Interest. |
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| 4.3 | A resolutory condition – non receipt of the TASE’s approval of the convertible debenture |
| 4.3.1 | 2 Business Days after the date of signing of This Agreement, the Borrower shall submit to TASE an application for the allotment of an unlisted convertible debenture, which may be converted into the Convertible Shares (the “Convertible Debenture”). |
| 4.3.2 | If the TASE’s approval for the allotment of the Convertible Debenture and for the listing of the Conversion Shares (if the Loan is not converted) (the “TASE’s Approval for the Convertible Debenture”) is not obtained within 30 Business Days from the date the Loan is actually provided, the Lender shall have the right to accelerate the Outstanding Debt, in accordance with the provisions of Section 8 below. |
| 5. | Terms of payment |
| 5.1 | The Loan Principal shall be repaid and the Loan Interest shall be paid in a single bullet payment on December 1, 2024, or converted into the Conversion Shares, whichever is earlier, in accordance with the dates and subject to the conditions set forth in Sections 8 and 9 below (the “End of the Loan Period” or the “Loan Period”, respectively). |
| 5.2 | The Borrower shall be entitled to repay the Outstanding Debt, in whole or in part, at any time, at its sole discretion, and for the avoidance of doubt, also prior to the End of the Loan Period. In the event of repayment of the Outstanding Debt prior to the End of the Loan Period as aforesaid, the Borrower shall provide the Lender with prior written notice of 7 Business Days before the requested repayment date, and during such period the Lender shall be given the opportunity to choose between conversion of the debt into the Conversion Shares or repayment thereof as aforesaid. |
| 5.3 | If the due date for any payment under This Agreement falls on a day that is not a Business Day, the payment shall be made on the next Business Day. It is clarified that any amount whose payment is deferred as aforesaid shall not bear interest until its full repayment, as applicable, other than if such amount is not paid on the next Business Day. |
| 5.4 | If the Borrower repays the Outstanding Debt, in whole or in part, before the End of the Loan Period, the Loan shall bear interest as specified in Section 9 below. |
| 5.5 | The Lender shall provide the Borrower with a withholding tax exemption from the Israel tax authorities specifying the rate of tax that the Borrower is required to withhold at source in connection with the payment of the Loan Interest to the Lender under This Agreement. It is clarified that if the Lender does not provide such approval by the date on which the Loan Interest payment is actually made under This Agreement, the Borrower shall withhold from the payment the tax it is required to withhold at source. |
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| 6. | The Borrower’s undertakings during the Loan Period |
During the Loan Period, or at any earlier date on which This Agreement terminates in accordance with its provisions, the Borrower undertakes, subject to any law and agreement, to use its best efforts to ensure the continuation of its ordinary course of operations and to conduct its ordinary course of business, as conducted before the signing of This Agreement.
| 7. | An option to invest in the Borrower during the Loan Period |
| 7.1 | Allocation of the allotted shares |
| 7.1.1 | The Borrower shall allot to the Lender, immediately after receipt of the TASE’s approval for the warrants, 250,000 unlisted warrants, exercisable into up to 250,000 Ordinary Shares (the “Exercise Shares” and the “Allotted Warrants”, respectively), for no consideration. |
| 7.1.2 | Each Allotted Warrant shall be exercisable for one Ordinary Share, subject to payment of the Exercise Price and subject to all terms and conditions set forth in This Agreement. |
“Exercise Price” – the sum of ILS 14.
| 7.1.3 | The Allotted Warrants to be allotted to the Lender shall be exercisable during a period commencing on the date of allotment of the warrants and ending 24 months from such date (the “Expiration Date”). For the avoidance of doubt, it is clarified that all of the Allotted Warrants granted to the Lender that are not exercised by the Expiration Date shall expire and shall no longer confer any rights on the Lender. |
| 7.2 | Exercise of the Allotted Warrants |
| 7.1.4 | The exercise of the Allotted Warrants by the Lender shall be effected in tranches, at the Lender’s discretion, provided that in each tranche at least 10% of the number of the Allotted Warrants as of the date of signing of This Agreement is exercised by way of delivery of a written notice to the Borrower, in the language to be determined by the Borrower, which shall include, inter alia, the name of the Lender and the product of the Exercise Price in the number of Allotted Warrants that she wishes to exercise (the “Exercise Notice”). |
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| 7.1.5 | The exercise of the Allotted Warrants shall become effective upon the Borrower’s receipt of the Exercise Notice and payment of the Exercise Price in respect of the Allotted Warrants to the Borrower’s Account. For the avoidance of doubt, it is clarified that the Exercise Shares shall be actually received by the Lender (if the Lender chose to exercise the Allotted Warrants) only after they are listed in accordance with the provisions of the TASE’s Regulations and the directives issued thereunder. The Borrower shall hold the consideration for the shares in trust for the Lender and shall not make any use of the warrant exercise proceeds until the Exercise Shares have been received by the Lender. |
| 7.1.6 | The Exercise Shares issued as a result of the exercise of the Allotted Warrants by the Lender shall rank pari passu in all respects with the Ordinary Shares. |
| 7.2 | Conditions precedent to the allocation of the Allotted Warrants |
| 7.2.1 | Within 2 Business Days following the date of signing of This Agreement, the Borrower shall submit an application to the TASE for the allotment of the Allotted Warrants and for the listing of the Exercise Shares (if the Allotted Warrants are exercised) (“TASE’s Approval for the Warrants”). |
| 7.2.2 | It is agreed that the allotment of the Allotted Warrants to the Lender is conditional upon receipt of the TASE’s approval for the listing of the Exercise Shares, and shall take effect subject to the fulfillment of this condition precedent (the “Condition Precedent with respect to the Allotted Warrants”). |
| 7.2.3 | The Borrower shall notify the Lender after the fulfillment of the Condition Precedent with respect to the Allotted Warrants (the “Borrower’s Notice”). |
| 8. | Acceleration |
| 8.1 | Acceleration – Non-receipt of TASE’s approval of the Convertible Debenture |
In addition to any other provision of This Agreement, the parties agree that upon the occurrence of one (or more) of the events set forth below, the Outstanding Debt shall be accelerated:
| 8.1.1 | The Borrower notified the Lender that neither the TASE’s approval for the Convertible Debenture nor the TASE’s Approval for the Warrants has been obtained. |
| 8.1.2 | The TASE’s approval for the Convertible Debenture or the TASE’s Approval for the Warrants has been obtained subject to conditions which, in the Lender’s sole discretion, materially and adversely change the terms of the transaction contemplated herein. |
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| 8.2 | Acceleration – Events of default |
Without derogating from the generality of the provisions of This Agreement and from any remedy available to the Lender under law, upon the occurrence of a Default Event (among ones specified below) (“Default Event/s”), provided that the cure/remedy period in respect of such event (if any) has elapsed, the Lender shall be entitled (but not obligated), at her sole discretion, to accelerate the Outstanding Debt, or any part thereof, and other amounts owing to her, regardless of whether or not the payment due date has arrived.
Below are the Default Events:
| 8.2.1 | The Borrower failed to comply with the repayment terms of any of the payments specified in This Agreement, without the Lender’s prior written consent. |
| 8.2.2 | The Borrower breached any of its undertakings under This Agreement and has not remedied such breach within 15 days from the date of the breach. |
| 8.2.3 | An attachment is imposed and/or similar enforcement action is taken against or in respect of 50% of the Borrower’s assets, and such attachment or request to impose an attachment has not been removed or cancelled within 120 days; |
| 8.2.4 | A motion has been filed for the liquidation of the Borrower and/or for the appointment of a receiver or liquidator or a temporary or permanent trustee in respect of the Borrower or its assets, and such motion or appointment has not been removed or cancelled within 60 days; |
| 8.2.5 | The Borrower notified that it is unable to repay all of its debts upon their due date; |
| 8.2.6 | The Borrower has ceased, or has notified of its intention to cease, the conduct of all of its business activities. |
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| 8.2.7 | The Borrower’s shares have been delisted from the TASE and are not listed on TASE in Israel or on a stock exchange outside of Israel. |
| 8.3 | In the event that any of the events listed in Sections 8.1 through 8.2 (inclusive) above occur and the Outstanding Debt is accelerated as aforesaid, the Borrower undertakes to repay the Outstanding Debt within 14 Business Days from the date of receipt of the Lender’s written demand. |
| 8.4 | For the avoidance of doubt, it is clarified that the Lender’s right to accelerate the Outstanding Debt and/or to take measures for the collection of the Outstanding Debt in respect of any of the events listed in Sections 8.1 through 8.2 (inclusive) constitutes a separate right with respect to each of the sub-sections, and the occurrence of any one Default Event shall be sufficient for the exercise of the Lender’s rights as provided in this section. |
| 8.5 | Without derogating from the aforesaid, in any case of acceleration, the Lender shall be entitled to take any and all measures she deems fit for the collection of the Outstanding Debt. |
| 8.6 | In the event that the Loan is declared due and payable as detailed above, an arrears interest shall be added to the Loan interest, as customary in the Israeli banking system, starting from the date of acceleration until the date of actual payment. |
| 8.7 | Any amounts received by the Lender or by anyone on her behalf as a result of collection actions taken (if any) in connection with the acceleration of the Outstanding Debt, shall be applied in the following order; (a) payment of expenses, levies, and obligations incurred by the Lender or by anyone on her behalf in connection with the collection of the Outstanding Debt; (b) payment of arrears interest pursuant to Section 8.6 above; (c) payment of the Loan interest; and (d) payment of the Loan Principal. |
| 9. | Conversion of the Loan |
| 9.1 | Loan Conversion terms |
The parties agree that, as of the date of receipt of the TASE’s approval, the Lender shall be entitled, at any time and until the expiration of the Loan Term, to convert the outstanding unpaid balance of the Loan (in whole or in part) into Ordinary Shares of the Borrower, provided that in each conversion at least 10% of the principal amount of the Loan, as stated as of the date of signing of This Agreement, is converted in accordance with the provisions of This Agreement and subject to the terms and conditions set forth below (the “Conversion Shares” and the “Loan Conversion” respectively):
| 9.1.1 | Loan Conversion price |
ILS 12 per share (the “Conversion Price”).
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| 9.1.2 | Conversion Shares amount |
| 9.1.2.1 | Until the lapse of 6 months from the date of provision of the Loan, the number of Conversion Shares shall be equal to the ratio between the principal of the Loan that the Lender seeks to convert (or any portion thereof), together with the Loan interest accrued thereon up to the date of conversion, and the Conversion Price. | |
For example, if the Lender seeks to convert an amount of ILS 1,000,000 out of the Loan Principal, and the conversion date occurs 3 months following the date of provision of the Loan:
(Loan Principal + interest (ILS 1,025,000)) / Conversion Price (ILS 12) = Conversion Shares (85,417) |
| 9.1.2.2 | Strating from the lapse of 6 months from the date of provision of the Loan, the number of Conversion Shares shall be equal to the ratio between the total principal amount of the Loan that the Lender seeks to convert (or any portion thereof), together with the Loan interest to be calculated up to the contractual maturity date, and the Conversion Price. | |
For example, if the Lender seeks to convert an amount of ILS 1,000,000 out of the Loan Principal, and the conversion date occurs 9 months following the date of provision of the Loan:
(Loan Principal + interest (ILS 1,210,000)) / Conversion Price (ILS 12) = Conversion Shares (100,833) |
| 9.1.2.3 | It is hereby clarified that the Loan is convertible into whole Ordinary Shares only, and in no event shall fraction shares be issued as a result of such conversion. If fraction shares would otherwise result from the conversion of the Loan, such fraction shares shall be rounded up or down to the nearest whole share number. |
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| 9.1.2.4 | The Lender’s right in connection with the Loan Conversion, the Conversion Shares or the Convertible Debenture shall not be subject to any adjustments of any kind, including in cases of bonus share distribution, dividend distribution, rights offering, changes in the Company’s share capital, or any merger, acquisition or reorganization transaction, other than in the case of an Additional Funding as specified in Section 10 below. 7.1.4 |
| 9.2 | Loan Conversion method |
| 9.2.1 | The Loan Conversion by the Borrower shall be carried out in accordance with the provisions of Section 9.1 above, following receipt of a written notice from the Lender, in the language to be determined by the Borrower, which shall include, inter alia, the name of the Lender, the Loan Conversion Price and the amount of the Loan to be converted (the “Conversion Notice”). |
| 9.2.2 | The Loan Conversion shall be in effect upon receipt of the Conversion Notice by the Borrower. For the avoidance of doubt, it is clarified that the Conversion Shares shall be received by the Lender in practice (insofar as the Lender sought to convert the Loan) only following their listing in accordance with the provisions of the TASE Regulations and the directives by virtue thereof. |
| 9.2.3 | The Loan Conversion shall be carried out in practice (namely – the Borrower shall act vis-à-vis TASE’s nominee company for the purpose of allocation of the Conversion Shares) within 5 Business Days from the date on which the Borrower received the Lender’s written request therefor, subject to TASE’s approval, the provisions of any law, and the provisions of the TASE’s Regulations including its directives (the “Conversion Date”). |
| 9.2.4 | The Conversion Shares derived as a result of the Loan Conversion shall be equal in their rights to the Ordinary Shares for all intents and purposes. |
| 9.3 | As of the Conversion Date, the provisions of This Agreement shall apply between the parties as if, from the outset, the total amount converted pursuant to the Loan Conversion had been transferred to the Borrower as consideration for the Conversion Shares. |
| 9.4 | For the avoidance of doubt, it is clarified that the full conversion of the Loan and the allotment of all of the Conversion Shares as aforesaid shall constitute full, final and absolute repayment of the Outstanding Debt contemplated herein. |
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| 10. | The Lender’s participation in the Additional Funding round |
Notwithstanding the foregoing, if during the Loan Term the Borrower raises capital, or performs a merger or acquisition, or conducts a rights offering, at a price per share lower than the Conversion Price (the “Additional Funding Price” and the “Additional Funding”, respectively):
| 10.1 | The Lender shall be entitled to perform the Loan Conversion (in whole or in part) at the Additional Funding Price, provided that such Loan Conversion is performed for each 3 months following the completion of the Additional Funding, in accordance with the provisions of Section 9.2 above (mutatis mutandis); and |
| 10.2 | The Lender shall be entitled to exercise the Allotted Warrants (in whole or in part) in consideration for the Reduced Exercise Price, provided that such exercise of the Allotted Warrants shall be performed no later than 3 months following the completion of the Additional Funding, in accordance with the provisions of Section 0 above (mutatis mutandis). |
“Reduced Exercise Price” – cash amount reflecting the product of: (1) the total number of Allotted Options in respect of which an Exercise Notice has been delivered; and (2) the product obtained by multiplying the Additional Funding Price by the ratio resulting from dividing the exercise price by the Conversion Price.
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For example, if the Lender seeks to exercise a total of 100,000 Allotted Warrants in the context of the Additional Funding, and the Additional Funding Price is set at ILS 10 per share:
Allotted Warrants (100,000) × Additional Funding Price (ILS 10) × Exercise Price (ILS 14) / Conversion Price (ILS 12) = Reduced Exercise Price (ILS 1,166,667) |
For the avoidance of doubt, it is clarified that if the Lender does not perform the Loan Conversion and/or exercise the Allotted Warrants within 3 months following the completion of the Additional Funding, the Lender shall not be entitled to the adjustment set forth in this Section 10, and the Conversion Price and the Exercise Price shall be as specified in Sections 9.1.1 and 7.1.2 above (respectively).
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| 11. | Transfer of rights and assignment of obligations |
| 11.1 | The Borrower shall not transfer her rights and/or obligations under This Agreement, in whole or in part, to any third party. Any assignment/ transfer of rights and/or obligations made, if any, contrary to the provisions of this section shall be null and void and of no legal effect. |
| 11.2 | The Lender shall not transfer her rights and/or obligations under This Agreement, in whole or in part, to any third party, other than with the Borrower’s prior written consent. Any assignment/transfer of rights and/or obligations made, if any, contrary to the provisions of this section shall be null and void and of no legal effect. |
| 11.3 | Notwithstanding the provisions of Section 11.2 above, the Lender may transfer her rights and/or obligations under This Agreement, in whole or in part, to a company under her control and wholly owned by her and/or to a third party who is a first-degree family member only. |
| 12. | Adjustments |
| 12.1 | Subject to the provisions and directives of the TASE’s Regulations, the Conversion Shares, the Allotted Warrants and the Exercise Shares shall be subject to the following adjustments: |
| a. | Change in share capital structure: in any event where, prior to the Loan Conversion or the exercise of the Allotted Warrants, a change occurs in the issued share capital of the Borrower, i.e. a share split/consolidation, the number of Conversion Shares and Exercise Shares shall be proportionately decreased or increased, and/or the Conversion Price and the Exercise Consideration shall be correspondingly decreased or increased, such that in any case the total aggregate consideration payable in respect of the Loan Conversion and/or the exercise of the Allotted Warrants shall remain unchanged. |
| b. | Dividend: in the event that, prior to the Loan Conversion and/or the exercise of the Allotted Warrants, the Borrower distributes a cash dividend to the shareholders of the Company, the Conversion Price (with respect to the Conversion Shares) and the Exercise Price (with respect to the Allotted Warrants) shall be adjusted as a result of such dividend distribution as follows: on the ex-dividend date, the Conversion Price/Exercise Price shall be reduced by the amount of the gross (pre-tax) dividend amount paid as part of the dividend for each share of the Borrower. |
| c. | Bonus shares: in the event that the Borrower distributes bonus shares, the record date for their distribution being before the Loan Conversion and/or the exercise of the Allotted Warrants, the number of shares to which the Lender shall be entitled upon the Loan Conversion and/or the exercise of the Allotted Warrants, as applicable, shall increase by the number of bonus shares to which the Lender would have been entitled had it converted the Loan or exercised the Allotted Warrants prior to the record date for the distribution of the bonus shares. The Conversion Price and/or the Exercise Price shall be correspondingly reduced as a result of the increase in the number of Exercise Shares or Conversion Shares to which the Lender is entitled due to the distribution of bonus shares, such that the total aggregate consideration payable in respect of the Conversion Shares and the Exercise Shares. |
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| 13. | Miscellaneous |
| 13.1 | This Agreement exhausts the entire agreement between the parties and supersedes any and all prior understanding, representation, agreement, draft or undertaking, whether direct or for the benefit of any third party, as well as any prior negotiations, summaries, MOUs, understandings or agreements relating to This Agreement, whether written or oral, and none of the foregoing shall be used for the interpretation of this Agreement. |
| 13.2 | No amendment, modification or addendum to This Agreement, and no waiver, consent, arrangement or extension (a “Waiver”), shall be valid or binding upon the parties to This Agreement unless made in writing and duly signed by all parties to This Agreement. If the Waiver is valid, it shall apply solely to the specific instance and purpose for which it was granted and shall not constitute any estoppel or preclusion with respect to any future matter. Any Waiver granted by one party to This Agreement to the other party shall not constitute a precedent and/or construed as creating any analogy or inference with respect to any similar, different or other case. Refrainment of any party to the Agreement to exercise any right available thereto under This Agreement or under any law, or the failure to timely use such right, shall not be deemed a Waiver of such right on his part. |
| 13.3 | This Agreement and any matter arising therefrom shall be governed exclusively by the Israeli law (without the choice of law rules of the Israeli law), and no other law shall apply. |
| 13.4 | The exclusive jurisdiction with respect to any matter arising in connection with This Agreement and its performance shall lie solely with the competent court in Tel Aviv-Jaffa, which shall serve as the exclusive venue. |
| 13.5 | Any notice delivered by one party to another in connection with This Agreement shall be in writing and delivered by hand or sent by registered post to the addressee’s address specified in the preamble to This Agreement (or to such other address as the parties may notify each other from time to time), or sent by e-mail to the address specified in the preamble to This Agreement (or to such other address as the parties may notify each other from time to time). Any such notice shall be deemed to have reached its destination upon delivery thereof (if delivered by hand), or within one Business Day from the date of transmission thereof by e-mail, or within 3 Business Days from the date of dispatch by registered post, as applicable. |
In witness whereof, the parties have hereunto set their hands:
| /s/ Turbogen Ltd | /s/ Alex Katz | |
| Turbogen Ltd. | Alex Katz |
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Annex A
Restrictions on Resale
Section 15C of the Securities Law, 5728-1968
| 15C. | (a) Notwithstanding the provisions of Section 15B(3), a public offering shall be deemed as – |
| (1) | An offering during the course of trading on the stock exchange of securities listed therein, which were allotted to the offeror by an issuer in an offering pursuant to Section 15A(a)(1)(4) or (7), or in an offering made outside of Israel other than according to a prospectus, if the period prescribed in the regulations from the date of allotment has not yet elapsed, or if the additional periods prescribed in the regulations have not yet elapsed and, in each of the additional periods, one of the following has occurred: |
| (a) | The number of the securities offered exceeds the number prescribed in the regulations; |
| (b) | The percentage of the issued and paid-up share capital of the corporation whose securities are offered exceeds the percentage prescribed in the regulations; |
The provisions of this paragraph shall also apply to securities purchased during such period or additional periods, as applicable, other than according to a prospectus and not during the course of trading on the stock exchange, from the offeror or from a corporation controlled by the corporation whose securities are offered, as well as to securities resulting from the exercise or conversion of securities allotted as stated in this paragraph;
| (2) | (Deleted). |
(b) The provisions of paragraph (a) shall not apply to an offer made in the course of trading on the stock exchange by the State, or by anyone who purchased securities that were offered by the State in the course of a privatization, within the meaning thereof in Section 15B.
Regulation 5 of the Securities Regulations (Details for Purposes of Sections 15A to 15C of the Law), 5760-2000
5. (a) The period from the day of allotment for purposes of Section 15C(a)(1) of the Law, with respect to securities allotted to the offeror by an issuer pursuant to Sections 15A(a)(1), (4) or (7), or in an offering made outside of Israel other than according to a prospectus, shall be six months; the period with respect to securities so allotted by an issuer to a corporation under its control shall be one year.
(b) The additional periods for purposes of Section 15C(a)(1) of the Law, with respect to securities allotted to the offeror by an issuer pursuant to Sections 15A(a)(1), (4) or (7), or in an offering made outside of Israel other than in accordance with a prospectus, shall be six consecutive quarters; the period with respect to securities so allotted by an issuer to a corporation under its control shall be eight consecutive quarters.
(c) The number of securities that may be offered on any trading day on the stock exchange for purposes of Section 15C(a)(1)(a) of the Law shall be the daily average of the stock exchange trading volume of securities of the type being offered during the eight-week period preceding the day of the offering.
(d) The percentage for purposes of Section 15C(a)(1)(b) of the Law, as of the day of the offering, shall be one percent of the issued and paid-up share capital of the corporation whose securities are offered, during each quarter; in this regulation, “issued and paid-up share capital” – other than shares resulting from the exercise or conversion of convertible securities that were allotted up to the day of the offering and have not yet been exercised or converted.
(e) The period for purposes of Section 15C(a)(2) of the Law shall be two years from the day of allotment.
(f) In this regulation, “quarter” means a period of three months; the first quarter shall commence at the end of the period stated in sub-regulation (a), as applicable.
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Exhibit 10.4
This is a translation into English of the official Hebrew version of this agreement. In the event of a conflict between the English and Hebrew texts, the Hebrew text shall prevail.
Convertible Loan Agreement
Entered into and signed on July 2, 2023
| Between: | TurboGen Ltd. |
Company no. 515086056
of 22 Efal Street, Petah Tikva 4951122
(the “Borrower”)
| And: | Alex Katz |
(the “Lender”)
of the second part;
| Whereas: | The Borrower wishes to receive a loan from the Lender, in accordance with the terms and conditions set forth in This Agreement below, and the Lender agrees to provide such loan to the Borrower; and |
| Whereas: | The parties wish that the loan to be provided by the Lender to the Borrower pursuant to This Agreement shall be convertible into shares, such that immediately upon the fulfillment of the conditions for conversion, the Lender shall have the right, but not the obligation, to receive from the Borrower the Conversion Shares by way of an allotment; and in addition, the Borrower shall allot to the Lender, for no consideration, within a period of up to 60 days, options exercisable into the Borrower’s Ordinary Shares, all in accordance with and subject to the provisions of This Agreement; and |
| Whereas: | The allotments contemplated in This Agreement require the approval of the Borrower’s authorized organs, including the General Meeting of shareholders, and the approval of the Tel Aviv Stock Exchange Ltd. (“TASE” or the “Stock Exchange”), all as detailed in This Agreement; and |
| Whereas: | The parties wish to establish and set forth in This Agreement the legal relations between them with respect to the terms of provision of the loan contemplated herein, its conversion (in whole or in part) or its repayment, and the terms of the Allotted Options and exercise thereof, all in accordance with and subject to the provisions of This Agreement; |
NOW, THEREFORE, IT IS DECLARED, STIPULATED, AND AGREED BETWEEN THE PARTIES AS FOLLOWS:
| 1. | General; Interpretation |
| 1.1. | The preamble to This Agreement and its annexes constitute an integral part hereof. |
| 1.2. | The division of This Agreement into sections and subsections and the headings used herein are for convenience purposes only and shall not be used for interpretation. |
| 1.3. | Words in the singular shall include the plural and vice versa; words in the masculine shall include the feminine and vice versa, as the context requires, unless expressly stated otherwise. |
| 1.4. | In This Agreement, the following terms shall have the meanings set forth beside them, unless the context or content requires otherwise: |
| 1.4.1. | “Allotted Options” – as defined in Section 7.1.1 below; |
| 1.4.2. | “The Loan” or “The Loan Principal” – as defined in Section 4.1.1 below; |
| 1.4.3. | “This Agreement” – This Agreement, as may be amended from time to time with the consent of the parties; |
| 1.4.4. | “Conversion of the Loan” – as described in Section 9 below; |
| 1.4.5. | “Outstanding Debt” – The Loan Principal, plus interest and all sums of any kind that the Borrower may be liable to pay to the Lender in connection with the Loan, as they may be from time to time; |
| 1.4.6. | “Companies Law” – The Companies Law, 5759-1999, and the regulations thereunder, as amended from time to time; |
| 1.4.7. | “Insolvency Law” – The Insolvency and Economic Rehabilitation Law, 5778-2018, and the regulations thereunder, as amended from time to time; |
| 1.4.8. | “Securities Law” – The Securities Law, 5728-1968, and the regulations thereunder, as amended from time to time; |
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| 1.4.9. | “Business Day” – Sunday through Thursday of each week, provided they are not holidays, festivals, holiday eves, or sabbatical days; |
| 1.4.10. | “Conversion Shares” – as defined in Section 9.1 below; |
| 1.4.11. | “Exercise Shares” – as defined in Section 7.1.1 below. |
| 2. | The Borrower’s representations |
The Borrower represents and warrants to the Lender that it is aware that the Lender has agreed to enter into This Agreement in full reliance upon its representations and warranties herein, and that each such representation is true and accurate in all its details as of the date of signing:
| 2.1. | The Borrower is a public company whose shares are listed for trading on TASE, duly incorporated under the laws of the State of Israel and duly registered with the Registrar of Companies. |
| 2.2. | The authorized share capital of the Borrower consists of 100,000,000 Ordinary Shares, par value NIS 0.01 each (“Ordinary Shares”). As of the date of signing This Agreement, the issued and paid-up capital of the Borrower is 13,781,947 Ordinary Shares. The Borrower’s securities register is as detailed in the Borrower’s immediate report published via Magna on June 21, 2023 (Reference 2023-01-058657). |
| 2.3. | There is no impediment under any agreement or law, including the Borrower’s incorporation documents, to its entry into This Agreement and the performance of all its obligations hereunder. |
| 2.4. | This Agreement has been duly signed by the Borrower and its obligations hereunder constitute valid, binding, and enforceable obligations. |
| 2.5. | The Conversion Shares, when and if allotted to the Lender, shall rank pari passu in all respects with the Ordinary Shares, and shall be fully paid up, free and clear of any debt, charge, pledge, lien, or any third-party rights. |
| 2.6. | The Borrower represents that its entry into This Agreement, as well as the execution and completion of the allotments contemplated herein, are subject to the approval of the Borrower’s authorized organs, including the General Meeting, and to the approval of TASE for the convertible undertaking and the options. |
| 2.7. | The Borrower undertakes to notify the Lender of any change in any of the representations in this section immediately upon its occurrence, and in any event no later than 12 hours from such change. |
| 2.8. | The Borrower undertakes that all public reports up to the date of signing This Agreement are true and accurate. |
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| 3. | The Lender’s representations |
The Lender represents and warrants to the Borrower that he is aware that the Borrower has agreed to enter into This Agreement in full reliance upon his representations and warranties herein, and that each is true and accurate as of the date of signing:
| 3.1. | The Lender is a private individual, citizen, and resident of the State of Israel. |
| 3.2. | The Lender possesses all means to perform his obligations hereunder in full and in due course and has sufficient business experience and ability to evaluate the business risks inherent in This Agreement. |
| 3.3. | The Lender has considered the tax aspects of the transaction applicable to him, and the Borrower has not presented any representation to him in any of these matters. The Lender agrees that he alone shall bear all tax liabilities in respect of the conversion of the Loan and/or the exercise of the Allotted Options in connection with the Conversion Shares and/or the Allotted Options and/or the Exercise Shares. It is known to the Lender that the Borrower will withhold taxes at source as required by law. Without derogating from the above, it is known to the Lender that the allotment for the sale of the Conversion Shares and/or the Allotted Options and/or the Exercise Shares may have tax implications. It will be clarified that it is recommended that the Lender consult a tax advisor regarding the tax implications resulting from these events. |
| 3.4. | The Lender has received all permits and approvals required under any law in connection with his entry into This Agreement and the performance of his obligations hereunder. |
| 3.5. | This Agreement has been duly signed by the Lender and constitutes valid, binding, and enforceable obligations. |
| 3.6 | The Lender is not affiliated with any of the controlling shareholders of the Borrower and/or their relatives and/or any of the Borrower’s officers and/or their relatives, directly and/or indirectly. Taking into account the Loan Conversion and the full exercise of the Allotted Warrants, and immediately following the Loan Conversion and the full exercise of the Allotted Warrants, the Lender’s total holdings in the Borrower (including any additional holdings of the Lender in the Borrower’s securities, if any, and including holdings together with others, if any) shall be less than 5% of the Borrower’s issued and paid-up share capital and of the voting rights therein, as of the date of signing of This Agreement. |
| 3.7 | No securities of the Company have been allotted to the Lender or to anyone on her behalf, to her relative, to a controlling shareholder of hers, to a corporation controlled by its controlling shareholder, or to a relative of its controlling shareholder. |
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| 3.8 | There are no agreements, whether written or oral, between the Lender and any shareholder of the Borrower and/or any holder of the Borrower’s securities or others (all or part of them), regarding the purchase or sale of the Borrower’s securities, or regarding voting rights in the Borrower. |
| 3.9. | The Lender is a “Qualified Investor” (Accredited Investor) as defined in Section 15A(b)(1) of the Securities Law. |
| 3.10. | The Lender is aware that the Conversion Shares and/or the Exercise Shares shall be subject to transfer restrictions (lock-up) with respect to transactions therein, in accordance with the provisions of Section 15C of the Securities Law and by virtue of the Securities Regulations (Details Regarding Sections 15A to 15C of the Law), 5760-2000 (the “Restrictions”), and undertakes to comply with such Restrictions. For convenience only, the Restrictions arising from the aforesaid provisions of law are attached hereto as Annex A, in the language in effect as of the date of signing of This Agreement. For the avoidance of doubt, it is clarified that the Restrictions shall also apply in the event that the Exercise Shares and/or the Conversion Shares are transferred to another party. |
| 3.11 | The Lender is aware that the Allotted Warrants are acquired by her on an as-is basis, without any representation, warranty, or indemnity on behalf of the Borrower, and she shall have no right of action and/or demand and/or argument against the Borrower or anyone on its behalf in connection with the Borrower and its condition (other than in connection with her representations above) and/or in connection with the Allotted Warrants. |
| 3.12 | The Lender is aware that the Borrower may, from time to time, grant rights and/or allot shares, additional options, and other securities to various entities and individuals, all at the Borrower’s sole discretion. |
| 3.13 | In order to enable the Borrower to allot Ordinary Shares following the Loan Conversion and/or the exercise of the Allotted Warrants, the Lender undertakes to sign any document that may be required and necessary under any law and/or under the Borrower’s articles of association. |
| 3.14 | The Lender is aware that, in accordance with the provisions of the Securities Law, upon receipt of approval by the Borrower’s authorized organs, or at a later date, the Borrower shall release an immediate report regarding This Agreement, including about the details of the Lender, the Conversion Shares and the terms for the Loan Conversion, and the Allotted Warrants and the terms for their exercise. |
| 3.15 | The Lender is aware that she shall not be entitled to receive the Conversion Shares and/or the Exercise Shares from the Borrower prior to full payment of any tax that the Borrower may be required, if any, to withhold at source, as required by law. |
| 3.16 | The Lender undertakes to notify the Borrower of any change in any of the representations in this section immediately upon its occurrence, and in any event no later than 12 hours from the occurrence of such change. |
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| 4. | The Loan |
| 4.1 | The Loan Principal: |
| 4.1.1 | The Lender shall provide the Borrower, and the Borrower shall receive from the Lender, a monetary loan of NIS 4,000,000 (four million New Israeli Shekels) (the “Loan” or the “Loan Principal”, as applicable). |
| 4.1.2. | No later than 2 Business Days from the date of signing of This Agreement, the Lender shall provide half of the loan amount (NIS 2,000,000) to the Borrower’s account. The remaining amount of (NIS 2,000,000) shall be provided within 30 days. The funds shall be deposited into a bank account it the name of the Borrower, the details of which shall be provided by the Borrower to the Lender in writing (together with a bank account management confirmation) (the “Borrower’s Account”). |
| 4.1.3 | Insofar as the Lender has provided the Loan Principal (or any part thereof) to the Borrower prior to receiving the approval of the Borrower’s authorized organs and receiving the Stock Exchange’s approval for the Convertible Undertaking and the Stock Exchange’s approval for the Options (as these terms are defined below), the Borrower shall not make any use of the loan funds received by it from the Lender. |
| 4.2. | Interest: |
| 4.2.1 | The outstanding balance of the Loan Principal shall bear annual interest at a rate of 10% (the “Loan Interest”), which shall be added to the outstanding balance of the Loan Principal at the end of the Loan Period (as such term is defined below). |
| 4.2.2 | Lawful VAT shall be added to the payment of the Loan Interest. |
| 4.3 | A resolutory condition – non receipt of the TASE’s approval of the convertible debenture |
| 4.3.1 | Close to the date of signing of This Agreement, the Borrower shall submit to TASE an application for the allotment of an unlisted convertible debenture, which may be converted into the Convertible Shares (the “Convertible Debenture”). |
| 4.3.2 | If the TASE’s approval for the allotment of the Convertible Debenture and for the listing of the Conversion Shares (if the Loan is not converted) (the “TASE’s Approval for the Convertible Debenture”) is not obtained within 30 Business Days from the date the Loan is actually provided, the Lender shall have the right to accelerate the Outstanding Debt, in accordance with the provisions of Section 8 below. |
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| 5. | Terms of payment |
| 5.1 | The Loan Principal shall be repaid and the Loan Interest shall be paid in a single bullet payment on 26 June 2025, or converted into the Conversion Shares, whichever is earlier, in accordance with the dates and subject to the conditions set forth in Sections 8 and 9 below (the “End of the Loan Period” or the “Loan Period”, respectively). |
| 5.2 | The Borrower shall be entitled to repay the Outstanding Debt, in whole or in part, at any time, at its sole discretion, and for the avoidance of doubt, also prior to the End of the Loan Period. In the event of repayment of the Outstanding Debt prior to the End of the Loan Period as aforesaid, the Borrower shall provide the Lender with prior written notice of 7 Business Days before the requested repayment date, and during such period the Lender shall be given the opportunity to choose between conversion of the debt into the Conversion Shares or repayment thereof as aforesaid. |
| 5.3 | If the due date for any payment under This Agreement falls on a day that is not a Business Day, the payment shall be made on the next Business Day. It is clarified that any amount whose payment is deferred as aforesaid shall not bear interest until its full repayment, as applicable, other than if such amount is not paid on the next Business Day. |
| 5.4 | If the Borrower repays the Outstanding Debt, in whole or in part, before the End of the Loan Period, the Loan shall bear interest as specified in Section 8.6 below. |
| 5.5 | The Lender shall provide the Borrower with a withholding tax exemption from the Israel tax authorities specifying the rate of tax that the Borrower is required to withhold at source in connection with the payment of the Loan Interest to the Lender under This Agreement. It is clarified that if the Lender does not provide such approval by the date on which the Loan Interest payment is actually made under This Agreement, the Borrower shall withhold from the payment the tax it is required to withhold at source. |
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| 6. | The Borrower’s undertakings during the Loan Period |
During the Loan Period, or at any earlier date on which This Agreement terminates in accordance with its provisions, the Borrower undertakes, subject to any law and agreement, to use its best efforts to ensure the continuation of its ordinary course of operations and to conduct its ordinary course of business, as conducted before the signing of This Agreement.
| 7. | An option to invest in the Borrower during the Loan Period |
| 7.1 | Allocation of the allotted shares |
| 7.1.1 | The Borrower shall allot to the Lender, immediately after receipt of the TASE’s approval for the warrants, 285,714 unlisted warrants, exercisable into up to 285,714 Ordinary Shares (the “Exercise Shares” and the “Allotted Warrants”, respectively), for no consideration. |
| 7.1.2 | Each Allotted Warrant shall be exercisable for one Ordinary Share, subject to payment of the Exercise Price and subject to all terms and conditions set forth in This Agreement. |
“Exercise Price” – the sum of ILS 14 (not link to any index basis).
| 7.1.3 | The Allotted Warrants to be allotted to the Lender shall be exercisable during a period commencing on the date of allotment of the warrants and ending on June 26, 2025 (the “Expiration Date”). For the avoidance of doubt, it is clarified that all of the Allotted Warrants granted to the Lender that are not exercised by the Expiration Date shall expire and shall no longer confer any rights on the Lender. |
| 7.2 | Exercise of the Allotted Warrants |
| 7.2.2 | The exercise of the Allotted Warrants shall become effective upon the Borrower’s receipt of the Exercise Notice and payment of the Exercise Price in respect of the Allotted Warrants to the Borrower’s Account. For the avoidance of doubt, it is clarified that the Exercise Shares shall be actually received by the Lender (if the Lender chose to exercise the Allotted Warrants) only after they are listed in accordance with the provisions of the TASE’s Regulations and the directives issued thereunder. The Borrower shall hold the consideration for the shares in trust for the Lender and shall not make any use of the warrant exercise proceeds until the Exercise Shares have been received by the Lender. |
| 7.2.3 | It is clarified that, in accordance with the Stock Exchange regulations and its guidelines, no exercise shall be performed on the record date for the distribution of bonus shares, an offer by way of rights, a dividend distribution, a share split, a share consolidation or a capital reduction (a “Corporate Event”). Furthermore, if the Ex-Date of a Corporate Event occurs before the Record Date of a Corporate Event, no exercise shall be performed on the Ex-Date as aforesaid. In any such case as aforesaid, the date of issuance as a result of the exercise shall be postponed to the first trading day after the Ex-Date. |
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| 7.2.4 | The Allocated Options are exercisable into whole ordinary shares only, and in no case shall fractional shares result from the exercise as aforesaid; if fractional shares would have resulted from the exercise as aforesaid, the fractional shares shall be rounded down to the nearest whole number. |
| 7.2.5 | The Exercise Shares resulting from the exercise of the Allocated Options to the Lender shall be equal in their rights to ordinary shares for all intents and purposes and shall be registered in the name of the Registration Company of the Tel Aviv Stock Exchange Ltd. or in the name of the registration company through which the Borrower’s shares are held at that time (the “Registration Company”). |
| 7.3 | Conditions precedent to the allocation of the Allotted Warrants |
| 7.3.1 | Immediately following the date of signing this Agreement, the Borrower shall submit an application to the TASE for allotment of the Allotted Warrants and for the listing of the Exercise Shares (if the Allotted Warrants are exercised) (“TASE’s Approval for the Warrants”). |
| 7.3.2 | It is agreed that the allotment of the Allotted Warrants to the Lender is conditional upon receipt of the TASE’s approval for the listing of the Exercise Shares and shall take effect subject to the fulfillment of this condition precedent (the “Condition Precedent with respect to the Allotted Warrants”). |
| 7.3.3 | The Borrower shall notify the Lender after the fulfillment of the Condition Precedent with respect to the Allotted Warrants (the “Borrower’s Notice”). |
| 8 | Acceleration |
| 8.1 | Acceleration – Non-receipt of TASE’s approval of the Convertible Debenture |
In addition to any other provision of This Agreement, the parties agree that upon the occurrence of one (or more) of the events set forth below, the Outstanding Debt shall be accelerated:
| 8.1.1 | The general meeting of the Borrower’s shareholders did not approve the allocations detailed in this Agreement; |
| 8.1.2 | The Borrower notified the Lender that neither the TASE’s approval for the Convertible Debenture nor the TASE’s Approval for the Warrants has been obtained. |
| 8.1.3 | The TASE’s approval for the Convertible Debenture or the TASE’s Approval for the Warrants has been obtained subject to conditions which, in the Lender’s sole discretion, materially and adversely change the terms of the transaction contemplated herein. |
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| 8.2 | Acceleration – Events of default |
Without derogating from the generality of the provisions of This Agreement and from any remedy available to the Lender under law, upon the occurrence of a Default Event (among ones specified below) (“Default Event/s”), provided that the cure/remedy period in respect of such event (if any) has elapsed, the Lender shall be entitled (but not obligated), at her sole discretion, to accelerate the Outstanding Debt, or any part thereof, and other amounts owing to her, regardless of whether or not the payment due date has arrived.
Below are the Default Events:
| 8.2.1 | The Borrower failed to comply with the repayment terms of any of the payments specified in This Agreement, without the Lender’s prior written consent. |
| 8.2.2 | The Borrower breached any of its undertakings under This Agreement and has not remedied such breach within 15 days from the date of the breach. |
| 8.2.3 | An attachment is imposed and/or similar enforcement action is taken against or in respect of 50% of the Borrower’s assets, and such attachment or request to impose an attachment has not been removed or cancelled within 120 days; |
| 8.2.4 | A motion has been filed for the liquidation of the Borrower and/or for the appointment of a receiver or liquidator or a temporary or permanent trustee in respect of the Borrower or its assets, and such motion or appointment has not been removed or cancelled within 60 days; |
| 8.2.5 | The Borrower notified that it is unable to repay all of its debts upon their due date; |
| 8.2.6 | The Borrower has ceased, or has notified of its intention to cease, the conduct of all of its business activities. |
| 8.2.7 | The Borrower’s shares have been delisted from the TASE and are not listed on TASE in Israel or on a stock exchange outside of Israel. |
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| 8.3 | In the event that any of the events listed in Sections 8.1 through 8.2 (inclusive) above occur and the Outstanding Debt is accelerated as aforesaid, the Borrower undertakes to repay the Outstanding Debt within 14 Business Days from the date of receipt of the Lender’s written demand. |
| 8.4 | For the avoidance of doubt, it is clarified that the Lender’s right to accelerate the Outstanding Debt and/or to take measures for the collection of the Outstanding Debt in respect of any of the events listed in Sections 8.1 through 8.2 (inclusive) constitutes a separate right with respect to each of the sub-sections, and the occurrence of any one Default Event shall be sufficient for the exercise of the Lender’s rights as provided in this section. |
| 8.5 | Without derogating from the aforesaid, in any case of acceleration, the Lender shall be entitled to take any and all measures she deems fit for the collection of the Outstanding Debt. |
| 8.6 | In the event that the Loan is declared due and payable as detailed above, an arrears interest shall be added to the Loan interest, as customary in the Israeli banking system, starting from the date of acceleration until the date of actual payment. |
| 8.7 | Any amounts received by the Lender or by anyone on her behalf as a result of collection actions taken (if any) in connection with the acceleration of the Outstanding Debt, shall be applied in the following order; (a) payment of expenses, levies, and obligations incurred by the Lender or by anyone on her behalf in connection with the collection of the Outstanding Debt; (b) payment of arrears interest pursuant to Section 8.6 above; (c) payment of the Loan interest; and (d) payment of the Loan Principal. |
| 9 | Conversion of the Loan |
| 9.1 | Loan Conversion terms |
The parties agree that, as of the date of receipt of the TASE’s approval, the Lender shall be entitled, at any time and until the expiration of the Loan Term, to convert the outstanding unpaid balance of the Loan (in whole or in part) into Ordinary Shares of the Borrower, provided that in each conversion at least 10% of the principal amount of the Loan, as stated as of the date of signing of This Agreement, is converted in accordance with the provisions of This Agreement and subject to the terms and conditions set forth below (the “Conversion Shares” and the “Loan Conversion” respectively):
| 9.1.1 | Loan Conversion price |
ILS 12 per share (the “Conversion Price”).
| 9.1.2 | Conversion Shares amount |
| 9.1.2.1 | Until the lapse of 6 months from the date of provision of the Loan, the number of Conversion Shares shall be equal to the ratio between the principal of the Loan that the Lender seeks to convert (or any portion thereof), together with the Loan interest accrued thereon up to the date of conversion, and the Conversion Price. | |
For example, if the Lender seeks to convert an amount of ILS 1,000,000 out of the Loan Principal, and the conversion date occurs 3 months following the date of provision of the Loan:
(Loan Principal + interest (ILS 1,025,000)) / Conversion Price (ILS 12) = Conversion Shares (85,417) |
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| 9.1.2.2 | Strating from the lapse of 6 months from the date of provision of the Loan, the number of Conversion Shares shall be equal to the ratio between the total principal amount of the Loan that the Lender seeks to convert (or any portion thereof), together with the Loan interest to be calculated up to the contractual maturity date, and the Conversion Price. |
For example, if the Lender seeks to convert an amount of ILS 1,000,000 out of the Loan Principal, and the conversion date occurs 9 months following the date of provision of the Loan:
(Loan Principal + interest (ILS 1,210,000)) / Conversion Price (ILS 12) = Conversion Shares (100,833) |
| 9.1.2.3 | It is hereby clarified that the Loan is convertible into whole Ordinary Shares only, and in no event shall fraction shares be issued as a result of such conversion. If fraction shares would otherwise result from the conversion of the Loan, such fraction shares shall be rounded up or down to the nearest whole share number. |
| 9.1.2.4 | The Lender’s right in connection with the Loan Conversion, the Conversion Shares or the Convertible Debenture shall not be subject to any adjustments of any kind, including in cases of bonus share distribution, dividend distribution, rights offering, changes in the Company’s share capital, or any merger, acquisition or reorganization transaction, other than in the case of an Additional Funding as specified in Section 10 below. 7.1.4. |
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| 9.2 | Loan Conversion method |
| 9.2.1 | The Loan Conversion by the Borrower shall be carried out in accordance with the provisions of Section 9.1 above, following receipt of a written notice from the Lender, in the language to be determined by the Borrower, which shall include, inter alia, the name of the Lender, the Loan Conversion Price and the amount of the Loan to be converted (the “Conversion Notice”). |
| 9.2.2 | The Loan Conversion shall be in effect upon receipt of the Conversion Notice by the Borrower. For the avoidance of doubt, it is clarified that the Conversion Shares shall be received by the Lender in practice (insofar as the Lender sought to convert the Loan) only following their listing in accordance with the provisions of the TASE Regulations and the directives by virtue thereof. |
| 9.2.3 | The Loan Conversion shall be carried out in practice (namely – the Borrower shall act vis-à-vis TASE’s nominee company for the purpose of allocation of the Conversion Shares) within 5 Business Days from the date on which the Borrower received the Lender’s written request therefor, subject to TASE’s approval, the provisions of any law, and the provisions of the TASE’s Regulations including its directives (the “Conversion Date”). |
| 9.2.4 | The Conversion Shares derived as a result of the Loan Conversion shall be equal in their rights to the Ordinary Shares for all intents and purposes. |
| 9.3 | As of the Conversion Date, the provisions of This Agreement shall apply between the parties as if, from the outset, the total amount converted pursuant to the Loan Conversion had been transferred to the Borrower as consideration for the Conversion Shares. |
| 9.4 | For the avoidance of doubt, it is clarified that the full conversion of the Loan and the allotment of all of the Conversion Shares as aforesaid shall constitute full, final and absolute repayment of the Outstanding Debt contemplated herein. |
| 10 | The Lender’s participation in the Additional Funding round |
Notwithstanding the foregoing, if during the Loan Term the Borrower raises capital, or performs a merger or acquisition, or conducts a rights offering, at a price per share lower than the Conversion Price (the “Additional Funding Price” and the “Additional Funding”, respectively):
| 10.1 | The Lender shall be entitled to perform the Loan Conversion (in whole or in part) at the Additional Funding Price, provided that such Loan Conversion is performed for each 3 months following the completion of the Additional Funding, in accordance with the provisions of Section 9.2 above (mutatis mutandis); and |
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| 10.2 | The Lender shall be entitled to exercise the Allotted Warrants (in whole or in part) in consideration for the Reduced Exercise Price, provided that such exercise of the Allotted Warrants shall be performed no later than 3 months following the completion of the Additional Funding, in accordance with the provisions of Section 0 above (mutatis mutandis). |
“Reduced Exercise Price” – cash amount reflecting the product of: (1) the total number of Allotted Options in respect of which an Exercise Notice has been delivered; and (2) the product obtained by multiplying the Additional Funding Price by the ratio resulting from dividing the exercise price by the Conversion Price.
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For example, if the Lender seeks to exercise a total of 100,000 Allotted Warrants in the context of the Additional Funding, and the Additional Funding Price is set at ILS 10 per share:
Allotted Warrants (100,000) × Additional Funding Price (ILS 10) × Exercise Price (ILS 14) / Conversion Price (ILS 12) = Reduced Exercise Price (ILS 1,166,667) |
For the avoidance of doubt, it is clarified that if the Lender does not perform the Loan Conversion and/or exercise the Allotted Warrants within 3 months following the completion of the Additional Funding, the Lender shall not be entitled to the adjustment set forth in this Section 10, and the Conversion Price and the Exercise Price shall be as specified in Sections 9.1.1 and 7.1.2 above (respectively).
it is clarified that in the event of a loan conversion at the Adjusted Conversion Price, then the conversion of the loan and the allotment of the Excess Shares (as such term is defined in Section 12.1(b) below) (to the extent that the Lender provides a conversion notice) are subject to the additional conditions for the Excess Shares (as such term is defined in Section 12.1(b) below).
To the extent that a withholding tax obligation applies in respect of the conversion of the loan at the reduced price, the Borrower shall bear the costs of the tax withholding and shall withhold tax at source. Insofar as there is an obligation under the provisions of the law to withhold tax at source in respect of the reduction component mentioned in Section 10.1, the Borrower shall transfer the amount in cash to the tax authorities for the withholding tax obligation without the Lender being required to do so, without a demand from the Lender to make such payment, and without a reduction in the number of shares allotted as a result of the conversion of the loan under Section 10.1, such that after the withholding of tax, the Lender shall receive the number of shares that would have been received had the withholding not been required.
| 11 | Transfer of rights and assignment of obligations |
| 11.1 | The Borrower shall not transfer her rights and/or obligations under This Agreement, in whole or in part, to any third party. Any assignment/ transfer of rights and/or obligations made, if any, contrary to the provisions of this section shall be null and void and of no legal effect. |
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| 11.2 | The Lender shall not transfer her rights and/or obligations under This Agreement, in whole or in part, to any third party, other than with the Borrower’s prior written consent. Any assignment/transfer of rights and/or obligations made, if any, contrary to the provisions of this section shall be null and void and of no legal effect. |
| 11.3 | Notwithstanding the provisions of Section 11.2 above, the Lender may transfer her rights and/or obligations under This Agreement, in whole or in part, to a company under her control and wholly owned by her and/or to a third party who is a first-degree family member only. |
| 12 | Adjustments |
| 12.1 | Subject to the provisions and directives of the TASE’s Regulations, the Conversion Shares, the Allotted Warrants and the Exercise Shares shall be subject to the following adjustments: |
| a. | Change in share capital structure: in any event where, prior to the Loan Conversion or the exercise of the Allotted Warrants, a change occurs in the issued share capital of the Borrower, i.e. a share split/consolidation, the number of Conversion Shares and Exercise Shares shall be proportionately decreased or increased, and/or the Conversion Price and the Exercise Consideration shall be correspondingly decreased or increased, such that in any case the total aggregate consideration payable in respect of the Loan Conversion and/or the exercise of the Allotted Warrants shall remain unchanged. |
| b. | Dividend: in the event that, prior to the Loan Conversion and/or the exercise of the Allotted Warrants, the Borrower distributes a cash dividend to the shareholders of the Company, the Conversion Price (with respect to the Conversion Shares) and the Exercise Price (with respect to the Allotted Warrants) shall be adjusted as a result of such dividend distribution as follows: on the ex-dividend date, the Conversion Price/Exercise Price shall be reduced by the amount of the gross (pre-tax) dividend amount paid as part of the dividend for each share of the Borrower. |
| c. | Bonus shares: in the event that the Borrower distributes bonus shares, the record date for their distribution being before the Loan Conversion and/or the exercise of the Allotted Warrants, the number of shares to which the Lender shall be entitled upon the Loan Conversion and/or the exercise of the Allotted Warrants, as applicable, shall increase by the number of bonus shares to which the Lender would have been entitled had it converted the Loan or exercised the Allotted Warrants prior to the record date for the distribution of the bonus shares. The Conversion Price and/or the Exercise Price shall be correspondingly reduced as a result of the increase in the number of Exercise Shares or Conversion Shares to which the Lender is entitled due to the distribution of bonus shares, such that the total aggregate consideration payable in respect of the Conversion Shares and the Exercise Shares. |
| 12.2 | The provisions of this section above shall also apply mutatis mutandis to the warrants. |
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| 13 | Miscellaneous |
| 13.1 | To the extent that the Borrower receives additional loans after the date of signing this agreement which are not secured by collateral (the “Additional Loans”), then upon dissolved, the Lender’s rights regarding the loan granted under this agreement shall have priority in the order of creditors over the rights of the lenders of the Additional Loans. To the extent that after the date of signing this agreement, secured loans are granted to the Borrower, such loans shall have priority in the order of creditors upon dissolved over the loan subject to this agreement only with respect to the specific collateral provided for such loans, all subject to the provisions of the law. For example: Loans received by the Borrower for the purpose of leasing a vehicle and/or loans received by the Borrower for the acquisition of turbines for the production of electricity and water against a pledge of said turbines – such loans shall have priority upon dissolved only in relation to the collateral provided as stated. |
| 13.2 | This Agreement exhausts the entire agreement between the parties and supersedes any and all prior understanding, representation, agreement, draft or undertaking, whether direct or for the benefit of any third party, as well as any prior negotiations, summaries, MOUs, understandings or agreements relating to This Agreement, whether written or oral, and none of the foregoing shall be used for the interpretation of this Agreement. |
| 13.3 | No amendment, modification or addendum to This Agreement, and no waiver, consent, arrangement or extension (a “Waiver”), shall be valid or binding upon the parties to This Agreement unless made in writing and duly signed by all parties to This Agreement. If the Waiver is valid, it shall apply solely to the specific instance and purpose for which it was granted and shall not constitute any estoppel or preclusion with respect to any future matter. Any Waiver granted by one party to This Agreement to the other party shall not constitute a precedent and/or construed as creating any analogy or inference with respect to any similar, different or other case. Refrainment of any party to the Agreement to exercise any right available thereto under This Agreement or under any law, or the failure to timely use such right, shall not be deemed a Waiver of such right on his part. |
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| 13.4 | This Agreement and any matter arising therefrom shall be governed exclusively by the Israeli law (without the choice of law rules of the Israeli law), and no other law shall apply. |
| 13.5 | The exclusive jurisdiction with respect to any matter arising in connection with This Agreement and its performance shall lie solely with the competent court in Tel Aviv-Jaffa, which shall serve as the exclusive venue. |
| 13.6 | Any notice delivered by one party to another in connection with This Agreement shall be in writing and delivered by hand or sent by registered post to the addressee’s address specified in the preamble to This Agreement (or to such other address as the parties may notify each other from time to time), or sent by e-mail to the address specified in the preamble to This Agreement (or to such other address as the parties may notify each other from time to time). Any such notice shall be deemed to have reached its destination upon delivery thereof (if delivered by hand), or within one Business Day from the date of transmission thereof by e-mail, or within 3 Business Days from the date of dispatch by registered post, as applicable. |
In witness whereof, the parties have hereunto set their hands:
| /s/ Turbogen Ltd | /s/ Alex Katz | |
| Turbogen Ltd. | Alex Katz |
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Annex A
Restrictions on Resale
Section 15C of the Securities Law, 5728-1968
| 15C. | (a) Notwithstanding the provisions of Section 15B(3), a public offering shall be deemed as – |
| (1) | An offering during the course of trading on the stock exchange of securities listed therein, which were allotted to the offeror by an issuer in an offering pursuant to Section 15A(a)(1)(4) or (7), or in an offering made outside of Israel other than according to a prospectus, if the period prescribed in the regulations from the date of allotment has not yet elapsed, or if the additional periods prescribed in the regulations have not yet elapsed and, in each of the additional periods, one of the following has occurred: |
| (a) | The number of the securities offered exceeds the number prescribed in the regulations; |
| (b) | The percentage of the issued and paid-up share capital of the corporation whose securities are offered exceeds the percentage prescribed in the regulations; |
The provisions of this paragraph shall also apply to securities purchased during such period or additional periods, as applicable, other than according to a prospectus and not during the course of trading on the stock exchange, from the offeror or from a corporation controlled by the corporation whose securities are offered, as well as to securities resulting from the exercise or conversion of securities allotted as stated in this paragraph;
| (2) | (Deleted). |
(b) The provisions of paragraph (a) shall not apply to an offer made in the course of trading on the stock exchange by the State, or by anyone who purchased securities that were offered by the State in the course of a privatization, within the meaning thereof in Section 15B.
Regulation 5 of the Securities Regulations (Details for Purposes of Sections 15A to 15C of the Law), 5760-2000
5. (a) The period from the day of allotment for purposes of Section 15C(a)(1) of the Law, with respect to securities allotted to the offeror by an issuer pursuant to Sections 15A(a)(1), (4) or (7), or in an offering made outside of Israel other than according to a prospectus, shall be six months; the period with respect to securities so allotted by an issuer to a corporation under its control shall be one year.
(b) The additional periods for purposes of Section 15C(a)(1) of the Law, with respect to securities allotted to the offeror by an issuer pursuant to Sections 15A(a)(1), (4) or (7), or in an offering made outside of Israel other than in accordance with a prospectus, shall be six consecutive quarters; the period with respect to securities so allotted by an issuer to a corporation under its control shall be eight consecutive quarters.
(c) The number of securities that may be offered on any trading day on the stock exchange for purposes of Section 15C(a)(1)(a) of the Law shall be the daily average of the stock exchange trading volume of securities of the type being offered during the eight-week period preceding the day of the offering.
(d) The percentage for purposes of Section 15C(a)(1)(b) of the Law, as of the day of the offering, shall be one percent of the issued and paid-up share capital of the corporation whose securities are offered, during each quarter; in this regulation, “issued and paid-up share capital” – other than shares resulting from the exercise or conversion of convertible securities that were allotted up to the day of the offering and have not yet been exercised or converted.
(e) The period for purposes of Section 15C(a)(2) of the Law shall be two years from the day of allotment.
(f) In this regulation, “quarter” means a period of three months; the first quarter shall commence at the end of the period stated in sub-regulation (a), as applicable.
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Exhibit 10.5
This is a translation into English of the official Hebrew version of this agreement. In the event of a
conflict between the English and Hebrew texts, the Hebrew text shall prevail.
Agreement for the Allotment of Shares and Warrants
Entered into and signed on December 25, 2024
| Between: | TurboGen Ltd. | |
| Company no. 515086056 | ||
| of 22 Efal Street, Petah Tikva 4951122 | ||
| (the “Company”) | ||
| of the first part; | ||
| And: | Alex Katz | |
| (the “Investor”) | ||
| of the second part; | ||
| Whereas: | the Company is a public company, whose shares are listed for trade on the Tel Aviv Stock Exchange Ltd. (the “TASE”); and | |
| Whereas: | the Investor is an individual who is included among the investors listed in the First Schedule to the Securities Law, 5728-1968 (the “Securities Law”), who wishes to purchase the Company’s securities by way of a private placement pursuant to Section 15A(a)(1) of the Securities Law; and | |
| Whereas: | the Company wishes to allot securities of the Company to the Investor by way of a private placement, all as specified in this Agreement; and | |
| Whereas: | prior to the signing of this Agreement, the Investor notified the Company and gave his consent to the conversion of all convertible loans that he had extended to the Company into the Company’s ordinary shares, in accordance with the agreements of December 1, 2022 (including the letter of consent of November 28, 2024) and of July 2, 2023, and as a result, all of the Company’s securities that were allotted to him by virtue of such agreements up to the date of signing of this Agreement have expired, been cancelled and no longer confer any rights on him (the “Conversion Notice in respect of the Convertible Loans”); and | |
| Whereas: | the allotments contemplated herein are subject to the approval of the Company’s authorized organs, including the Company’s board of directors and the general meeting of the Company’s shareholders, as well as the approval of TASE, all as specified herein; and | |
| Whereas: | the parties wish to set and establish, as part of this Agreement, their legal relations with respect to the terms of allotment of the Company’s securities to the Investor, all in accordance with and subject to the provisions hereof. |
Now therefore it has been stipulated, represented and agreed by and between the parties as follows:
| 1. | Preamble and interpretation |
| 1.1 | The preamble to this Agreement and its annex constitutes an integral part hereof. |
| 1.2 | The division of this Agreement into sections and subsections, and the headings appearing herein, are made for convenience only and shall not be used for purposes of interpretation. |
| 1.3 | In this Agreement, the singular shall include the plural, and vice versa, and the masculine gender shall include the feminine gender, and vice versa, all as the context may require, unless expressly stated otherwise. |
| 1.4 | No provision of the terms and conditions contained herein shall derogate from any other term or provision of this Agreement, but shall rather supplement the same, unless stated otherwise in this Agreement. |
| 2. | The Company’s representations |
The Company represents to the Investor that it is aware that the Investor agreed to engage in this Agreement in full reliance on the representations and statements made by the Company herein, and that it undertakes that each of the representations and statements set forth in this Agreement is true and accurate in all respects as of the date of signing of this Agreement, as detailed below:
| 2.1 | The Company is a public company, limited by shares and duly registered in Israel, whose shares are listed on the TASE. |
| 2.2 | The Company’s authorized share capital consists of a total of 100,000,000 ordinary shares, equal in rights, of par value ILS 0.01 each (the “Ordinary Shares”). The Company’s register of securities is in accordance with the Company’s immediate report of December 8, 2024 (Ref. no: 2024-01-622703). |
| 2.3 | The Allotted Shares (as defined below) shall rank pari passu in all respects with the Ordinary Shares and shall be allotted when fully paid, being clear of any debt, charge, pledge, lien or any other third party right other than as specified in the Company’s articles of association and under any law, including the TASE’s Regulations (“Free and Clear”). |
| 2.4 | Subject to the provisions of Section 5 below, any and all approvals required from the authorized organs of the Company and/or from third parties (if required) for the Company’s engagement in this Agreement and for the performance of its undertakings hereunder have been obtained. There is no legal or contractual impediment to the Company’s engagement in this Agreement and/or to the performance of any undertaking hereunder. |
| 2.5 | The Company undertakes to notify the Investor of any change in any of the representations set forth in this section immediately upon its occurrence, and in any event no later than 12 hours from the occurrence of such change. |
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| 3. | The Investor’s representations |
The Investor represents to the Company that he is aware that the Company agreed to engage with him in this Agreement in full reliance on his representations and statements herein, and that each of his representations and statements set forth below is true and accurate in all respects as of the date of signing of this Agreement, as detailed below:
| 3.1 | The Lender is an individual, a resident and citizen of the State of Israel, and for purposes of Section 15A(b)(1) of the Securities Law, the Investor meets the conditions set forth in the First Schedule to the Securities Law. |
| 3.2 | The Investor has all of the means required to fully and properly perform all of his undertakings under this Agreement, and has sufficient ability and business experience to assess the business risks inherent in this Agreement. In this context, the Investor has reviewed all of the Company’s public disclosures, including the H1/2024 financial statements, and is aware of the Company’s capital deficit as of June 30, 2024, and of the Company’s current financial condition and the limited financing sources available to the Company as of the date of signing of this Agreement. |
| 3.3 | The Investor represents that he received all of the information required for him in order to make the investment in the Company. |
| 3.4 | The Investor has considered the transaction’s tax aspects applicable to him, and the Company has not made any representation to the Investor in any of these matters. The Investor agrees that he alone shall bear all tax liabilities in respect of the securities to be allotted to him by the Company, payment therefor or for any other act of the Company and/or the Investor. The Investor is aware that the Company shall withhold any and all taxes, including withholding tax, in accordance with any law. Without derogating from the foregoing, the Investor is aware that the allotment/sale of the Company’s securities may have tax implications. It is clarified that it is recommended that the Investor consult a tax advisor regarding the tax implications arising from these events. |
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| 3.5 | The Lender has obtained any and all permits and approvals required under any law, in connection with his engagement in this Agreement and the fulfillment of his undertakings hereunder. |
| 3.6 | This Agreement was duly signed by the Investor and the Investor’s undertakings thereunder constitute valid, binding and enforceable undertakings. |
| 3.7 | There are no agreements, whether written or oral, between the Investor and any shareholder of the Company and/or any holder of the Company’s securities or any others (in whole or in part), regarding the purchase or sale of the Company’s securities, or regarding voting rights in the Company, other than the Convertible Loan and Warrants Agreement dated December 1, 2022 (and the letter of consent dated November 28, 2024 in connection with such agreement), other than the Convertible Loan and Warrants Agreement dated July 2, 2023 (and the letter of assignment dated July 16, 2023 in connection with the transfer of one half of the rights and obligations under such agreement), other than the Consulting Agreement dated July 2, 2023, and other than the Share and Warrants Allotment Agreement dated December 25, 2024 (the “Prior Agreements”). |
| 3.8 | As of the date of signing of this Agreement, taking into account the allotments pursuant to this Agreement, the Investor’s total holdings in the Company (together with additional holdings of the Investor in the Company’s securities, if any) shall exceed 5% of the Company’s issued and paid-up share capital and of the voting rights therein. |
| 3.9 | No securities of the Company have been allotted to the Investor or to anyone on his behalf, to his relative, to a controlling shareholder of his, to a corporation controlled by its controlling shareholder, or a relative of the controlling shareholder. |
| 3.10 | In order to enable the Company to allot the Allotted Shares and/or the additional shares and/or the Exercise Shares, the Investor undertakes to sign any document that may be required and necessary under any law and/or under the Company’s articles of association. However, it is clarified that the Company shall not be obligated to allot such shares to the Investor if such allotment would cause the Company to violate any provision of law and/or any mandatory disclosure requirement. |
| 3.11 | The Investor is aware that: |
| 3.11.1 | The Allotted Shares and the Exercise Shares (as defined below) shall be subject to resale restrictions (lock-up) with respect to transactions therein, in accordance with the provisions of Section 15C of the Securities Law and pursuant to the Securities Regulations (Details Regarding Sections 15A to 15C of the Law), 5760-2000 (the “Restrictions”), and undertakes to comply with such Restrictions. For convenience only, the Restrictions arising from the aforesaid provisions of law are attached hereto as Annex A, in the language in effect as of the date of signing of this Agreement. For the avoidance of doubt, it is clarified that the Restrictions shall also apply in the event that such shares are transferred to another. |
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| 3.11.2 | The Allotted Shares and the Exercise Shares (as defined below) are acquired by him on an as-is basis, without any representation, warranty, or indemnity on the part of the Company, other than as expressly specified in this Agreement, and he shall have no right of action and/or demand and/or argument against the Company or anyone on its behalf with respect to the Company and its condition and/or the Allotted Shares and/or the Exercise Shares (as defined below). |
| 3.11.3 | The Company may, from time to time, grant other warrants and shares and allot other securities to various entities and individuals, all at its sole discretion. |
| 3.11.4 | Upon receipt of approval by the Company’s authorized organs, or at a later date, the Company may release an immediate report regarding the engagement in this Agreement, and regarding the allotment of the securities to be allotted to the Investor by virtue thereof, in accordance with the provisions of the Securities Law and the regulations promulgated thereunder, including (insofar as required) regarding the details of the Investor, the securities to be allotted to him under this Agreement and their conditions. |
| 3.11.5 | The Investor shall not be entitled to receive the Allotted Shares and/or the Exercise Shares (as defined below) from the Company prior to the full payment of any tax that the Company may be required, if any, to withhold at source, as required by law. |
| 3.12 | The Investor undertakes to notify the Company of any change in any of the representations in this section immediately upon its occurrence, and in any event no later than 12 hours from the occurrence of such change. |
| 4. | The allotted securities |
| 4.1 | The Allotted Shares |
| 4.1.1 | Allocation of the Allotted Shares |
Subject to the provisions of Section 5 below, on the Completion Date (as defined below), in consideration for a total cash amount of ILS 500,000, the Company shall allot to the Investor a total of 74,627 Ordinary Shares of the Company (i.e. at a price per share of ILS 6.70) (the “Allotted Shares” and the “Consideration” or the “Investment Amount”, as applicable, respectively).
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The Investor undertakes to transfer to the Company the full amount of the Consideration, on account of the Investment Amount, within 45 days from the date of signing of this Agreement.
The transfer of the Investment Amount as aforesaid shall be made by way of a wire transfer or RTGS transfer, to the bank account held in the name of the Company, following which evidence of such transfer shall be provided to the Company.
The parties agree that, upon receipt of the Consideration by the Company as aforesaid, the Company shall be entitled to use the full amount of the Consideration, at its sole discretion.
| 4.1.2 | The allotment of the Additional Shares in the event of an additional financing round |
In the event that the Company raises capital, or performs a merger or acquisition, or conducts a rights offering, as part of a new engagement that did not exist at the time of signing of this Agreement, at a price per share lower than ILS 6.70 (the “Additional Funding Price” and the “Additional Funding”, respectively), the Investor shall be entitled to the Additional Shares, provided that completion of such Additional Funding is effected within 18 months from the date of the actual allotment of the Allotted Shares to the Investor (in this Section 4.1.2, the “Adjustment Period”), all subject to compliance with the provisions of the TASE’s regulations and directives promulgated thereunder, as being at such time, including with respect to the minimum price per share provisions.
For purposes of this section only, the “Additional Shares” – a number equal to the (positive) difference between (a) the quotient obtained by dividing the Investment Amount by the Additional Funding Price, and (b) the number of the Allotted Shares, provided that the price per share shall be no lower than the minimum price per share in accordance with the provisions of the TASE Regulations and directives promulgated thereunder.
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For example, if the Additional Funding Price is set at ILS 5.00 per share:
(The Investment Amount (ILS 500,000) / by the Additional Funding Price (ILS 5) - (the number of the Allotted Shares (74,627))1 = the number of the Additional Shares (25,373)
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| 1 | For the avoidance of doubt, all of the figures set forth in this example are provided for illustrative purposes only to demonstrate the method of calculation of the number of Additional Shares, and shall not be deemed to determine the Additional Financing Price. |
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It is clarified that, in the event that during the Adjustment Period and prior to the Additional Funding the Company performs a share split, share consolidation, distribution of bonus shares or share exchange, or any other event of a similar nature (in this paragraph: an “Event”), adjustments shall apply such that the number of Additional Shares to be allotted to the Investor following the Additional Funding shall be decreased or increased, and shall equal the number of Ordinary Shares to which the Investor would have been entitled as a result of such Event had the Additional Shares been allotted to the Investor prior to such Event.
For the avoidance of doubt, it is clarified that if the Additional Funding is not completed by the end of the Adjustment Period, the Investor shall not be entitled to the Additional Shares or any portion thereof. It is further clarified that the allotment of the Additional Shares is subject to the TASE’s approval for their listing and to the condition that the price per share shall be no lower than the minimum price in accordance with the provisions of the TASE’s Regulations and directives issued thereunder.
The calculation of any adjustments required pursuant to the provisions of this Section 4.1.2 above, if any, shall be made by the Company, and its determination shall be final in this respect.
| 4.1.3 | Rights attached to the Allotted Shares and the Additional Shares |
The Allotted Shares and the Additional Shares (if allotted to the Investor) shall rank pari passu in all respects with the Ordinary Shares of the Company and shall be registered in the name of the nominee company of the Tel Aviv Stock Exchange Ltd. or in the name of the nominee company through which the Company’s shares are held from time to time (the “Nominee Company”).
| 4.2 | The Allotted Warrants |
| 4.2.1 | Allocation of the Allotted Warrants, the Exercise Price and the Expiration Date |
Subject to the provisions of Section 5 below, and without derogating from the provisions of Section 4.2.4 below, on the Completion Date (as defined below), the Company shall allot to the Investor, for no consideration (the “Allotted Warrants”):
| a. | 74,627 warrants not listed on the TASE, exercisable into up to 74,627 Ordinary Shares of the Company, subject to payment of a Exercise Price of ILS 10.50 per option (not linked to any index), exercisable from the date of their actual allotment until the expiry of 12 months from the date of their actual allotment (the “Allotted Warrants A”); and |
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| b. | 457,143 warrants not listed on the TASE, exercisable into up to 457,143 Ordinary Shares of the Company, subject to payment of Exercise Price of ILS 8.00 per option (not linked to any index), exercisable from the date of their actual allotment until the expiry of 12 months from the date of their actual allotment (the “Allotted Warrants B”). |
For the avoidance of doubt, it is clarified that all of the Allotted Warrants granted to the Investor which have not been exercised by the applicable expiration dates specified above, as the case may be (inclusive) (the “Expiration Date”), shall expire and shall no longer confer any rights on the Investor.
| 4.2.2 | Exercise of the Allotted Warrants |
| 4.2.2.1 | The exercise of the Allotted Warrants by the Investor shall be carried out in installments, at the Investor’s discretion, provided that in each installment at least 25% of the number of Allotted Warrants A or of the number of Allotted Warrants B (as applicable), as in effect on the date of signing of this Agreement, shall be exercised, by way of delivery of a written notice to the Company, which shall include, inter alia, the name of the Investor and the product of the Exercise Price (as detailed in Section 4.2.1 above) by the number of the Allotted Warrants he wishes to exercise (the “Exercise Price” and the “Exercise Notice”, respectively). |
| 4.2.2.2 | The exercise of the Allotted Warrants shall be in effect upon receipt by the Company of the Exercise Notice and payment of the Exercise Price in respect of the Allotted Warrants to the Company’s account. For the avoidance of any doubt, it is clarified that the shares derived from the exercise of the Allotted Warrants (the “Exercise Shares”) shall be credited to the Investor in practice (if he requests to exercise the Allotted Warrants) only after their registration for trade in accordance with the provisions of the TASE’s Regulations and the directives issued thereunder. The Company shall act to procure the registration of the Exercise Shares on the TASE shortly after receipt of the Exercise Price, and shall hold the consideration paid for the Exercise Shares in trust for the Investor and shall make no use thereof until the Exercise Shares are credited to the Investor. |
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It is clarified that, in accordance with the provisions of the TASE’s Regulations and the directives issued thereunder, the exercise of the Allotted Warrants shall not be made on the record date for the distribution of bonus shares, a rights offering, a dividend distribution, a share consolidation, a share split or a reduction of share capital (a “Corporate Event”). In addition, if the ex-date of a Corporate Event occurs prior to the record date of such Corporate Event, the exercise of the Allotted Warrants shall not be made on such ex-date. In any such case, the allotment date resulting from the exercise of the Allotted Warrants shall be deferred to the first trading day following the ex-date.
| 4.2.2.3 | The Allotted Warrants shall be exercisable into whole Ordinary Shares only, such that each Allotted Option exercised shall entitle the Investor to receive one Ordinary Share, and in any event, no fractional shares shall be issued as a result of such exercise, and any fractional shares that would otherwise result from such exercise shall be rounded down to the nearest whole number. |
| 4.2.2.4 | The Exercise Shares derived as a result of the exercise of the Allotted Warrants shall rank pari passu in all respects with the Ordinary Shares of the Company and shall be registered in the name of the Nominee Company. |
| 4.2.3 | Adjustments |
Subject to the provisions of the TASE’s Regulations and the directives issued thereunder, the Allotted Warrants and the Exercise Shares shall be subject to the following adjustments:
| 4.2.3.1 | Change in the capital structure of the Ordinary Shares – in the event that the Company performs a share split, consolidation, distribution or exchange of shares, or any other event of a similar nature (in this section: an “Event”), following the grant date, prior to the exercise date of the Allotted Warrants and prior to the Expiration Date, adjustments shall be made such that the number of shares to be issued upon exercise of the Allotted Warrants shall be proportionally decreased or increased, as if the Allotted Warrants had been exercised prior to such Event, and the Exercise Price payable per share shall be (correspondingly) increased or decreased, such that in any case the aggregate consideration payable upon exercise of the Allotted Warrants shall remain unchanged. |
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| 4.2.3.2 | Dividend – in the event that the Company distributes a cash dividend to its shareholders, where the record date for payment falls within the exercise period, the Exercise Price shall be reduced on the ex-dividend date by the gross amount (prior to tax) of the dividend paid per one Ordinary Share, provided that the Exercise Price shall not be reduced below the par value. |
| 4.2.3.3 | Distribution of bonus shares – in the event that the Company distributes bonus shares and the record date for such distribution falls during the exercise period, the number of Ordinary Shares to which the Investor shall be entitled upon exercise of the Allotted Warrants shall be increased (accordingly), by the number of Ordinary Shares that the Investor would have been entitled to receive as bonus shares had the Allotted Warrants been exercised prior to the record date for the bonus share distribution. Correspondingly, the Exercise Price shall be reduced as a result of the increase in the number of Exercise Shares to which the Investor is entitled due to the distribution of bonus shares, such that in any event the total consideration payable upon exercise of the Allotted Warrants shall remain unchanged. |
The calculation of any adjustments required pursuant to the provisions of this Section 4.2.3 above, if required, shall be made by the Company, and its determination shall be final in this respect.
It is clarified that, in accordance with the provisions of the TASE’s Regulations and the directives issued thereunder, the Investor shall not be entitled to any adjustment in respect of the Allotted Warrants in the event of a rights offering.
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| 4.2.4 | Adjustment of Exercise Price in the case of Additional Funding for the Allotted Warrants A |
If, from the Completion Date until the Expiration Date, the Company carries out an Additional Funding at the Additional Funding Price (as defined in Section 4.1.2 above), the Investor shall be entitled to exercise the Allotted Warrants A (in whole or in part) in consideration for the Reduced Exercise Price, provided that such exercise of the Allotted Warrants A is carried out by no later than the end of the Adjustment Period (as this term is defined in Section 4.1.2 above) (and provided that the Expiration Date has not occurred), in accordance with the provisions of Section 4.2.2 above (mutatis mutandis), all subject to compliance with the provisions of the TASE’s Regulations and the directives issued thereunder, as being at such time, including with respect to the minimum price per share provisions.
The “Reduced Exercise Price” – a cash amount reflecting the product of: (1) the total number of Allotted Warrants A in respect of which an Exercise Notice has been delivered; and (2) the product obtained by multiplying the Additional Funding Price by the ratio derived from dividing the Exercise Price by the price per share specified in Section 4.1.1 above, provided that the minimum price per one Ordinary Share shall be no lower than as provided in the TASE’s Regulations and the directives issued thereunder, as being at such time.
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For example, if the Investor seeks to exercise a total of 100,000 Allotted Warrants A as part of the Additional Funding, and the Additional Funding Price is set at ILS 5 per share2:
The Allotted Warrants A (100,000) * the Additional Funding Price (ILS 5) * (the Exercise Price (ILS 10.50) / per-share price (ILS 6.70) = total consideration payable by the Investor in respect of the Exercise Price in this example above (ILS 783,582)
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For the avoidance of doubt, it is clarified that if the Investor does not exercise the Allotted Warrants by the end of the Adjustment Period (as this term is defined in Section 4.1.2 above) (provided that the Expiration Date has not occurred), the Investor shall not be entitled to the adjustment set forth in this Section 4.2.4 above, and the Exercise Price shall be as specified in Section 4.2.1 above (as the case may be).
| 2 | It is clarified that all of the figures set forth in this example are provided for illustrative purposes only of the Reduced Exercise Price mechanism, and shall not be deemed to determine the Additional Funding Price. |
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The calculation of any adjustments required pursuant to the provisions of this Section 4.2.4 above, if any, shall be made by the Company, and its determination in this respect shall be final.
For the avoidance of doubt, it is clarified that the adjustment to the Exercise Price in the event of an Additional Financing, as set forth in this Section 4.2.4 above, is done solely with respect to the Allotted Warrants A, and such adjustment shall not apply to the Allotted Warrants B.
| 5. | Conditions precedent |
It is agreed that this Agreement is conditional on the fulfilment of all of the conditions precedent set forth below, and shall take effect subject to the fulfillment of:
| 5.1 | Payment of the full Consideration as provided in Section 4.1.1 above. |
| 5.2 | Completion of the conversions in accordance with the Conversion Notice in connection with the convertible loans. |
| 5.3 | Receipt of any and all approvals required by law for the engagement in this Agreement, including the approvals of the Company’s authorized organs, including with respect to the allotment of the Allotted Shares and the Allotted Warrants. |
| 5.4 | Receipt of the TASE’s approval for the listing of the Allotted Shares and of the shares to be derived from the Allotted Warrants. |
The Company shall notify the Investor upon the fulfillment of all of the conditions precedent set forth in Sections 5.1 through 5.3 (inclusive) above (the “Company Notice”).
If the conditions precedent set forth in Sections 5.1 through 5.3 (inclusive) above are not fulfilled within 60 days from the date of signing of this Agreement, and the parties have not agreed in writing to extend such period, this Agreement shall be null and void, the Investment Amount shall be immediately refunded in full to the Investor, without any deduction, and neither party shall have any remedy or right by virtue thereof against the other pursuant to law.
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| 6. | Completion date |
Within no later than 3 business days from the date of the Company Notice (the “Completion Date”), the Company shall allot the Allotted Shares to the Investor, through the nominee company of the Tel Aviv Stock Exchange Ltd. (the “Nominee Company”), and in this context shall instruct the Nominee Company to credit the Investor’s securities account, the details of which shall be provided by the Investor.
| 7. | Transfer of rights and assignment of obligations |
| 7.1 | The Company shall not transfer its rights and/or obligations under this Agreement, in whole or in part, to any third party. Any assignment/ transfer of rights and/or obligations made, if any, contrary to the provisions of this section shall be null and void and of no legal effect. |
| 7.2 | The Investor shall be entitled to transfer the Allotted Warrants and/or his rights and/or obligations under this Agreement, in whole or in part, to any third party, other than to a person or entity or another party who has been charged with or convicted of a criminal offense or an offense involving moral turpitude, and further provided that such transferee undertakes to comply with all of the provisions of law, including compliance with the Restrictions set forth in Section 3.11.1 above. Any assignment/transfer of rights and/or obligations made, if any, that is contrary to the provisions of this section shall be null and void and of no legal effect. In addition, in proximity to the signing of any agreement relating to such transfer, the Investor shall notify the trustee thereof in writing within 3 days. It is clarified that nothing herein shall prevent the Investor from selling or transferring the Allotted Shares and/or the Exercise Shares and/or part thereof, subject to the provisions of any law, including the Restrictions as set forth in Section 3.11.1 above. |
| 7.3 | Notwithstanding the provisions of Section 7.2 above, the Investor may transfer his rights and/or obligations under this Agreement, in whole or in part, to a company under his control and wholly owned by him and/or to a third party who is a first-degree family member only. |
| 8. | Miscellaneous |
The provisions below shall apply to this Agreement and bind the parties, as follows:
| 8.1 | This Agreement exhausts the entire agreement between the parties and supersedes any and all prior understanding, representation, agreement, draft or undertaking, whether direct or for the benefit of any third party, as well as any prior negotiations, summaries, MOUs, understandings or agreements relating to this Agreement, whether written or oral, and none of the foregoing shall be used for the interpretation of this Agreement. |
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| 8.2 | For the avoidance of doubt, it is hereby clarified and agreed that upon the fulfillment of all of the conditions precedent as set forth in Section 5 above, the Prior Agreements shall be cancelled and shall not confer any rights on the Investor. |
| 8.3 | No amendment, modification or addendum to this Agreement, and no waiver, consent, arrangement or extension (a “Waiver”), shall be valid or binding upon the parties to this Agreement unless made in writing and duly signed by all parties to this Agreement. If the Waiver is valid, it shall apply solely to the specific instance and purpose for which it was granted and shall not create any estoppel or preclusion with respect to any future matter. Any Waiver granted by one party to this Agreement to the other party shall not constitute a precedent and/or construed as creating any analogy with respect to any similar and/or different and/or other case. Refrainment of any party to the Agreement to exercise any right available thereto under this Agreement or under any law, or failure to timely use such right, shall not be deemed a Waiver of such right on his part. |
| 8.4 | No provision of this Agreement shall be construed as an undertaking and/or agreement by the Company to employ or to receive services from the Investor and/or any person on his behalf, or as limiting the Company’s right to terminate his employment or the engagement with him at any time, at its sole discretion and in accordance with the law (to the extent the Company employs or engages him in any manner). |
| 8.5 | Each party shall bear its expenses under this Agreement. |
| 8.6 | This Agreement and any matter arising therefrom shall be governed exclusively by the Israeli law (without the choice of law rules of the Israeli law), and no other law shall apply. The provisions of the TASE’s Regulations and the directives issued thereunder shall prevail over the provisions of this Agreement, including with respect to the minimum price. |
| 8.7 | The exclusive jurisdiction with respect to any matter arising in connection with this Agreement and its performance shall lie solely with the competent court in Tel Aviv-Jaffa, which shall serve as the exclusive venue. |
| 8.8 | Any notice delivered by one party to another in connection with this Agreement shall be in writing and delivered by hand or sent by registered post to the addressee’s address specified in the preamble to this Agreement (or to such other address as the parties may notify each other from time to time), or sent by e-mail to the address specified in the preamble to this Agreement (or to such other address as the parties may notify each other from time to time). Any such notice shall be deemed to have reached its destination upon delivery thereof (if delivered by hand), or within one business day from the date of transmission thereof by e-mail, or within 3 business days from the date of dispatch thereof by registered post, as the case may be. |
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The Investor hereby represents that he has read this Agreement and he agrees to
all of its terms and restrictions, including all terms applicable to the Allotted Shares
and the Allotted Warrants.
In witness whereof, the parties have hereunto set their hands:
| /s/ Alex Katz | /s/ Turbogen Ltd. | |
| The Investor | The Company |
15
Annex A
Restrictions on Resale
Section 15C of the Securities Law, 5728-1968
| 15C. | (a) Notwithstanding the provisions of Section 15B(3), a public offering shall be deemed as – |
| (1) | An offering during the course of trading on the stock exchange of securities listed therein, which were allotted to the offeror by an issuer in an offering pursuant to Section 15A(a)(1)(4) or (7), or in an offering made outside of Israel other than according to a prospectus, if the period prescribed in the regulations from the date of allotment has not yet elapsed, or if the additional periods prescribed in the regulations have not yet elapsed and, in each of the additional periods, one of the following has occurred: |
| (a) | The number of the securities offered exceeds the number prescribed in the regulations; |
| (b) | The percentage of the issued and paid-up share capital of the corporation whose securities are offered exceeds the percentage prescribed in the regulations; |
The provisions of this paragraph shall also apply to securities purchased during such period or additional periods, as applicable, other than according to a prospectus and not during the course of trading on the stock exchange, from the offeror or from a corporation controlled by the corporation whose securities are offered, as well as to securities resulting from the exercise or conversion of securities allotted as stated in this paragraph;
| (2) | (Deleted). |
| (b) | The provisions of paragraph (a) shall not apply to an offer made in the course of trading on the stock exchange by the State, or by anyone who purchased securities that were offered by the State in the course of a privatization, within the meaning thereof in Section 15B. |
Regulation 5 of the Securities Regulations (Details for Purposes of Sections 15A to 15C of the Law), 5760-2000
5. (a) The period from the day of allotment for purposes of Section 15C(a)(1) of the Law, with respect to securities allotted to the offeror by an issuer pursuant to Sections 15A(a)(1), (4) or (7), or in an offering made outside of Israel other than according to a prospectus, shall be six months; the period with respect to securities so allotted by an issuer to a corporation under its control shall be one year.
(b) The additional periods for purposes of Section 15C(a)(1) of the Law, with respect to securities allotted to the offeror by an issuer pursuant to Sections 15A(a)(1), (4) or (7), or in an offering made outside of Israel other than in accordance with a prospectus, shall be six consecutive quarters; the period with respect to securities so allotted by an issuer to a corporation under its control shall be eight consecutive quarters.
(c) The number of securities that may be offered on any trading day on the stock exchange for purposes of Section 15C(a)(1)(a) of the Law shall be the daily average of the stock exchange trading volume of securities of the type being offered during the eight-week period preceding the day of the offering.
(d) The percentage for purposes of Section 15C(a)(1)(b) of the Law, as of the day of the offering, shall be one percent of the issued and paid-up share capital of the corporation whose securities are offered, during each quarter; in this regulation, “issued and paid-up share capital” – other than shares resulting from the exercise or conversion of convertible securities that were allotted up to the day of the offering and have not yet been exercised or converted.
(e) The period for purposes of Section 15C(a)(2) of the Law shall be two years from the day of allotment.
(f) In this regulation, “quarter” means a period of three months; the first quarter shall commence at the end of the period stated in sub-regulation (a), as applicable.
16
Exhibit 10.6
This is a translation into English of the
official Hebrew version of this agreement. In the event of a
conflict between the English and Hebrew texts, the Hebrew text shall prevail
December 31, 2024
To: TurboGen Ltd.
22 Efal St. Petah Tikva, 4951122
(the “Company”)
Via Email
Notice of Conversion at an Agreed Price – July 2023 Loan
WHEREAS: On July 16, 2023, we entered into an Assignment Deed with Mr. Alex Katz, whereby Mr. Alex Katz transferred to us half of his rights and obligations under a Convertible Loan and Options Agreement (the “Agreement”), pursuant to which we provided the company with a Convertible Loan in a total aggregate amount of NIS 2,000,000, against which 201,666 non-tradable Convertible Notes were allotted to us, convertible into Ordinary Shares of the company (Security No. 1192012) (the “Convertible Notes” and the “Loan”, as the case may be);
AND WHEREAS: In accordance with the provisions of the Agreement 142,857 non-tradable Options were allotted to us, exercisable into Ordinary Shares of the company with exercise price of NIS 8.00 (Security No. 1192004) (the “Options”);
AND WHEREAS: As mutually agreed upon with the company, it was agreed to settle the Loan in full by way of converting all Convertible Notes into Conversion shares, and to cancel the Options;
THEREFORE, we hereby notify you of our irrevocable consent to the full Satisfaction of the outstanding Loan balance (principal and interest), and to the cancellation of the Options, all as detailed below:
| 1. | Pursuant to the mutually agreed with the company, the full balance of the Convertible Notes shall be converted into Ordinary shares of the company, at an agreed price per share of NIS 6.00, as hereunder: |
Amount of Conversion Shares (NIS 0.01 Par Value) | Total Loan Amount for Conversion (NIS) | Loan Interest Amount for Conversion (NIS) | Loan Principal Amount for Conversion (NIS) | |||||||||||
| 403,333 | 2,420,000 | 420,000 | 2,000,000 | |||||||||||
Since the VAT component on the loan interest amount (the “VAT Component”) will be paid by Ordinary Shares of the company (instead of cash payment), the total amount of shares to be allotted to me will include VAT Component (the “Allotted Shares”).
Notwithstanding the above, if it be agreed between us and the company in writing that the company shall bear the payment of the VAT Component in cash, then the amount of Allotted Shares shall be updated to a total of 403,333 Ordinary Shares of the company.
It is known to us that the allotment of shares as mention above is subject to and conditional upon receiving all required approvals by law, including the approval of the company’s Board of Directors, the approval of the General Meeting of the company’s shareholders, and the approval of the Tel Aviv Stock Exchange Ltd. (the “TASE”) for the listing of the company’s shares for trading, as well as conditional upon the provisions of the Stock Exchange articles and the instructions under. Furthermore, if all required approvals as mentioned above are not accepted, we shall have no right to claim and/or demand and/or argument against the company or anyone on its behalf in connection therewith.
| 2. | All Options shall be cancelled and expired, and we shall have no right in them and/or to the exercise of any of them. |
| 3. | We are aware that in accordance with the provisions of the Securities Law, 1968, and the Securities Regulations (Details regarding Sections 15A to 15C of the Law), 2000, restricted securities will apply to the shares allotted to us as mentioned above. |
| 4. | Each party shall pay its own expenses pursuant to this notice. It is clarified that we undertake to transfer to the company, at the required time, the applicable withholding tax on the interest amount, unless we have presented a lawful exemption from withholding tax in this regard. |
Sincerely,
| /s/ David Benjamin Greenberg | /s/ Elliot Tannenbaum | |
| David Benjamin Greenberg | Elliot Tannenbaum |
| /s/ Dov Tannenbaum | ||
| Dov Tannenbaum |
Exhibit 10.7
EXERCISE AND REGISTRATION RIGHTS AGREEMENT
This Exercise and Registration Rights Agreement (the “Agreement”) is entered on August 21, 2025 by and between Turbogen Ltd., CR#5 15086056 of Efal 22, Petah Tikva, Israel (the “Company”), and Mr. Alex Katz (the “Holder”).
WHEREAS, the Company and the Holder are parties to two (2) Share and Options Issuance Agreements, both dated December 25, 2024 (the “Issuance Agreements”), according to each, inter-alia, Holder has been granted with options to purchase Ordinary Shares of the Company, under the terms prescribed therein (collectively the “Options”); and,
WHEREAS, the Holder agrees and undertakes, subject to the herein terms, to exercise all outstanding Options no later than the second business day following the date on which the Company informed the Holder that the Company has received a listing approval letter from the Nasdaq Stock Market, irrespective of any exercise periods (longer or shorter) specified in the respective Issuance Agreement (the “Mandatory Exercise Date”); and,
WHEREAS, in consideration of Holder’s performance of its undertakings herein, subject to receipt of all corporate approvals and the herein terms, the Company agrees to grant Holder with certain registration rights concerning the Ordinary Shares of the Company underlying the outstanding Options on the date hereof (the “Underlying Shares”).
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 Holder agree as follows:
| 1. | Mandatory Exercise |
| 1.1 | Holder shall, by the Mandatory Exercise Date, exercise all outstanding Options, in accordance with the other respective terms of the Issuance Agreements and the terms herein (the “Exercise Undertaking”). |
| 1.2 | Notwithstanding the Issuance Agreement, since the Mandatory Exercise Date might not take place prior to the lapse of the respective exercise period(s) prescribed in the applicable Issuance Agreement, then such exercise period is hereby amended, such that the applicable exercise period shall lapse at the later of: (i) as prescribed in the respective Issuance Agreement, or (ii) 11:59pm EST on the Mandatory Exercise Date. |
| 2. | Registration Rights |
In consideration of the full and timely performance by Holder of the Exercise Undertaking:
| 2.1 | Following the Mandatory Exercise Date, the Company shall prepare and file with the United States Securities and Exchange Commission (the “Commission”), a registration statement for covering the Holder’s resale of the Underlying Shares (the “Registration Statement”). |
| 2.2 | The Company shall use its commercially best efforts to cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), as promptly as possible after the filing thereof and shall use its commercially best efforts to keep such Registration Statement, with respect to Holder’s Underlying Shares, continuously effective under the Securities Act until the earlier to occur of (i) the 2nd anniversary from the date on which the Registration Statement first became effective, (ii) the date on which Holder may sell the Underlying Shares then held in compliance with Rule 144, or (iii) all Underlying Shares covered by the Registration Statement have been sold by Holder. “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. |
| 3. | Transfer Restrictions |
| 3.1 | Holder understands that the Underlying Shares may only be disposed of in compliance with Israeli corporate and securities laws, and following the Mandatory Exercise Date, in connection with any transfer of Underlying Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Holder, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. “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, as such terms are used in and construed under Rule 405 under the Securities Act. |
| 3.2 | The Holder agrees to the imprinting, so long as is required by either Israeli or United States law, of a legend on any of the Underlying Shares in the following form: |
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
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| 4. | General |
| 4.1 | The effectiveness of this Agreement is contingent upon Company securing all requisite corporate approvals (including shareholder approval). |
| 4.2 | This Agreement constitutes the entire understanding between the parties with respect to the matters referred to herein. This Agreement may not be amended or modified, except by the written consent of both parties hereto. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. |
| 4.3 | All other terms of the Issuance Agreements shall continue to apply, mutatis-mutandis. In case of any controversy between the terms of the Issuance Agreements and this Agreement, the latter shall govern and prevail. |
| 4.4 | This Agreement shall be governed by the laws of the State of Israel, and the courts of Tel-Aviv-Jaffa shall have exclusive jurisdiction over the parties. |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
| /s/ Dov Fridman | /s/ Alex Katz | ||
| Turbogen Ltd. | Mr. Alex Katz | ||
| By: | Dov Fridman | ||
| Title: | Director | ||
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Exhibit 10.8
EXERCISE AND REGISTRATION RIGHTS AGREEMENT
This Exercise and Registration Rights Agreement (the “Agreement”) is entered on August 21, 2025, by and between Turbogen Ltd., CR#5 15086056 of Efal 22, Petah Tikva, Israel (the “Company”), and each holder listed in Exhibit A attached hereto (each, including its successors and assigns, a “Holder” and collectively, the “Holders”).
WHEREAS, the Company and the Holders are parties to Warrants Issuance Agreement, dated January 16, 2025 (the “Issuance Agreement”), according to which, inter-alia, each Holder has been granted with Warrants in accordance with the quantities specified in Exhibit A, to purchase Ordinary Shares of the Company that shall be exercisable, subject to the terms and conditions of this Agreement, at an exercise price of NIS 8 (eight New Israeli Shekels) per warrants (collectively the “Warrants”); and,
WHEREAS, each Holder agrees and undertakes, subject to the herein terms, to exercise all outstanding Warrants no later than the second business day following the date on which the Company informed the Holder that the Company has received a listing approval letter from the Nasdaq Stock Market, irrespective of any exercise periods (longer or shorter) specified in the respective Issuance Agreement (the “Mandatory Exercise Date”); and,
WHEREAS, in consideration of Holder’s performance of its undertakings herein, subject to receipt of all corporate approvals and the herein terms, the Company agrees to grant Holder with certain registration rights concerning the Ordinary Shares of the Company underlying the outstanding Warrants on the date hereof (the “Underlying Shares”).
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 Holder agree as follows:
| 1. | Mandatory Exercise |
| 1.1 | Each holder shall, by the Mandatory Exercise Date, exercise all outstanding Warrants, in accordance with the other respective terms of the Issuance Agreements and the terms herein (the “Exercise Undertaking”). |
| 1.2 | Notwithstanding the Issuance Agreement, since the Mandatory Exercise Date might not take place prior to the lapse of the respective exercise period(s) prescribed in the applicable Issuance Agreement, then such exercise period is hereby amended, such that the applicable exercise period shall be 11:59pm EST on the Mandatory Exercise Date. |
| 2. | Registration Rights |
In consideration of the full and timely performance by Holder of the Exercise Undertaking:
| 2.1 | Following the Mandatory Exercise Date, the Company shall prepare and file with the United States Securities and Exchange Commission (the “Commission”), a registration statement for covering the Holder’s resale of the Underlying Shares (the “Registration Statement”). |
| 2.2 | The Company shall use its commercially best efforts to cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), as promptly as possible after the filing thereof and shall use its commercially best efforts to keep such Registration Statement, with respect to Holder’s Underlying Shares, continuously effective under the Securities Act until the earlier to occur of (i) the 2nd anniversary from the date on which the Registration Statement first became effective, (ii) the date on which Holder may sell the Underlying Shares then held in compliance with Rule 144, or (iii) all Underlying Shares covered by the Registration Statement have been sold by Holder. “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. |
| 3. | Transfer Restrictions |
| 3.1 | Holder understands that the Underlying Shares may only be disposed of in compliance with Israeli corporate and securities laws, and following the Mandatory Exercise Date, in connection with any transfer of Underlying Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Holder, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. “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, as such terms are used in and construed under Rule 405 under the Securities Act. |
| 3.2 | The Holder agrees to the imprinting, so long as is required by either Israeli or United States law, of a legend on any of the Underlying Shares in the following form: |
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
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| 4. | General |
| 4.1 | The effectiveness of this Agreement is contingent upon Company securing all requisite corporate approvals (including shareholder approval). |
| 4.2 | This Agreement constitutes the entire understanding between the parties with respect to the matters referred to herein. This Agreement may not be amended or modified, except by the written consent of both parties hereto. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. |
| 4.3 | All other terms of the Issuance Agreements shall continue to apply, mutatis-mutandis. In case of any controversy between the terms of the Issuance Agreements and this Agreement, the Issuance Agreements shall govern and prevail. |
| 4.4 | This Agreement shall be governed by the laws of the State of Israel, and the courts of Tel-Aviv-Jaffa shall have exclusive jurisdiction over the parties. |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
| /s/ Dov Fridman | Address for Notice: | |
|
TURBOGEN LTD. |
| |
| Email: |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR HOLDERS FOLLOW]
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[HOLDERS SIGNATURE PAGES TO TURBOGEN EXERCISE AND REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this EXERCISE AND REGISTRATION RIGHTS AGREEMENT to be duly executed by their respective authorized signatories as of the date first indicated above.
|
Name of Holder: Elliot Tannenbaum |
/s/ Elliot Tannenbaum |
| Signature of Authorized Signatory of holder: | |
| Name of Authorized Signatory: | |
| Title of Authorized Signatory: | |
| Email address of Authorized Signatory: | |
| Address for Notice to Holder: |
| Name of Holder: David Greenberg | /s/ David Greenberg |
| Signature of Authorized Signatory of holder: | |
| Name of Authorized Signatory: | |
| Title of Authorized Signatory: | |
| Email address of Authorized Signatory: | |
| Address for Notice to Holder: |
| Name of Holder: Dov Tannenbaum | /s/ Dov Tannenbaum |
| Signature of Authorized Signatory of holder: | |
| Name of Authorized Signatory: | |
| Title of Authorized Signatory: | |
| Email address of Authorized Signatory: | |
| Address for Notice to Holder: |
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Exhibit A
| Name of Holder | Number of warrants | |||
| Eliot Tannenbaum | 121,428 | |||
| David Greenberg | 7,143 | |||
| Dov Tannenbaum | 14,286 | |||
| TOTAL | 142,857 | |||
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Exhibit 10.9
This is a translation into English of the official Hebrew version of the Convertible Loan Conversion Arrangement. In the event of a conflict between the English and Hebrew texts, the Hebrew text shall prevail.
Convertible Loan Conversion Arrangement
Entered into and signed on 22 October 2025
(the “Arrangement”)
| Between: | TurboGen Ltd. |
| Public Company 515086056 | |
| 22 Efal Street, Petah Tikva 4951122 | |
| E-mail: info@turbogenchp.com | |
| (the “Company”) | |
| of the first part; |
| And: | Zohar Rapaport |
| of the second part; |
| And: | Maayan David Jan |
| of the third part; |
| And: | Pini Hertz |
| of the fourth part; |
| And: | Moshe Danino |
| of the fifth part; |
| And: | Ofer Eitan |
| of the sixth part; |
(Zohar, Pini and Maayan shall be referred to jointly as: the “Lenders”)
| Whereas | on 27 February 2023, Zohar and the Company engaged in a convertible loan agreement (the “Loan Agreement with Zohar”). The Loan Agreement with Zohar is attached hereto as Annex A; and |
| Whereas | pursuant to the Loan Agreement with Zohar, Zohar provided the Company with a loan (in 2 installments) in a sum total of ILS 1,750,000 (“Zohar’s Loan”) bearing interest as specified in the Loan Agreement with Zohar; and |
| Whereas | in accordance with Section 12 of the Loan Agreement with Zohar, and following receipt of the Company’s approval for the transfer of rights and assignment of obligations under the Loan Agreement with Zohar, in February 2025, Zohar assigned to Pini his rights and obligations by virtue of the Loan Agreement with Zohar, with respect to the provision of a convertible loan in the additional amount of ILS 750,000, which had not been provided by Zohar; and |
| Whereas | accordingly, on 24 February 2025, Pini provided the Company with a convertible loan of ILS 750,000 (“Pini’s Loan”); and |
| Whereas | in April 2023, Maayan and the Company engaged in a convertible loan agreement (the “Loan Agreement with Maayan”). The Loan Agreement with Maayan is attached hereto as Annex B; and |
| Whereas | by virtue of the Loan Agreement with Maayan, Maayan provided the Company with a loan in the sum of ILS 1,000,000 (“Maayan’s Loan”) bearing interest as specified in the Loan Agreement with Maayan; and |
| Whereas | as of and prior to the date of signing of this Arrangement, the Lenders, each one separately, delivered a conversion notice to the Company; and |
| Whereas | the Company was unable to fulfill its obligations under the Loan Agreement with Zohar and the Loan Agreement with Maayan (jointly, the “Agreements”), as applicable, and allot to any of the Lenders the Company’s securities in accordance with the Agreements, due to the fact that the allotment of the securities pursuant to the Agreements does not comply with the provisions of the Regulations of the Tel Aviv Stock Exchange Ltd. (the “TASE”) regarding the minimum price required under the TASE Regulations for the allotment of shares; and |
| Whereas | the Company and the Lenders held negotiations for several months in order to reach an arrangement with respect to the Agreements; and |
| Whereas | the parties reached agreements regarding the allotment of securities deriving from the Agreements; and |
2
| Whereas | in accordance with Section 12 of the Loan Agreement with Zohar and Section 11 of the Loan Agreement with Maayan , and after receipt of the Company’s approval, each one of the Lenders assigned, in whole or in part, his rights arising from this Arrangement; and |
| Whereas | the parties wish to put in writing all of the new changes and arrangements regarding the securities to be allotted by virtue of the Agreements, as provided herein. |
Now therefore it has been stipulated, represented and agreed by and between the parties as follows:
| 1. | Terms of repayment of the loan |
Zohar’s Loan, Pini’s Loan and Maayan’s Loan shall be referred to jointly as: the “Loans”.
| 1.1 | Notwithstanding the provisions of the Agreements, subject to Section 4.1 below, for the loan principal and interest, the Company shall allot an aggregate of 595,744 conversion shares, in one single tranche and without any adjustments (other than adjustments resulting from capital consolidation and/or split and/or distribution) (the “Conversion Shares”). The Conversion Shares shall be allotted to each of the offerees listed in Annex C (the “Offerees”), in accordance with the amount specified next to his name. |
| 1.2 | The Conversion Shares shall be allotted to the Offerees up to 7 business days following the date of fulfillment of all of the conditions precedent set forth in Section 4.1 below. |
| 1.3 | Notwithstanding the foregoing, it is clarified that such allotment shall be conditional upon the relevant Offeree delivering to the Company a certificate from the Israel tax authorities regarding an exemption from withholding tax, specifying the rate of tax that the Company is required to withhold at source in connection with the conversion contemplated herein, arising from the interest accrued on the Loans. It is clarified that if the Offeree fails to provide such certificate by the date of the conversion (and transfers the Company the required withholding amount, to the extent that such exemption does not constitute a full exemption from withholding tax), the Company shall not allot to such Offeree the number of shares reflecting the interest component accrued in respect of the loan amount of the relevant Offeree. |
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| 2. | Grant of warrants and registration of the shares issuable upon their exercise |
| 2.1 | Subject to Section 4.2 below, shortly after receipt of approval for the listing of the Company’s securities for trade on the Nasdaq Stock Market in the U.S., pursuant to a registration statement on Form F-1 approved by the U.S. Securities and Exchange Commission (the “SEC” and the “Registration Statement”, respectively), and the submission of an application to the SEC’s committee for the taking effect of the Registration Statement (the “Milestone”), the Company shall allot an aggregate of 1,200,000 warrants (the “Warrants” or the “Allotted Warrants”), in a single tranche and without adjustments, other than in the event of a capital consolidation and/or split and/or distribution, exercisable for up to an aggregate of 1,200,000 ordinary shares of the Company (the “Exercise Shares”), subject to payment of the exercise price per Warrant, as defined below, in accordance with the Warrant attached hereto as Annex D, which materially includes the following terms: |
| (1) | The Allotted Warrants shall be exercisable commencing on the date of the Registration Statement’s taking effect and for a period of 12 months thereafter; |
| (2) | The exercise addition per Allotted Warrant shall be U.S. $2 (the “Exercise Price”). To the extent that the Exercise Price is paid in shekels, the applicable exchange rate shall be the representative rate published by the Bank of Israel on the date of payment of the Exercise Price to the Company; |
| (3) | The Company shall register the shares issuable upon the exercise of the Warrants on the Nasdaq Stock Market by submitting the Registration Statement, in accordance with the provisions of the Warrant. |
The Allotted Warrants shall be allotted to each one of the Offerees listed in Annex C, in accordance with the number specified next to his name.
| 3. | Right to a share |
| 3.1 | Subject to Section 4.1 below, the Company shall allot an aggregate of 750,000 rights to shares, in one single tranche and without any adjustments (other than adjustments of a capital consolidation and/or split and/or distribution) (the “Rights to Shares”). The Rights to Shares shall be allotted to each one of the Offerees listed in Annex C, in accordance with the number specified next to his name. |
| 3.2 | In the event that the Company does not complete the Milestone by 30 June 2026 (inclusive), each Share Right shall convert into one ordinary share of the Company (the “Rights-based Shares”), subject to receipt of the approval of the TASE for the listing of the Rights-based Shares. It is clarified that if the Milestone is completed by 1 July 2026, the Rights to Shares shall expire and be of no force and effect. |
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| 3.3 | Subject to Section 3.2 above, the Rights-based Shares shall be allotted up to 7 business days following receipt of TASE’s approval for the listing of the Rights-based Shares. The Company undertakes to apply for and renew the TASE’s approval for the listing of the Rights-based Shares by 1 July 2026. Each one of the holders of Rights to Shares and/or Rights-based Shares hereby confirms that he is aware that the Company will be required to obtain TASE’s approval for the allotment of the Rights-based Shares, in addition to the approval granted by the TASE for the allotment of the Rights-based Shares at the time such Rights to Shares were granted. It is further clarified that the allotment of the Rights-based Shares shall be subject to the TASE’s instructions regarding the minimum price per share. |
| 4. | Conditions precedent |
| 4.1 | The taking effect of this Arrangement is subject to the fulfillment of all of the following conditions precedent: |
| (1) | Receipt of approval of the Company’s general meeting of shareholders for the Company’s engagement in this Arrangement; |
| (2) | Receipt of approval of the Tel Aviv Stock Exchange Ltd. (“TASE”) for the allotment of the Conversion Shares, the Rights to Shares, and the Rights-based Shares. |
| 4.2 | The taking effect of the Company’s undertaking to grant the Warrants as specified in Section 2 above shall be subject to the completion of the Milestone. |
| 4.3 | The allotment of the Exercise Shares shall be subject to receipt of the TASE’s approval. |
| 4.4 | The taking effect of the Company’s undertaking to convert the Rights to Shares into shares of the Company, as specified in Section 3.2 above, shall be subject to the non-completion of the Milestone. |
| 5. | Waiver, release and no further effect |
| 5.1 | Each of the parties to this Arrangement (other than the Company) represents that the securities specified in Annex C constitute the final and absolute type and quantity of securities to which he is entitled pursuant to the Agreements. Each such party further represents that he is aware that the Company has no obligation to achieve the Milestone and that he shall have no claim in connection therewith. |
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| 5.2 | Upon the signing of this Arrangement, each one of the Lenders and Moshe and Ofer, jointly and severally, hereby irrevocably waives, unconditionally and without consideration (other than the performance of the Company’s undertakings under this arrangement), any claim, demand, expense, right or damage (whether direct or indirect), including any debt (monetary or otherwise) of any kind, in connection with the Agreements, whether contractual (including, inter alia, raising a claim of a “default event” with respect to the non-conversion of shares in accordance with the provisions of the Agreements) and/or statutory, against the Company and/or anyone on its behalf. In addition, each of the Lenders and Moshe and Ofer, jointly and severally, hereby releases the Company and/or anyone on its behalf from any liability for any representation, action taken or not taken, and/or any act performed or not performed, in connection with the original agreement, and agrees that he shall have no claim or demand against the Company and/or anyone on its behalf in connection with the performance or non-performance and/or consummation or non-consummation, of any of the provisions of the Agreements. |
| 5.3 | Each one of the Lenders, and Moshe and Ofer, jointly and severally, further confirms that the Company’s performance of its undertakings under Sections 1 and 3 above shall constitute full and final repayment of the loan agreement with each one of the Lenders, Moshe and Ofer. |
| 5.4 | In addition, as of the date of signing of this Arrangement, the Company’s undertaking to grant the securities specified in the agreement shall be cancelled and of no legal or other effect. |
| 6. | General |
| 6.1 | Taxation |
The Offerees shall bear exclusively any and all tax liabilities in respect of the offered securities and/or the Conversion Shares and/or the Exercise Shares and/or the Rights-based Shares.
The Company shall withhold all taxes as required by law.
The Company shall not allot the Conversion Shares and/or the Exercise Shares until all mandatory payments as set forth above are fully paid other than in the case of the allotment of shares in respect of the interest component, in which case the provisions of Section 1.3 above shall apply.
| 6.2 | Each one of the Lenders, and Ofer and Moshe, hereby confirms that, other than as provided herein, no third party has or shall have any right in connection with the Loan Agreements and/or any convertible security arising from this Arrangement (prior to the allotment of the Company’s shares resulting from the exercise of such security). |
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| 6.3 | Each of the Offerees represents to the Company that there are no agreements, whether written or oral, between him and/or anyone on his behalf and any holders and/or shareholders of the Company or any other parties, regarding the purchase or sale of the Company’s securities or regarding voting rights therein, and accordingly he shall not be deemed a joint holder of the Company’s shares, as such term is defined in the Securities Law, 5728-1968. |
| 6.4 | The sale of the Conversion Shares, the Rights-based Shares and the Exercise Shares shall be subject to the resale restrictions set forth in the Securities Law and the regulations promulgated and to be promulgated thereunder, if applicable, as well as to any additional statutory provision or legal restriction that shall be applicable at such time to the sale of such shares. |
It is clarified that the Exercise Shares may be sold on the Nasdaq Stock Market, subject to a valid registration prospectus.
| 6.5 | This Arrangement shall be deemed an integral part of the Loan Agreement with Zohar and the Loan Agreement with Maayan, as applicable. Terms that are defined under the Agreements that are not defined herein shall have the meanings ascribed to them in the loan agreement. |
| 6.6 | The remaining provisions of each of the Agreements shall continue to apply, mutatis mutandis. In the event of a discrepancy between the provisions of any of the Agreements and this Arrangement, the provisions of this Arrangement shall prevail, even if the conflicting provisions of any of the Agreements have not been directly amended pursuant to this Arrangement. |
| 6.7 | This arrangement supersedes any and all prior understandings and agreements, written and/or oral, express or implied, between the parties before the signing of this Arrangement, and from the date of its signing onward, the parties shall act solely in accordance with the provisions of this Arrangement, subject to applicable law. |
[Signature page follows]
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Signature page
| /s/ Turbogen Ltd. | /s/ Zohar Rapaport | |
| Turbogen Ltd. | Zohar Rapaport | |
| /s/ Maayan David Jan | ||
| Maayan David Jan | ||
| /s/ Pini Hertz | ||
| Pini Hertz | ||
| /s/ Ofer Eitan | ||
| Ofer Eitan | ||
| /s/ Moshe Danino | ||
| Moshe Danino |
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Annex C
Conversion Shares | Warrants | Rights to Share | ||||||||||
| Zohar Rapaport | 114,000 | |||||||||||
| Maayan David Jan | ||||||||||||
| Pini Hertz | ||||||||||||
| Moshe Danino | 400,000 | |||||||||||
| Ofer Eitan | 81,744 | 1,200,000 | 750,000 | |||||||||
| Total | 595,744 | 1,200,000 | 750,000 | |||||||||
9
Exhibit 10.10
This is a translation into English of the official Hebrew version of this Agreement. In the event of a conflict between the English and Hebrew texts, the Hebrew text shall prevail.
Agreement
Entered into and signed on 1 January 2018
| Between: | Rafael Advanced Defense Systems Ltd. | |
| P.C. 52-004218-5 | ||
| P.O.B. 2250 Haifa, 31021 | ||
| (“Rafael”) | ||
| of the first part; | ||
| And: | R-Jet Engineering Ltd. | |
| P.C. 51-320637-5 | ||
| 1 Mohaliver Herzliya | ||
| (“R-Jet”) | ||
| of the second part; | ||
| And: | Turbo-Gas Clean Energy Company Ltd. | |
| P.C. 51-508605-6 | ||
| 1 Mohaliver Herzliya | ||
| (“Turbo Gas”) | ||
| of the third part; |
| Whereas | R-Jet transferred to Turbo Gas the Transferred IP (as defined below) as specified in the deed of transfer of intellectual property attached hereto as Annex A (the “Deed of Transfer”); and |
| Whereas | Rafael and R-Jet have are engaged in a license agreement for the co-ownership of their joint intellectual property (the “License Agreement”); and |
| Whereas | the Transferred IP under the Deed of Transfer is subject to the License Agreement; and |
| Whereas | the parties wish to regulate in this agreement, the co-holding of the rights in the Transferred IP. |
Now therefore it has been represented, agreed and stipulated by and between the parties as follows:
| 1. | Preamble |
| 1.1 | The preamble to this agreement constitutes an integral part hereof and one of its provisions. |
| 1.2 | Section headings are for convenience of reading only and shall not serve for the interpretation of the agreement. |
| 2. | The parties’ representations |
| 2.1 | The parties hereby represent that they neither have nor are aware of any legal, economic or other impediment to the fulfillment of their undertakings under this agreement. |
| 2.2 | The parties hereby represent that all necessary resolutions have been adopted for the approval of this agreement. |
| 2.3 | R-Jet hereby represents that it has no claims against Rafael in connection with the Transferred IP under the Deed of Transfer. |
| 3. | The engagement |
‘The Transferred IP’ means any and all rights and powers arising therefrom or granted thereby, in connection with the intellectual property rights in the technology for the manufacture and operation of micro-turbines for electricity generation (including expander turbines) (“Micro-turbines”), as well as any related or similar technology for electricity generation by turbines only, up to a capacity of 500KW, and other than Micro-turbines: (a) for military purposes or uses; (b) for electric vehicles (on land, at sea, or in the air); (c) for aeronautical uses, including: intellectual property rights related to Micro-turbines, whether registrable or non-registrable, including rights in algorithms, binary code, computer programs, software, concepts, confidential information, firmware, data, copyrights, databases, designs, derivative works, discoveries, documents, file structures, formulas, ideas, improvements, industrial designs (whether registered or unregistered), information, innovations, inventions, integrated circuits, know-how, production data, topography of integrated circuits; materials; methods; moral rights; machine language; original literary works; patents; patent applications; patent rights (without derogating from the generality of the foregoing, including any and all continuation applications, divisional applications, reissues, re-examinations, and extensions); Service Inventions as defined in Section 132 of the Patents Law, 5727-1967, plans; processes; proprietary technology; research results; research records; semiconductor chips; software; source code; specifications; statistical models; techniques; trade secrets; technical information; and any equivalent right to any of the foregoing in any country and/or jurisdiction.
| 3.1 | Limitation of use |
| 3.1.1 | Turbo Gas undertakes vis-à-vis Rafael that it shall not use any of the Transferred IP rights for military purposes. |
| 3.1.2 | Rafael undertakes vis-à-vis Turbo Gas that it shall not use any of the Transferred IP rights for civil purposes. |
| 3.1.3 | The parties undertake not to make any use of the Transferred IP that may be in conflict with the laws of the State of Israel and/or any other foreign country, or any other act that may impose any liability on any party or in any way impair the goodwill of such party. |
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| 3.2 | Ownership of new know-how |
| 3.2.1 | Without derogating from the provisions of Section 3.1 above, insofar as Rafael develops new know-how in connection with the Transferred IP, Rafael shall have exclusive ownership of any and all intellectual property rights in connection with the said new know-how. |
| 3.2.2 | Without derogating from the provisions of Section 3.1 above, insofar as Turbo Gas develops new know-how in connection with the Transferred IP, Turbo Gas shall have exclusive ownership of any and all intellectual property rights in connection with the said new know-how. |
| 4. | Transfer of intellectual property rights |
| 4.1 | The parties undertake that if they are requested to transfer the intellectual property rights held thereby (in whole or in part) to third parties, a condition for the transfer of such intellectual property, shall be the signing of such third party to whom the transfer is made, of an undertaking to comply with the terms and conditions of this License Agreement (including, but without derogating from the generality of the aforesaid, with respect to Sections 0 [sic.], 3.2 and 4). |
| 4.2 | By signing this agreement, Rafael gives its consent to the transfer of the Transferred IP in accordance with the Deed of Transfer. |
| 5. | General |
| 5.1 | This agreement is not intended to grant rights of any kind to third parties, and it shall not be interpreted as a contract in favor of a third party. |
| 5.2 | This agreement shall be governed by the Israeli law only. The exclusive jurisdiction with respect to any dispute or conflict pertaining to this agreement, including its making or effect, shall be vested in the courts in the district of Tel Aviv-Jaffa. |
| 5.3 | This agreement, including its annexes, reflects and exhausts any and all agreements between the parties with respect to the Transferred IP, and upon the signing thereof, the parties revoke any written or oral representation, understanding or undertaking made between the parties or any one of them in connection with the granting of the Transferred IP prior to their signing. For the avoidance of doubt, this agreement shall not modify the terms and conditions of the License Agreement and the relations between Rafael and R-Jet, and in any event of a discrepancy between the provisions of this agreement and the provisions of the License Agreement, the provisions of the License Agreement shall prevail. |
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| 5.4 | No conduct by any of the parties shall be deemed as a waiver of any of its rights under this agreement, or as a waiver or consent on its part, to any breach or non-fulfillment of any of the terms of the agreement, or as a modification, cancellation or addendum to any term unless made expressly and in writing. |
| 5.5 | A delay or refrainment by any of the parties from exercising or enforcing any of its rights under this agreement, shall not be deemed as a waiver or refrainment on its part, to use its rights in the future, and it shall be entitled to use all or part of its rights at any time it deems fit. |
| 5.6 | The parties’ rights or obligations under this agreement may not be assigned or endorsed other than with the prior written consent of all parties to this agreement. |
| 5.7 | Each party hereby waives any right of setoff or lien of any kind, and no party shall offset or withhold any claim it has against any amount due therefrom to another party. |
| 5.8 | No modification or addendum to this agreement shall be valid unless made in writing and signed by all parties to this agreement. |
| 5.9 | Each party and its advisors have reviewed the language of this agreement and its provisions, and contributed to its completion and therefore the interpretation against the drafter rule, within the meaning thereof in Section 25(b1) of the Contracts Law (General Part), 5733-1973, shall not apply in the interpretation of this agreement. The provisions and terms of this agreement shall be interpreted fairly with respect to each party and shall not be interpreted in favor or against any of the parties due to such party being responsible for the drafting and preparation of this agreement. |
| 5.10 | In the event that any of the provisions of this agreement, or its implementation in accordance with the agreement becomes or is declared by a competent court unlawful, void or unenforceable, the remainder of the agreement shall remain in full force and effect, and the implementation of such a provision on other parties and other circumstances shall be interpretated in a manner so as to give reasonable effect to the intention of the parties to this agreement. The parties agree to replace such void or unenforceable provision with a valid and enforceable provision that shall achieve, inasmuch as possible, the economic, business and other purposes of such void and unenforceable provision. |
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| 5.11 | Any notice sent by one party of the agreement to another via registered post shall be deemed to have reached its destination three (3) business days after its delivery at the post office, and if delivered via courier, it shall be deemed as received on that same day, and if sent via e-mail during a business day and in standard working hours, it shall be deemed as received on the first business day thereafter. |
In witness whereof, the parties have hereunto set their hands:
/s/ Rafael Advanced Defense Systems Ltd. |
/s/ Turbo-Gas Clean Energy Company Ltd. | |
| Rafael Advanced Defense Systems Ltd. | Turbo-Gas Clean Energy Company Ltd. | |
| /s/ R-Jet Engineering Ltd. | ||
| R-Jet Engineering Ltd. |
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Annex A – Deed of Transfer of Intellectual Property Rights
| Whereas | on 1 January 2018, a share purchase agreement was signed (the “Share Sale Agreement”) between R-Jet Engineering Ltd. P.C. 51-3206375-5 (the “Transferor”), Rafael Advanced Defense Systems Ltd. P.C. 52-004218-5 (“Rafael”), Turbo-Gas Clean Energy Company Ltd., P.C. 51-508605-6 (the “Transferee”), the Investor, Paris Holdings and Eco and the Purchasers (as these terms are defined in the Share Sale Agreement); and |
| Whereas | the Transferor co-holds the Intellectual Property (as defined below) with Rafael; and |
| Whereas | as a condition for the completion of the Share Sale Agreement, the Transferor is required to sign this deed of transfer and transfer the Intellectual Property (as defined below) to the Transferee such that the Transferee and Rafael, the Transferor, shall be the co-holders of such Intellectual Property; and |
| Whereas | the Transferee wishes to receive any and all rights in the Transferor’s intellectual property such that the Transferee and Rafael, the transferor, shall be the co-holders of such Intellectual Property. |
Therefore, in consideration for ILS 1,500,000 plus VAT (the “Consideration”), which shall be paid by the Transferee to the Transferor, the Transferor transfers to the Transferee any and all rights that the Transferor holds or may hold in the Intellectual Property and in connection therewith, insofar as it holds such rights (the “Transferred Rights”), including any and all rights and powers arising therefrom or granted thereby, and any and all applications for the registration of intellectual property in respect of the Transferred Rights that were submitted or that may be submitted in the future in any country or jurisdiction, and any divisional and renewal applications and any continuation applications deriving therefrom, together with any and all preemptive rights that the Transferor holds or may hold in connection with the Transferred Rights, and any registration that shall be given for the Transferred Rights or for such applications, such that the Intellectual Property (and the rights transferred thereunder) shall be co-held between Rafael and the Transferee.
And the Transferor hereby authorizes and requests from the Israel Patent, Designs and Trademarks Office, and from any equivalent authority in any other country or jurisdiction, whose function is to issue and record registrations in respect of any application for the registration of the Transferred Rights, to issue and record the foregoing in favor of and in the name of the Transferee, in accordance with the terms of this deed, all at the expense of the Transferee.
And the Transferor hereby represents that it did not engage and undertakes that it will not engage in any agreement that is in conflict with this Deed of Transfer.
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“Intellectual Property” for purposes of this document, is any and all intellectual property rights in the technology for the manufacture and operation of micro-turbines for electricity generation (including expander turbines) (“Micro-turbines”), as well as any related or similar technology for electricity generation by turbines only, up to a capacity of 500KW, and other than Micro-turbines: (a) for military purposes or uses; (b) for electric vehicles (on land, at sea, or in the air); (c) for aeronautical uses, including as defined in the Share Sale Agreement and including: intellectual property rights related to Micro-turbines, whether registrable or non-registrable, including rights in algorithms, binary code, computer programs, software, concepts, confidential information, firmware, data, copyrights, databases, designs, derivative works, discoveries, documents, file structures, formulas, ideas, improvements, industrial designs (whether registered or unregistered), information, innovations, inventions, integrated circuits, know-how, production data, topography of integrated circuits; materials; methods; moral rights; machine language; original literary works; patents; patent applications; patent rights (without derogating from the generality of the foregoing, including any and all continuation applications, divisional applications, reissues, re-examinations or extensions); Service Inventions as defined in Section 132 of the Patents Law, 5727-1967, plans; processes; proprietary technology; research results; research records; semiconductor chips; software; source code; specifications; statistical models; techniques; trade secrets; technical information; and any equivalent right to any of the foregoing in any country and/or jurisdiction.
The Transferor hereby represents that it is not entitled to any additional consideration for the transfer of rights as provided in this Deed of Transfer over and above the Consideration it received from the Transferee in accordance with the terms and conditions of the Share Sale Agreement, and that its signing of this deed constitutes an express waiver of any right it may have pursuant to Section 134 of the Patents Law, 5727-1967.
| /s/ R-Jet Engineering Ltd. | |
| R-Jet Engineering Ltd. |
7
Exhibit 10.11
Turbogen Ltd.
2020 SHARE Incentive PLAN
Unless otherwise defined, capitalized terms used herein shall have the meaning ascribed to them in Section 2 hereof.
| 1. | PURPOSE; TYPES OF AWARDS; CONSTRUCTION |
| 1.1. | Purpose. The purpose of this 2020 Share Incentive Plan (the “Plan”) is to afford an incentive to employees, directors, officers, consultants, advisors, suppliers and any other person or entity whose services are considered valuable (collectively, the “Service Providers”) to Turbogen Ltd. (the “Company”), or any Affiliate of the Company, which now exists or hereafter is organized or acquired by the Company, to continue as Service Providers, to increase their efforts on behalf of the Company or Affiliate and to promote the success of the Company’s business, by providing such Service Providers with opportunities to acquire a proprietary interest in the Company by the grant of Options, Shares, restricted Shares awards (“Restricted Shares”) and other Share-based awards pursuant to the Plan. |
| 1.2. | Types of Awards. The Plan is intended to enable the Company to issue Awards under varying tax regimes, including, without limitation: |
| (i) | pursuant and subject to the provisions of Section 102 of the Ordinance, including without limitation the Income Tax Rules (Tax Benefits in Stock Issuance to Employees) 5763-2003 (the “Rules”) or such other rules published by the Israeli Income Tax Authorities (the “ITA”) from time to time (such Awards, “102 Awards”). 102 Awards may either be granted to a Trustee or without a Trustee; |
| (ii) | pursuant to Section 3(i) of the Ordinance (such Awards, “3(i) Awards”); |
| (iii) | options issued under other tax regimes; |
| (iv) | Restricted Shares; |
| (v) | other share-based Awards pursuant to Section 10 hereof; |
In addition to the issuance of Awards under the relevant tax regimes in the United States of America and the State of Israel, the Plan contemplates issuances to Grantees in other jurisdictions with respect to which the Committee is empowered to make the requisite adjustments in the Plan and set forth the relevant conditions in the Company’s agreement with the Grantee in order to comply with the requirements of the tax regimes in any such jurisdictions.
The Plan contemplates the issuance of Awards by the Company, both as a private company and as a publicly traded company.
| 1.3. | Construction. To the extent any provision herein conflicts with the conditions of any relevant tax law or regulation which are relied upon for tax relief in respect of a particular Award granted to a Grantee, the provisions of such law or regulation shall prevail over those of the Plan and the Committee is empowered hereunder to interpret and enforce the said prevailing provisions. |
| 2. | DEFINITIONS. |
| 2.1. | Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth therein or herein), (ii) references to any law, constitution, statute, treaty, regulation, rule or ordinance, including any section or other part thereof shall refer to that it as amended from time to time and shall include any successor law, (iii) reference to a person shall mean an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof, (iv) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Plan in its entirety and not to any particular provision hereof and (v) all references herein to Sections shall be construed to refer to Sections to this Plan. |
| 2.2. | Defined Terms. The following terms shall have the meanings ascribed to them in this Section 2: |
| 2.2.1. | “Affiliate” shall mean an affiliate of, or person affiliated with, a specified person or company or other trade or business that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person. For the purpose of Awards granted pursuant to Section 102 shall mean also an “employing company” within the meaning of Section 102(a) of the Ordinance. |
| 2.2.2. | “Applicable Law” shall mean any applicable law, rule, regulation, statute, pronouncement, policy, interpretation, judgment, order or decree of any federal, provincial, state or local governmental, regulatory or adjudicative authority or agency, of any jurisdiction, and the rules and regulations of any stock exchange or trading system on which the Shares are then traded or listed. |
| 2.2.3. | “Award” shall mean any Restricted Share, Option, Share, or any other Share-based award, granted to a Grantee under the Plan and any share issued pursuant to the exercise thereof. |
| 2.2.4. | “Board” shall mean the board of directors of the Company, as appointed from time to time. |
| 2.2.5. | “Committee” shall mean a committee established by the Board to administer the Plan (or, in the absence of such a Committee, the Board). |
| 2.2.6. | “Companies Law” shall mean the Israeli Companies Law-1999 and the regulations promulgated thereunder, all as amended from time to time. |
| 2.2.7. | “Controlling Shareholders” shall have the meaning set forth in Section 32(9) of the Ordinance. |
| 2.2.8. | “Disability” shall mean the inability of a Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. An individual shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may require. |
| 2.2.9. | “Employee” shall mean a person who is employed by the Company or any of its Affiliates, including, for the purpose of Section 102, an individual who is serving as an “office holder” as defined under the Companies Law, but excluding any Controlling Shareholder. |
| 2.2.10. | “Exercise Period” shall mean the period, commencing on the date of grant of an Award, during which an Award shall be exercisable, subject to any vesting provisions thereof and the termination provisions hereof. |
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| 2.2.11. | “Exercise Price” shall mean the exercise price for each Share covered by an Option. |
| 2.2.12. | “Fair Market Value” per share as of a particular date shall mean (i) the closing sales price per Share on the securities exchange on which the Shares are principally traded for the last preceding date on which there was a sale of such Shares on such exchange; or (ii) if the Shares are then traded in an over-the-counter market, the last reported price per Share on such market on the last preceding date on which there was a sale of such Share, or if such price is not available, the average of the closing bid and asked prices for the Shares in such over-the-counter market for the last preceding date on which there was a sale of such Shares in such market; (iii) if the Shares are not then listed on a securities exchange or market or traded in an over-the-counter market, such value as the Committee, in its sole discretion, shall determine, with full authority to determine the method for making such determination (which may be the ‘Black-Scholes’ model or any other method), and which determination shall be conclusive and binding on all parties, and shall be made after such consultations with outside legal, accounting and other experts as the Committee may deem advisable. The Committee may maintain a written record of its method of determining such value. If the Shares are listed or quoted on more than one established stock exchange or national market system, the Committee shall determine the appropriate exchange or system for the purpose of determination of Fair Market Value. |
| 2.2.13. | “Grantee” shall mean a person who receives a grant of Award under the Plan, and who at the time of grant is a Service Provider of the Company or any Affiliate thereof. |
| 2.2.14. | “Non-Employee” shall mean a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Employee. |
| 2.2.15. | “Options” shall mean all options to purchase Shares granted as 102 Awards, 3(i) Awards, as well as options to purchase Shares issued under other tax regimes. |
| 2.2.16. | “Ordinance” shall mean the Israeli Income Tax Ordinance (New Version) 1961, and the regulations, rules, orders or procedures promulgated thereunder, all as amended from time to time. |
| 2.2.17. | “Parent” shall mean any company (other than the Company), which now exists or is hereafter organized, in an unbroken chain of companies ending with the Company if, at the time of granting an Award, each of the companies (other than the Company) owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain. |
| 2.2.18. | “Retirement” shall mean a Grantee’s retirement pursuant to applicable law or in accordance with the terms of any tax-qualified retirement plan maintained by the Company or any of its Affiliates in which the Grantee participates. |
| 2.2.19. | “Securities Act” shall mean the US Securities Act of 1933, as amended. |
| 2.2.20. | “Shares” shall mean ordinary shares of the Company, par value NIS 0.01,or shares of such other class of shares of the Company as shall be designated by the Board in respect of the relevant Award, all as shall be adjusted in accordance with Section 13 of the Plan (if applicable). |
| 2.2.21. | “Subsidiary” shall mean any company (other than the Company), which now exists or is hereafter organized or acquired by the Company, in an unbroken chain of companies beginning with the Company if, at the time of granting an Award, each of the companies other than the last company in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain. |
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| 2.2.22. | “Trustee” shall mean the trustee appointed by the Committee or the Board, as the case may be, to hold the respective Awards and/or Shares (and, in relation with 102 Awards, approved by the Israeli tax authorities), if so appointed. |
| 2.3. | Other Defined Terms. The following terms shall have the meanings ascribed to them in the Sections set forth below: |
| Term | Section | |||
| “102 Awards” | 1.2(i) | |||
| “102 Capital Gains Track Awards” | 7.1 | |||
| “102 Non-Trustee Awards” | 7.2 | |||
| “102 Ordinary Income Track Awards” | 7.1 | |||
| “102 Trustee Awards” | 7.1 | |||
| “3(i) Awards” | 1.2(ii) | |||
| “Cause” | 6.6.3 | |||
| “Company” | 1.1 | |||
| “Effective Date” | 25.1 | |||
| “Election” | 7.2 | |||
| “Eligible 102 Grantees” | 4.2 | |||
| “ITA” | 1.2(i) | |||
| “Market Stand-Off” | 17.1 | |||
| “Merger/Sale” | 13.3 | |||
| “Option Agreement” | 6 | |||
| “Plan” | 1.1 | |||
| “Required Holding Period” | 7.4 | |||
| “Restricted Period” | 9.3 | |||
| “Restricted Share Agreement” | 9 | |||
| “Restricted Shares” | 1.1 | |||
| “Rules” | 1.2(i) | |||
| “Service Provider(s)” | 1.1 | |||
| “Successor Corporation” | 13.3.1 | |||
| “Withholding Obligations” | 19.4 |
| 3. | ADMINISTRATION. |
| 3.1. | The Plan shall be administered by the Board. However, the Board may by a unanimous vote, delegate the power to administer the Plan, in whole or in part, to the extent permitted by Applicable Law, to the Committee. In the event that an action necessary for the administration of the Plan is required under law to be taken by the Board, then such action shall be so taken by the Board. To the extent that the Board has not delegated powers to the Committee, as set forth above, all references herein to the Committee shall be deemed to be references to the Board. |
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| 3.2. | Subject to the terms and conditions of this Plan and any mandatory provisions of Applicable Law, and in addition to the Committee’s powers contained elsewhere in this Plan, the Committee shall have full authority in its discretion, from time to time and at any time, to determine any of the following, or to recommend to the Board any of the following if it is not authorized to take such action according to Applicable Law: |
| 3.2.1. | eligible Grantees; |
| 3.2.2. | grants of Awards and setting the terms and provisions of award agreements (which need not be identical) and any other agreements or instruments under which Awards are made, including, but not limited to, the number of Shares underlying each Award; |
| 3.2.3. | the time or times at which Awards shall be granted; |
| 3.2.4. | the schedule and conditions on which Awards may be exercised; |
| 3.2.5. | the Exercise Price; |
| 3.2.6. | to interpret the Plan; |
| 3.2.7. | prescribe, amend and rescind rules and regulations relating to and for carrying out the Plan, as it may deem appropriate; |
| 3.2.8. | the Fair Market Value of the Shares; |
| 3.2.9. | the tax track (capital gains track, ordinary income track or any other track available under Section 102 of the Ordinance) for the purpose of 102 Awards; and |
| 3.2.10. | any other matter which is necessary or desirable for, or incidental to, the administration of the Plan and any Award thereunder. |
| 3.3. | Grants of Awards shall be made pursuant to written notice to Grantees setting forth the terms of the Award. Such notice shall designate the type of Award as one of the following: (i) a 102 Award granted to a Trustee (either as a 102 Award (capital gain track) with Trustee or a 102 Award (ordinary income track) with Trustee); (ii) a 102 Award without a 102 Trustee; (iii) a 3(i) Award; or (iv) any other type of Award. |
| 3.4. | Subject to the mandatory provisions of Applicable Law, the grant of any Award, whether by the Committee or the Board, shall be deemed to include an authorization of the issuance of Shares upon the due exercise thereof. |
| 3.5. | The authority granted hereunder includes the authority to modify Awards to eligible individuals who are foreign nationals or are individuals who are employed in various jurisdictions to recognize differences in local law, tax policy or custom, in order to effectuate the purposes of the Plan but without amending the Plan. |
| 3.6. | The Committee shall have the authority to grant, in its discretion, to the holder of an outstanding Award, in exchange for the surrender and cancellation of such Award, a new Award having an exercise price different than provided in the Award so surrendered and canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of the Plan or to set a new exercise price for the same Award different than that previously provided in the Award. |
| 3.7. | All decisions, determination and interpretations of the Committee shall be final and binding on all Grantees of any Awards under this Plan, unless otherwise determined by the Board. No member of the Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award granted hereunder. |
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| 3.8. | Each member of the Board and the Committee shall be indemnified and held harmless by the Company against any cost or expense (including fees of counsel) reasonably incurred by him/her, or liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the Plan unless arising out of such member’s own fraud or bad faith, to the extent permitted by Applicable Law. Such indemnification shall be in addition to any rights of indemnification the member may have as director or otherwise under the articles of association of the Company, any agreement, any vote of share or disinterested directors, or otherwise. |
| 4. | ELIGIBILITY. |
| 4.1. | Awards may be granted to Service Providers of the Company and any Affiliate thereof, taking into account the qualification under each tax regime pursuant to which such Awards are granted. A person who has been granted an Award hereunder may be granted additional Awards, if the Committee shall so determine, subject to the limitations herein. In determining the persons to whom Awards shall be granted and the number of Shares to be covered by each Award, the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success of the Company and such other factors as the Committee shall deem relevant in connection with accomplishing the purpose of the Plan. |
| 4.2. | Subject to Applicable Law, 102 Awards may not be granted to Controlling Shareholders and may only be granted to Employees, including officers and directors, of the Company or any Affiliate thereof, who are Israeli residents (“Eligible 102 Grantees”). Awards to Eligible 102 Grantees in Israel shall be 102 Awards. Eligible 102 Grantees may receive only 102 Awards, which may either be grants to a Trustee or grants under Section 102 without a Trustee. Unless otherwise permitted by the Ordinance and the Rules, no 102 Awards to a Trustee may be granted until the expiration of thirty (30) days after the requisite filings under the Ordinance and the Rules have been appropriately made with the ITA. |
| 4.3. | The Awards and underlying Shares are extraordinary, one-time benefits granted to the Grantees, and are not and shall not be deemed a salary component for any purpose whatsoever, including in connection with calculating severance compensation under Applicable Law. |
| 4.4. | Subject to Applicable Law, Non-Employees who are Israeli residents and are not Eligible 102 Grantees may only be granted 3(i) Awards under this Plan. |
| 5. | SHARES. |
If any outstanding Award under the Plan should, for any reason, expire, be canceled or be forfeited without having been exercised in full the Shares allocable to the unexercised, canceled or terminated portion of such Award shall (unless the Plan shall have been terminated) become available for subsequent grants of Awards under the Plan. The Board may, subject to any other approvals required under any Applicable Law, increase or decrease the number of Shares to be reserved under the Plan. Such Shares may, in whole or in part, be authorized but unissued Shares, or Shares that shall have been or may be reacquired by the Company (to the extent permitted pursuant to any Applicable Law) or by a Trustee appointed by the Board under the relevant provisions of the Ordinance or any other Applicable law. Any of such Shares which may remain unsold and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan, the Company shall at all times reserve a sufficient number of Shares to meet the requirements of the Plan.
| 6. | TERMS AND CONDITIONS OF OPTIONS, AND 102 AWARDS. |
Each Option granted pursuant to the Plan shall be evidenced by a written agreement between the Company and the Grantee or a written notice delivered by the Company and accepted by the Grantee (the “Option Agreement”), in such form and containing such terms and conditions as the Committee shall from time to time approve, which Option Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Option Agreement.
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| 6.1. | Number of Shares. Each Option Agreement shall state the number of Shares covered by the Option. |
| 6.2. | Type of Option. Each Option Agreement shall specifically state the type of Award granted thereunder and whether it constitutes an 102 Award and the relevant track, 3(i) Award, or otherwise. |
| 6.3. | Exercise Price. Each Option Agreement shall state the Exercise Price, which shall be equal to the amount determined by the Committee or the Board, as the case may be. In no event shall the Exercise Price of an Option be less than the par value of the shares for which such Option is exercisable. The Exercise Price shall also be subject to adjustment as provided in Section 13 hereof. |
| 6.4. | Manner of Exercise. An Option may be exercised, as to any or all Shares as to which the Option has become exercisable, by written notice delivered in person or by registered mail to the Company, specifying the number of Shares with respect to which the Option is being exercised, along with payment of the Exercise Price for such Shares in the manner specified in the following sentence. The Exercise Price shall be paid in full with respect to each Share, at the time of exercise, either (i) in cash; (ii) if the Company’s shares are publicly traded, all or part of the Exercise Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company or the Trustee; or (iii) in such other manner as the Committee shall determine, which may include procedures for cashless exercise or for payment with a full-recourse promissory note. The foregoing notwithstanding, no Option shall be exercisable unless the Grantee (a) has delivered an executed copy of the Share Option Agreement to the Company; or (b) otherwise agrees to be bound by the terms of the Share Option Agreement. |
| 6.5. | Term and Vesting of Options. Each Option Agreement shall provide the vesting schedule for the Option as determined by the Committee. To the extent permitted under Applicable Law, the Committee shall have the authority to determine and amend the vesting schedule and accelerate the vesting of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. Unless otherwise resolved by the Committee and stated in the Option Agreement, and subject to Sections 6.6 and 6.7 hereof, Options shall vest and become exercisable under the following schedule: twenty five percent (25%) of the Shares covered by the Option, on the first anniversary of the date on which such Option is granted, provided that the Grantee remains continuously employed by or in the service of the Company or its Subsidiary, Parent or Affiliate for that one year, and six point twenty five percent (6.25%) of the Shares covered by the Option at the end of each subsequent three (3) month period, provided that the Grantee remains continuously employed by or in the service of the Company or its Subsidiary, Parent or Affiliate for that three (3) month period over the course of the following three (3) years of continued employment by or service for the Company or its Subsidiary, Parent or Affiliate. The Option Agreement may contain performance goals and measurements, and the provisions with respect to any Option need not be the same as the provisions with respect to any other Option. The Exercise Period of an Option will be ten (10) years from the date of grant of the Option unless otherwise determined by the Committee, but subject to the vesting provisions described above and the early termination provisions set forth in Sections 6.6 and 6.7 hereof. At the expiration of the Exercise Period, all unexercised Options shall become null and void. |
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| 6.6. | Termination. |
| 6.6.1. | Except as provided in this Section 6.66.7 and in Section 6.7 hereof, an Option may not be exercised unless the Grantee is then in the employ of or maintaining a director, officer, consultant, advisor or supplier relationship with the Company or a Subsidiary, Parent or Affiliate thereof, and unless the Grantee has remained continuously so employed or in the director, officer, supplier, consultant, or advisor relationship since the date of grant of the Option. In the event that the employment or director, officer or consultant, advisor or supplier relationship of a Grantee shall terminate (other than by reason of death, Disability or Retirement), all Options of such Grantee that are vested and exercisable at the time of such termination may, unless earlier terminated in accordance with their terms, (including without limitation pursuant to Section 6.5 above), be exercised within up to ninety (90) days after the date of such termination (or such different period as the Committee shall prescribe) and in any event, prior to the lapse of ten (10) years from the date of grant of such Awards; provided, however, that if the Company (or its Subsidiary, Parent or Affiliate, when applicable) shall terminate the Grantee’s employment or service for Cause (as defined below) or if following the Grantee’s termination of employment, circumstances arise or are discovered with respect to the Grantee that would have constituted Cause for termination of his or her employment or service, all Options theretofore granted to such Grantee (whether vested or not) shall, to the extent not theretofore exercised, terminate on the date of such termination (or on which such circumstance arise or are discovered, as the case may be) unless otherwise determined by the Committee. |
| 6.6.2. | In the case of a Grantee whose principal employer is a Subsidiary, Parent or Affiliate of the Company, the Grantee’s employment shall also be deemed terminated for purposes of this Section 6.6 as of the date on which such principal employer ceases to be a Subsidiary, Parent or Affiliate of the Company. Notwithstanding anything to the contrary, the Committee, in its absolute discretion may, on such terms and conditions as it may determine appropriate, extend the periods for which the Options held by any individual may be exercisable. For the purpose of this section 6.6, the date of termination of employment or service, shall be the date that notice of termination is provided by either the Company or the Grantee, as the case may be. |
| 6.6.3. | For purposes of this Plan, the term “Cause” shall mean any of the following: (a) fraud, embezzlement or felony or similar act by the Grantee; (b) an act of moral turpitude by the Grantee, or any similar act, to the extent that such act causes significant injury to the reputation, business or business relationship of the Company (or a Subsidiary, Parent or Affiliate of the Company, when applicable); (c) any material breach by the Grantee of an agreement between the Company or any Subsidiary, Parent or Affiliate thereof and the Grantee (including material breach of confidentiality, non-competition or non-solicitation covenants); (d) any refusal to carry out a reasonable directive of the CEO, Board or the Grantee’s direct supervisor which involves the business of the Company or any of its Subsidiary, Parent or Affiliate and was capable of being lawfully performed; (e) any breach of the Grantee’s fiduciary duties or duties of care towards the Company or any of its Subsidiaries, Parent or Affiliates; or (f) any circumstances that constitute grounds for termination for cause under the Grantee’s employment, consulting or service agreement with the Company or Subsidiary, Parent or Affiliate thereof, to the extent applicable. |
| 6.7. | Death, Disability or Retirement of Grantee. If a Grantee shall (i) die while: (A) employed by, or performing service for, the Company or a Subsidiary, Parent or Affiliate, or (B) within the ninety (90) days period after the date of termination of such Grantee’s employment or service (or within such different period as the Committee may have provided pursuant to Section 6.6 hereof); or (ii) if the Grantee’s employment or service shall terminate by reason of Disability, all Options theretofore granted to such Grantee may (to the extent otherwise vested and exercisable and unless earlier terminated in accordance with their terms), be exercised by the Grantee or by the Grantee’s estate or by a person who acquired the right to exercise such Options by bequest or inheritance or otherwise by result of death or Disability of the Grantee, at any time within one (1) year after the death or Disability of the Grantee (or such different period as the Committee shall prescribe), and in any event, prior to the lapse of ten (10) years from the date of grant of such Awards. In the event that an Option granted hereunder shall be exercised by the legal representatives of a deceased or former Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative to exercise such Option. In the event that the employment or service of a Grantee shall terminate on account of such Grantee’s Retirement, all Options of such Grantee that are exercisable at the time of such Retirement may, unless earlier terminated in accordance with their terms, be exercised at any time within the ninety (90) days period after the date of such Retirement (or such different period as the Committee shall prescribe). |
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| 6.8. | Other Provisions. The Option Agreement evidencing Awards under the Plan shall contain such other terms and conditions not inconsistent with the Plan as the Committee may determine, at or after the date of grant, including without limitation, provisions in connection with the restrictions on transferring the Awards, which shall be binding upon the Grantees and other terms and conditions as the Committee shall deem appropriate. |
| 6.9. | Modification, Extension and Assumption of Options. Within the limitations of the Plan, the Board may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Grantee, impair the Grantee’s rights or increase the Grantee’s obligations under such Option. |
| 6.10. | 102 Awards. The terms of this Section 6 shall apply mutatis mutandis to all 102 Awards. |
| 7. | 102 AWARDS. |
| 7.1. | Awards granted pursuant to this Section 7 are intended to be granted pursuant to Section 102 of the Ordinance pursuant to either: (a) Section 102(b)(2) thereof as capital gains track awards (“102 Capital Gains Track Awards”); or (b) Section 102(b)(1) thereof as ordinary income track options (“102 Ordinary Income Track Awards”, together with 102 Capital Gains Track Awards, a “102 Trustee Awards”). A 102 Trustee Awards shall be granted subject to the following special terms and conditions contained in this Section 7, the general terms and conditions specified in Section 6 hereof and other provisions of the Plan, except for any provisions of the Plan applying to Awards under different tax laws or regulations. |
| 7.2. | The Company may grant only one type of 102 Trustee Award at any given time to all Grantees who are to be granted 102 Trustee Awards pursuant to this Plan, and shall file an election with the ITA regarding the type of 102 Trustee Award it elects to grant before the date of grant of any 102 Trustee Awards (the “Election”). Such Election shall also apply to any bonus shares received by any Grantee as a result of holding the 102 Trustee Awards. The Company may change the type of 102 Trustee Award that it elects to grant only after the passage of at least twelve (12) months from the end of the year in which the first grant was made in accordance with the previous Election, or as otherwise provided by Applicable Law. Any Election shall not prevent the Company from granting Awards, pursuant to Section 102(c) of the Ordinance without a Trustee (a “102 Non-Trustee Awards”). |
| 7.3. | Each 102 Trustee Award will be deemed granted on the date stated in a written notice to be provided by the Company, provided that: (i) within the period prescribed in the Ordinance the Company has provided such notice to the Trustee; and (ii) on or before such date the Grantee has signed all documents required pursuant to Applicable Law and under the Plan. |
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| 7.4. | Each 102 Trustee Award, each Share issued pursuant to the exercise of any 102 Trustee Award, Restricted Shares and any rights granted thereunder, including bonus shares, shall be allotted and issued to and registered in the name of the Trustee and shall be held in trust for the benefit of the Grantee for a period of not less than the requisite period prescribed by the Ordinance and the Rules or such longer period as set by the Committee or for a longer period if so requested by the Grantee (the “Required Holding Period”). In the event that the requirements under Section 102 to qualify an Award as a 102 Trustee Award are not met, then the Award will be treated as a 102 Non-Trustee Award, all in accordance with the provisions of Section 102 and the Rules. After termination of the Required Holding Period, the Trustee may release such 102 Trustee Award and any such Shares, provided that: (i) the Trustee has received an acknowledgment from the ITA that the Grantee has paid any applicable taxes due pursuant to the Ordinance; or (ii) the Trustee and/or the Company and/or its Affiliate withholds any applicable taxes due pursuant to the Ordinance arising from the 102 Trustee Awards and/or any Shares allotted or issued upon exercise of such 102 Trustee Awards. The Trustee shall not release any 102 Trustee Awards or Shares issued upon exercise thereof prior to the payment in full of the Grantee’s tax liabilities arising from such 102 Trustee Awards and/or Shares or the withholding referred to in (ii) above, together with the applicable fees of the Trustee. |
| 7.5. | Each 102 Trustee Award shall be subject to the relevant terms of the Ordinance and the Rules, which shall be deemed an integral part of the 102 Trustee Award and shall prevail over any term contained in the Plan or Option Agreement which is not consistent therewith. Any provision of the Ordinance, the Rules and any approvals by the Income Tax Commissioner not expressly specified in this Plan or Option Agreement which, as determined by the Committee, are necessary to receive or maintain any tax benefit pursuant to Section 102 shall be binding on the Grantee. The Grantee granted a 102 Trustee Award shall comply with the Ordinance and the terms and conditions of the trust agreement entered into between the Company and the Trustee. The Grantee agrees to execute any and all documents, which the Company and/or its Affiliates and/or the Trustee may reasonably determine to be necessary in order to comply with the Ordinance and the Rules. |
| 7.6. | During the Required Holding Period, the Grantee shall not release from trust or sell, assign, transfer or give as collateral, the Shares issuable upon the exercise of a 102 Trustee Award and/or any securities issued or distributed with respect thereto, until the expiration of the Required Holding Period. Notwithstanding the above, if any such sale or release occurs during the Required Holding Period it will result in adverse tax consequences to the Grantee under Section 102 of the Ordinance and the Rules, which shall apply to and shall be borne solely by such Grantee. Subject to the foregoing, the Trustee may, pursuant to a written request from the Grantee, release and transfer such Shares to a designated third party, provided that both of the following conditions have been fulfilled prior to such release or transfer: (i) payment has been made to the ITA of all taxes required to be paid upon the release and transfer of the Shares, and confirmation of such payment has been received by the Trustee and (ii) the Trustee has received written confirmation from the Company that all requirements for such release and transfer have been fulfilled according to the terms of the Company’s corporate documents, the Plan, the Option Agreement and any Applicable Law. |
| 7.7. | If an option granted as a 102 Trustee Award is exercised during the Required Holding Period, the Shares issued upon such exercise shall be issued in the name of the Trustee for the benefit of the Grantee. If such 102 Trustee Award is exercised after the expiration of the Required Holding Period, the Shares issued upon such exercise shall, at the election of the Grantee, either: (i) be issued in the name of the Trustee; or (ii) be issued to the Grantee, provided that the Grantee first complies with all applicable provisions of the Plan and all taxes with respect thereto shall have been fully paid to the ITA. |
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| 7.8. | The foregoing provisions of this Section 7 relating to 102 Trustee Awards shall not apply with respect to 102 Awards without a Trustee, which shall, however, be subject to the relevant provisions of Section 102 and the Rules. |
| 7.9. | Upon receipt of a 102 Trustee Award, the Grantee will sign an undertaking to release the Trustee from any liability with respect to any action or decision duly taken and executed in good faith by the Trustee in relation to the Plan, or any 102 Trustee Award or Share granted to such Grantee thereunder. |
| 8. | 3(i) AWARD. |
| 8.1. | Options granted pursuant to this Section 8 are intended to constitute a 3(i) Award and shall be granted subject to the general terms and conditions specified in Section 6 hereof and other provisions of the Plan, except for any provisions of the Plan applying to Options under different tax laws or regulations. |
| 8.2. | To the extent required by the Ordinance or the ITA or otherwise deemed by the Committee prudent or advisable, the 3(i) Awards granted pursuant to the Plan shall be issued to a Trustee nominated by the Committee in accordance with the provisions of the Ordinance. In such event, the Trustee shall hold such 3(i) Awards in trust, until exercised by the Grantee, pursuant to the Company’s instructions from time to time as set forth in a trust agreement, which will be entered into between the Company and the Trustee. If determined by the Board or the Committee, and subject to such trust agreement the Trustee shall be responsible for withholding any taxes to which a Grantee may become liable upon the exercise of 3(i) Awards. |
| 8.3. | Upon receipt of a 3(i) Award that is issued to a Trustee, the Grantee will sign an undertaking to release the Trustee from any liability with respect to any action or decision duly taken and executed in good faith by the Trustee in relation to the Plan, or any 3(i) Award or Share granted to such Grantee thereunder. |
| 9. | RESTRICTED SHARES. |
The Committee may award Restricted Shares to any eligible Grantee, including under Section 102 of the Ordinance. Each Award of Restricted Shares under the Plan shall be evidenced by a written agreement between the Company and the Grantee (the “Restricted Share Agreement”), in such form as the Committee shall from time to time approve. The Restricted Share Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Restricted Share Agreement:
| 9.1. | Number of Shares. Each Restricted Share Agreement shall state the number of Shares covered by an Award. |
| 9.2. | Purchase Price. Each Restricted Share Agreement may state an amount of purchase price to be paid by the Grantee in consideration for the issuance of the Restricted Shares and the terms of payment thereof, which may include, payment by issuance of promissory notes or other evidence of indebtedness on such terms and conditions as determined by the Committee. Any right to purchase Shares pursuant to this Section 9 shall automatically expire if not exercised by the Grantee within 30 days after the grant of such right was communicated to the Grantee by the Company. For the avoidance of doubt, and at the discretion of the Board, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Parent, Affiliate or Subsidiary prior to the award. |
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| 9.3. | Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, for such period as the Committee shall determine from the date on which the Award is granted (the “Restricted Period”). The Committee may also impose such additional or alternative restrictions and conditions on the Restricted Shares, as it deems appropriate, including the satisfaction of performance criteria. Such performance criteria may include, but are not limited to, sales, earnings before interest and taxes, return on investment, earnings per share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee. Certificates for shares issued pursuant to Restricted Share Awards shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares in contravention of such restrictions shall be null and void and without effect. Such certificates may, if so determined by the Committee, be held in escrow by an escrow agent appointed by the Committee, or, if a Restricted Share Award is made pursuant to Section 102, by the Trustee. In determining the Restricted Period of an Award the Committee may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded Restricted Shares on successive anniversaries of the date of such Award. To the extent required by the Ordinance or the ITA, the Restricted Shares issued pursuant to Section 102 of the Ordinance shall be issued to the Trustee in accordance with the provisions of the Ordinance and the Restricted Shares shall be held for the benefit of the Grantee for such period as may be required by the Ordinance. |
| 9.4. | Adjustment of Performance Goals. The Committee may adjust performance goals to take into account changes in law and accounting and tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the inclusion or the exclusion of the impact of extraordinary or unusual items, events or circumstances. The Committee also may adjust the performance goals by reducing the amount to be received by any Grantee pursuant to an Award if and to the extent that the Committee deems it appropriate. |
| 9.5. | Forfeiture. Subject to such exceptions as may be determined by the Committee, if the Grantee’s continuous employment or service relationship with the Company or its Subsidiary or Affiliate shall terminate for any reason prior to the expiration of the vesting date or Restricted Period of an Award or prior to the payment in full of the purchase price of any Restricted Shares with respect to which the vesting date or the Restricted Period has expired, any shares remaining subject to vesting or restrictions or with respect to which the purchase price has not been paid in full, shall thereupon be forfeited and shall be deemed transferred to, and reacquired by, or cancelled by, as the case may be, the Company or a Subsidiary at no cost to the Company or Subsidiary, subject to all Applicable Laws. Upon forfeiture of Restricted Shares, the Grantee shall have no further rights with respect to such Restricted Shares. |
| 9.6. | Ownership. During the Restricted Period the Grantee shall possess all incidents of ownership of such Restricted Shares, subject to Section 9.3 and Section 15 including the right to receive dividends with respect to such shares. All distributions, if any, received by a Grantee with respect to Restricted Shares as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award. |
| 10. | OTHER SHARE OR SHARE-BASED AWARDS. |
The Committee may grant other Awards under the Plan pursuant to which Shares (which may, but need not, be Restricted Shares pursuant to Section 9 hereof), cash or a combination thereof, are or may in the future be acquired or received, or Awards denominated in stock units, including units valued on the basis of measures other than market value. The Committee may also grant stock appreciation rights without the grant of an accompanying option, which rights shall permit the Grantees to receive, at the time of any exercise of such rights, cash equal to the amount by which the Fair Market Value of all Shares in respect to which the right was granted exceeds the exercise price thereof. The Committee may, and it is hereby deemed to be an Award under the terms of the Plan, grant to Grantees (including Employees) the opportunity to purchase Shares of the Company in connection with any public offerings of the Company’s securities. Such other Share based Awards may be granted alone, in addition to, or in tandem with any Award of any type granted under the Plan and must be consistent with the purposes of the Plan.
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| 11. | SUSPENSION OF EMPLOYMENT OR ENGAGEMENT |
Unless the Board or the Committee provides otherwise, vesting of Awards granted hereunder shall be suspended during any unpaid leave of absence, other than in the case of any: (a) leave of absence which was pre-approved by the Company and continued vesting is expressly approved by the Company or if continued vesting is expressly required by Applicable Law; or (b) transfers between locations of the Company or between the Company, any Affiliate of the Company, or any respective successor thereof.
| 12. | VOTING PROXY. |
Until immediately after the listing for trading on a stock exchange or market or trading system of the Company’s (or the Successor Corporation’s) shares, the right to vote any Shares acquired under this Plan pursuant to an Award shall, unless otherwise determined by the Board or the Committee, be given by the Grantee or the Trustee (if so requested from the Trustee and agreed by the Trustee), as the case may be, pursuant to an irrevocable proxy, to the person or persons designated by the Board. All Awards granted hereunder shall be conditioned upon the execution of such irrevocable proxy. So long as any such Shares are held by a Trustee (and unless a proxy was given by the Trustee as aforesaid), such Shares shall be voted by the Trustee, and unless the Trustee is directed otherwise by the Board, such Shares shall be voted in the same proportion as the result of the Shareholder vote at the Shareholders meeting or written consent in respect of which the Shares held by the Trustee are being voted. Any irrevocable proxy granted pursuant hereto shall be of no force or effect immediately after the listing for trading on a stock exchange or market or trading system of the Company’s (or the Successor Corporation’s) shares.
| 13. | EFFECT OF CERTAIN CHANGES. |
| 13.1. | General. In the event of a subdivision of the outstanding share capital of the Company, any payment of a stock dividend (distribution of bonus shares), a reorganization (which may include a combination or exchange of shares), a consolidation, a stock split, a reverse stock split, a reclassification or other similar occurrence, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, the Committee shall make proportionate adjustments in each of: (i) the number of Shares available for future grants of Awards; (ii) the number of Shares covered by outstanding Awards; and (iii) the exercise price per share covered by any Award; provided, however, that in each case any fractional shares resulting from such adjustment shall be rounded down to the nearest whole share and that the Company shall have no obligation to make any cash or other payment with respect to such fractional shares. |
| 13.2. | In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Shares, a recapitalization, a spin-off or other corporate divestiture or division, or a similar occurrence, the Board at its sole discretion may make appropriate adjustments in one or more of: (i) the number of Shares available for future grants of Awards; (ii) the number of Shares covered by each outstanding Award; or (iii) the exercise price under each outstanding Award; provided, however, that in each case the aggregate exercise price for all Awards shall not change. |
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| 13.3. | Merger and Sale of Company. Unless otherwise determined by the Board or the Committee, and specifically provided in the respective Option Agreement, in the event of (i) a sale of all or substantially all of the assets of the Company; or (ii) a sale (including an exchange) of all or substantially all of the shares of the Company; (iii) a merger, consolidation, amalgamation or like transaction of the Company with or into another corporation; (iv) a scheme of arrangement for the purpose of effecting such sale, merger or amalgamation; or (v) such other transaction that is determined by the Committee to be a transaction having a similar effect (all such transactions being herein referred to as a “Merger/Sale”), then, without the Grantee’s consent and action: |
| 13.3.1. | The Committee in its sole and absolute discretion may cause that any Award then outstanding shall (i) be continued or (ii) be assumed or an equivalent Award shall be substituted by such successor corporation of the Merger/Sale or any Parent or Affiliate thereof as determined by the Board in its discretion (the “Successor Corporation”), under substantially the same terms as the Award; For the purposes of this Section 13.3.1, the Award shall be considered assumed if, following a Merger/Sale, the Award confers on the holder thereof the right to purchase or receive, for each Share underlying an Award immediately prior to the Merger/Sale, either (i) the consideration (whether stock, cash, or other securities or property) distributed to or received by holders of Shares in the Merger/Sale for each Share held on the effective date of the Merger/Sale (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares), which may be subject to vesting and other terms as determined by the Committee in its discretion, or (ii) regardless of the consideration received by the holders of Shares in the Merger/Sale, solely shares (or their equivalent) of the Successor Corporation at a value to be determined by the Committee in its discretion, which may be subject to vesting and other terms as determined by the Committee in its discretion. The foregoing shall not limit the Committee authority to determine, in its sole discretion, that in lieu of such assumption or substitution of Awards for Awards of the Successor Corporation, such Award will be substituted for any other type of asset or property, including under Section 13.3.2 hereunder. |
| 13.3.2. | In the event that the Awards are not continued, assumed or substituted by an equivalent Award, then the Committee may (but shall not be obligated to), in lieu of such continuation, assumption or substitution of the Award and in its sole discretion, (i) provide for the Grantee to have the right to exercise the Award, or otherwise for the acceleration of vesting of such Award, as to all or part of the Shares, including Shares covered by the Award which would not otherwise be exercisable or vested, under such terms and conditions as the Committee shall determine, including the cancellation of all unexercised Awards upon closing of the Merger/Sale; and/or (ii) provide for the cancellation of each outstanding Award at the closing of such Merger/Sale, and payment to the Grantee of an amount in cash as determined by the Committee to be fair in the circumstances (taking into consideration the value of each Share covered by the vested portion of any Award as reflected under the terms of the Merger/Sale, and the Exercise Price of each Share covered by such vested portion of such Award), and subject to such terms and conditions as determined by the Committee. |
| 13.3.3. | Notwithstanding the foregoing, in the event of a Merger/Sale, the Committee may determine, in its sole discretion, that upon completion of such Merger/Sale, the terms of any Award be otherwise amended, modified or terminated, as the Committee shall deem in good faith to be appropriate, including that the Award shall confer the right to purchase or receive any other security or asset, or any combination thereof, or that its terms be otherwise amended, modified or terminated, as the Committee shall deem in good faith to be appropriate. Neither the authorities and powers of the Committee under this Section 13.3.3, nor the exercise or implementation thereof, shall (i) be restricted or limited in any way by any adverse consequences (tax or otherwise) that may result to any holder of an Award, and (ii) as, inter alia, being a feature of the Award upon its grant, be deemed to constitute a change or an amendment of the rights of such holder under this Plan, nor shall any such adverse consequences (as well as any adverse tax consequences that may result from any tax ruling or other approval or determination of any relevant tax authority) be deemed to constitute a change or an amendment of the rights of such holder under this Plan. |
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| 13.4. | Reservation of Rights. Except as expressly provided in this Section 13 the Grantee of an Award hereunder shall have no rights by reason of any subdivision or consolidation of shares of any class or the payment of any stock dividend (bonus shares), any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, Merger/Sale, or consolidation, divestiture or spin-off of assets or shares of another company. Any issue by the Company of shares of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, type or price of shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right of power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structures or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or part of its business or assets or engage in any similar transactions. |
| 14. | NET EXERCISE. |
| 14.1. | The Exercise Price of each Share subject to an Option shall be payable upon the exercise of an Option in the following acceptable forms of payment: |
| (i) | cash, check or wire transfer; or |
| (ii) | the Board or the Committee at its sole discretion may determine that instead of issuing one Share as a result of the exercise of each one Option, the Grantee will exercise part or all of vested Options through a “Net Exercise” method, so that the Grantee will be entitled to receive pursuant to the exercise of the Options only the number of Shares representing the benefit component in the Options, based on the following formula, in exchange to paying only the par value of the Share (unless the Board decided otherwise, in its sole discretion, according to the provisions of section 304 to the Companies Law). For the avoidance of doubt, according to the said exercise method, the Grantee will not be required to actually pay the Purchase Price which is used only for calculating the benefit component: |
X = number of Shares to be issued pursuant to Net Exercise;
Y = the number of vested exercisable Options that the Grantee wishes to exercise into Shares;
A = the Fair Market Value of the Share at the date of exercise;
B = the Exercise Price;
N = the par value of the Share.
At the discretion of the Board or the Committee, the Board or Committee may decide of any combination of the methods of payment permitted by any paragraph of this Section 1414.
| 15. | NON-TRANSFERABILITY OF AWARDS; SURVIVING BENEFICIARY. |
| 15.1. | All Shares granted hereunder (or issued pursuant to the exercise of any Award) shall not be transferable otherwise than as set forth in the articles of association of the Company, as amended from time to time. Unless otherwise approved by the Committee, all Awards granted under the Plan, other than Shares, shall not be transferable otherwise than by will or by the laws of descent and distribution. Any transfer or disposition of Awards not permitted hereunder (including transfers pursuant to any decree of divorce, dissolution or any property settlement) shall be null and void. |
| 15.2. | Awards may be exercised or otherwise realized, during the lifetime of the Grantee, only by the Grantee or by his/her guardian or legal representative, to the extent provided for herein. If no designated beneficiary survives the Grantee, the executor or administrator of the Grantee’s estate shall be deemed to be the Grantee’s beneficiary. |
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| 16. | CONDITIONS UPON ISSUANCE OF SHARES. |
| 16.1. | Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award, unless the exercise of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws as determined by counsel to the Company. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. |
| 16.2. | Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, and make other representations as may be required under applicable securities laws if, in the opinion of counsel for the Company, such representations are required, all in form and content specified by the Company. |
| 17. | MARKET STAND-OFF. |
| 17.1. | In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act or equivalent law in another jurisdiction, the Grantee shall not directly or indirectly, without the prior written consent of the Company or its underwriters: (i) lend, offer, pledge, sell, contract to sell, sell any Award or contract to purchase, purchase any Award or contract to sell, grant any Award, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares acquired under this Plan or any securities of the Company (whether or not such Shares acquired under this Plan); or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Shares acquired under this Plan, whether any such transaction described in (i) or (ii) above is to be settled by delivery of Shares acquired under this Plan or such other securities, in cash or otherwise. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the effective date of the registration statement relating to such offering, as may be requested by the Company or such underwriters, however in any event, such period shall not exceed 180 days (in the case of the Company’s first underwritten offering of its Shares) following the effective date of such registration statement; or 90 days (in the case of a registration statement thereafter), plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions upon: (i) the publication or other distribution of research reports; or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules. |
| 17.2. | In the event of a subdivision of the outstanding share capital of the Company, the declaration and payment of a stock dividend (distribution of bonus shares), the declaration and payment of an extraordinary dividend payable in a form other than stock, a recapitalization, a reorganization (which may include a combination or exchange of shares or a similar transaction affecting the Company’s outstanding securities without receipt of consideration), a consolidation, a stock split, a spin-off or other corporate divestiture or division, a reclassification or other similar occurrence, an adjustment in conversion ratio, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. |
| 17.3. | In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Plan until the end of the applicable stand-off period. |
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| 17.4. | The underwriters in connection with a registration statement so filed are intended to be third party beneficiaries of this Section 17 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. |
| 17.5. | The Market Stand-Off shall not apply to Shares registered in any such public offering under the Securities Act. |
| 18. | AWARD AGREEMENT |
The grant of each Award is subject to and conditioned upon the signing of all documents required pursuant to Applicable Law and under the Plan, including the respective Option Agreement or Award agreement, by the Grantee.
| 19. | AGREEMENT BY GRANTEE REGARDING TAXES. |
| 19.1. | As a condition of exercise of an Award, the release of Shares by the Trustee or the expiration of the Restricted Period, a Grantee shall agree that, no later than the date of such occurrence, he will pay to the Company or make arrangements satisfactory to the Committee and the Trustee (if applicable) regarding payment of any applicable taxes of any kind required by Applicable Law to be withheld or paid. |
| 19.2. | ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH MAY ARISE FROM THE GRANT OF ANY AWARDS OR THE EXERCISE THEREOF, THE SALE OR DISPOSITION OF ANY SHARES GRANTED HEREUNDER OR ISSUED UPON EXERCISE OF ANY AWARD OR FROM ANY OTHER ACTION OF THE GRANTEE IN CONNECTION WITH THE FOREGOING SHALL BE BORNE AND PAID SOLELY BY THE GRANTEE, AND THE GRANTEE SHALL INDEMNIFY THE COMPANY, ITS SUBSIDIARIES, PARENT AND AFFILIATES AND THE TRUSTEE, AND SHALL HOLD THEM HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY SUCH TAX OR PENALTY, INTEREST OR INDEXATION THEREON. EACH GRANTEE AGREES TO, AND UNDERTAKES TO COMPLY WITH, ANY RULING, SETTLEMENT, CLOSING AGREEMENT OR OTHER SIMILAR AGREEMENT OR ARRANGEMENT WITH ANY TAX AUTHORITY IN CONNECTION WITH THE FOREGOING WHICH IS APPROVED BY THE COMPANY. |
| 19.3. | THE GRANTEE IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING OR EXERCISING AWARDS HEREUNDER. THE COMPANY DOES NOT ASSUME ANY RESPONSIBILITY TO ADVISE THE GRANTEE ON SUCH MATTERS, WHICH SHALL REMAIN SOLELY THE RESPONSIBILITY OF THE GRANTEE. IN ADDITION, THE COMPANY DOES NOT UNDERTAKE OR ASSUME ANY RESPONSIBILITY TO THE EFFECT THAT ANY AWARD SHALL BENEFIT FROM ANY PARTICULAR TAX TREATMENT OR TAX ADVANTAGE OF ANY TYPE AND THE COMPANY SHALL BEAR NO LIABILITY IN CONNECTION WITH THE MANNER IN WHICH ANY AWARD IS EVENTUALLY TREATED FOR TAX PURPOSES. |
| 19.4. | The Company or any of its Subsidiary, Parent or Affiliate may take such action as it may deem necessary or appropriate, in its discretion, for the purpose of or in connection with withholding of any taxes which the Company or any of its Subsidiary, Parent or Affiliate is required by any Applicable Law to withhold in connection with any Awards (collectively, “Withholding Obligations”). Such actions may include, without limitation: (i) requiring Grantees to remit to the Company in cash an amount sufficient to satisfy such Withholding Obligations; (ii) subject to Applicable Law, allowing the Grantees to provide Shares to the Company, in an amount that at such time, reflects a value that the Committee determines to be sufficient to satisfy such Withholding Obligations; (iii) withholding Shares otherwise issuable upon the exercise of an Award at a value which is determined by the Committee to be sufficient to satisfy such Withholding Obligations; or (iv) any combination of the foregoing. The Company shall not be obligated to allow the exercise of any Award by or on behalf of a Grantee until all tax consequences arising from the exercise of such Award are resolved in a manner acceptable to the Company. |
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| 19.5. | Each Grantee shall notify the Company in writing promptly and in any event within ten (10) days after the date on which such Grantee first obtains knowledge of any tax bureau inquiry, audit, assertion, determination, investigation, or question relating in any manner to the Awards granted or received hereunder or Shares issued thereunder and shall continuously inform the Company of any developments, proceedings, discussions and negotiations relating to such matter, and shall allow the Company and its representatives to participate in any proceedings and discussions concerning such matters. Upon request, a Grantee shall provide to the Company any information or document relating to any matter described in the preceding sentence, which the Company, in its discretion, requires. |
| 19.6. | With respect to 102 Trustee Awards, if the Grantee ceases to be employed by the Company or any of its Affiliate, the Grantee shall extend to the Company and/or its Affiliate with whom the Grantee is employed a security or guarantee for the payment of taxes due at the time of sale of Shares, all in accordance with the provisions of Section 102 of the Ordinance and the Rules. |
| 20. | RIGHTS AS A SHAREHOLDER; VOTING AND DIVIDENDS. |
| 20.1. | A Grantee shall have no rights as a shareholder of the Company with respect to any Shares covered by the Award until the date of the issuance of a share certificate to the Grantee for such Shares. With respect to Options under 102 Awards or 3(i) Option Awards (if such Share Options are being held by a Trustee), the Trustee shall have no rights as a shareholder of the Company with respect to any Shares covered by such Award until the date of the issuance of a share certificate to the Grantee for such Shares or to the Trustee for the Grantee’s benefit, and the Grantee shall have no rights as a Shareholder of the Company with respect to any Shares covered by an Option under 102 Awards or 3(i) Option Awards until the date of the release of such Shares from the Trustee to the Grantee and the issuance of a share certificate to the Grantee for such Shares (provided however, that as of the date of the exercise of such Options and/or the issuance of the Shares, the holder of the Shares will be entitled to receive dividends and/or bonus shares, to the extent applicable with respect to such issued Shares, subject to any applicable taxation, and when applicable subject to the provisions of Section 102 and the Rules, regulations or orders promulgated thereunder). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights for which the record date is prior to the date such Shares are issued, except as provided in Section 13 hereof. |
| 20.2. | With respect to all Shares issued in the form of Awards hereunder or upon the exercise of Awards hereunder, any and all voting rights attached to such Shares shall be subject to Section 13, and the Grantee shall be entitled to receive dividends distributed with respect to such Shares, subject to the provisions of the Company’s articles of association, as amended from time to time, and subject to any Applicable Law. |
| 20.3. | In any event of a cash dividend by the Company to its shareholders holding ordinary shares of the Company, within the period an Award was granted to a Grantee to the date of conversion of such Award to shares of the Company, the Exercise Price of the Options will be adjusted to the full amount of dividend paid for each share of the Company on the day of the “ex-dividend”, provided that the Exercise Price shall not fall below the par value of the Shares. Such adjustment will be applicable to any Award granted by the Company (including in respect of Awards which the Grantee was not entitled to exercise on the determining date for the payment of the dividend). |
| 20.4. | Subject to the provisions of the Plan, the underlying Shares shall not be protected against dilution in any manner whatsoever, unless otherwise determined by the Board or under this Plan. |
| 20.5. | The Company may, but shall not be obligated to, register or qualify the sale of Shares under any applicable securities law or any other Applicable Law. |
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| 21. | NO REPRESENTATION BY COMPANY. |
By granting the Awards, the Company is not, and shall not be deemed as, granting any representation or warranties to the Grantee regarding the Company, its business affairs, its prospects or the future value of its Shares.
| 22. | NO RETENTION RIGHTS. |
Nothing in the Plan or in any Award granted or agreement entered into pursuant hereto shall confer upon any Grantee the right to continue in the employ of, or be in a consultant, advisor, director, officer or supplier relationship with, the Company or any of its Subsidiaries, Parent or Affiliates or to be entitled to any remuneration or benefits not set forth in the Plan or such agreement or to interfere with or limit in any way the right of the Company or any such Subsidiary, Parent or Affiliate to terminate such Grantee’s employment or service. Awards granted under the Plan shall not be affected by any change in duties or position of a Grantee as long as such Grantee continues to be employed by, or be in a consultant, advisor, director, officer or supplier relationship with, the Company or any Subsidiary, Parent or Affiliate thereof.
| 23. | PERIOD DURING WHICH AWARDS MAY BE GRANTED. |
Awards may be granted pursuant to the Plan from time to time within a period of ten (10) years from the Effective Date, provided that the Board may extend the term of the Plan upon any increase of the number of Shares reserved for the grant of Awards under the Plan. From the tenth (10th) anniversary of the Effective Date no grants of Awards may be made and the Plan shall continue to be in full force and effect solely with respect to such Awards that remain outstanding. The Plan shall terminate at such time after the tenth (10th) anniversary of the Effective Date that no Awards remain outstanding.
| 24. | TERM OF AWARD. |
Anything herein to the contrary notwithstanding, but without derogating from the provisions of Section 6.6, or 6.7 hereof, if any Award, or any part thereof, has not been exercised and the Shares covered thereby not paid for within the term of the Award as determined by the Committee, which in any event shall not exceed ten (10) years after the date on which the Award was granted, as set forth in the Award Agreement in the Grantee’s Award, such Award, or such part thereof, and the right to acquire such Shares shall terminate, and all interests and rights of the Grantee in and to the same shall expire. In the case of Shares held by a Trustee, the Grantee shall elect whether to release such Shares from trust or sell the Shares and upon such release or sale such trust shall expire.
| 25. | APPROVAL. |
| 25.1. | The Plan shall take effect upon its adoption by the Board (the “Effective Date”) and shall terminate on the tenth (10th) anniversary of such adoption by the Board or approval by the shareholders, whichever is earlier. |
| 25.2. | No 102 Award shall be granted under the Plan until the lapse of at least thirty (30) days following submission of the Plan for the approval of the ITA and receipt by the Company of all approvals thereof. |
| 26. | AMENDMENT AND TERMINATION OF THE PLAN. |
The Board at any time and from time to time may suspend, terminate, modify or amend the Plan, whether retroactively or prospectively; provided, however, that, unless otherwise determined by the Board, an amendment which requires Shareholder approval in order for the Plan to continue to comply with any Applicable Law shall not be effective unless approved by the requisite vote of Shareholders, and provided further that except as provided in Section 13, no suspension, termination, modification or amendment of the Plan may adversely affect any Award previously granted, unless the written consent of the respective Grantee is obtained.
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| 27. | RULES PARTICULAR TO SPECIFIC COUNTRIES. |
Notwithstanding anything herein to the contrary, the terms and conditions of the Plan may be amended with respect to a particular country by means of an appendix to the Plan, and to the extent that the terms and conditions set forth in any appendix conflict with any provisions of the Plan, the provisions of the appendix shall govern. Terms and conditions set forth in the Appendix shall apply only to Award granted to a Grantee under the jurisdiction of the specific country that is the subject of the appendix and shall not apply to Awards issued to a Grantee not under the jurisdiction of such country. The adoption of any such appendix shall be subject to the approval of the Board or Committee, and if required in connection with the application of certain tax treatment, pursuant to applicable stock exchange rules or regulations or otherwise, then also the approval of the Shareholders of the Company at the required majority.
| 28. | GOVERNING LAW; JURISDICTION. |
| 28.1. | The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Israel, except with respect to matters that are subject to tax laws, regulations and rules in any specific jurisdiction, which shall be governed by the respective laws, regulations and rules of such jurisdiction. Certain definitions, which refer to laws other than the laws of the State of Israel, shall be construed in accordance with such other laws. |
| 28.2. | The competent courts located in Tel-Aviv-Jaffa, Israel shall have exclusive jurisdiction over any dispute arising out of or in connection with this Plan and any Award granted. |
| 29. | NON-EXCLUSIVITY OF THE PLAN. |
Neither the adoption of the Plan by the Board nor the submission of the Plan to Shareholders of the Company for approval (to the extent required under Applicable Law), shall be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to Employees generally, or to any class or group of Employees, which the Company or any Subsidiary now has lawfully put into effect, including, without limitation, any Retirement, pension, savings and share purchase plan, insurance, death and Disability benefits and executive short-term or long-term incentive plans.
| 30. | MISCELLANEOUS. |
| 30.1. | Additional Terms. Each Award awarded under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion. |
| 30.2. | Severability. If any provision of the Plan or any Option Agreement, Restricted Share Agreement, or other Award related agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. In addition, if any particular provision contained in this Plan shall for any reason be held to be excessively broad as to duration, geographic scope, activity or subject, it shall be construed by limiting and reducing such provision as to such characteristic so that the provision is enforceable to fullest extent compatible with the Applicable Law as it shall then appear. |
| 30.3. | Captions and Titles. The use of captions and titles in this Plan or any Option Agreement, Restricted Share Agreement or other Award related agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such agreement. |
***
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Exhibit 10.12
TurboGen Ltd.
(the “Company”)
Compensation Policy for the Company’s Office Holders
(the “Compensation Policy”)
November 2025
Table of Contents
| Topic | Page | |
| 1. Purpose of the Compensation Policy | 1 | |
| 2. Parameters for examining the compensation terms | 2 | |
| 3. Ratio between the Office Holders' compensation and compensation of the Company's other employees | 3 | |
| 4. Compensation terms – general | 3 | |
| 5. Compensation terms – fixed component | 4 | |
| 6. Compensation terms – variable component | 7 | |
| 7. Clawback of compensation given based on erroneous financial information | 12 | |
| 8. Ratio between fixed compensation and variable compensation components | 13 | |
| 9. Director remuneration | 13 | |
| 10. Non-material changes to the terms of employment of Office Holder who report to the CEO | 13 |
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| 1. | Purpose of the Compensation Policy |
This document constitutes the Compensation Policy for the Company's office holders, within the meaning of the terms in the Companies Law, 5759-1999 (the “Companies Law” and “Office Holder”, respectively).
The purpose of the Compensation Policy is to define and specify, as required, a compensation policy for the Company's Office Holders in accordance with the requirements of the Companies Law, which imposes an obligation on public companies to adopt such a compensation policy.
The Compensation Policy is a multi-year compensation policy, which took effect in November 2021 when the Company became public, and is valid for 5 years from the date the Company's shares were listed on the Tel Aviv Stock Exchange Ltd. ("TASE"), pursuant to the provisions of Section 1 of the Companies Regulations (Relief Regarding the Obligation to Establish a Compensation Policy), 5773-2013.
On 5 October 2025 and 20 October 2025, the Compensation Committee (the “Compensation Committee”) and the Company's Board of Directors (the "Board"), respectively, approved the renewal of the Compensation Policy for the Company's Office Holders, for a period of three (3) years from the date of approval by the general meeting of the Company's shareholders.
The Company strives to adopt appropriate compensation solutions so as to encourage the Office Holders to achieve its business targets, while placing emphasis on the link between the Office Holders' contribution and the Company's long-term performance, taking into account the Company's risk management policy, alongside the development and retention of its human capital. In the estimation of the Board, the Compensation Policy includes mechanisms that encourage the Office Holders to address the challenges facing the Company and remain motivated to achieve a high level of business performance, without taking risks that are inconsistent with the Company's risk management policy.
The Compensation Policy is designed to assist in achieving the Company's goals and work plans, inter alia, in the long term, by:
| 1.1. | Creating a reasonable and appropriate set of incentives for the Company's Office Holders, taking into account, inter alia, the Company's characteristics, its business activities, the Company's risk management policy and working relations at the Company. |
| 1.2. | Providing necessary tools for the recruitment, incentivization and retention of talented and skilled managers in the Company, who can contribute to the Company and maximize its profits over the long term. |
| 1.3. | Emphasizing performance-based compensation, and linking the Office Holders to the Company and its performance, while adjusting the Office Holders' compensation to their contribution towards achieving the Company's targets and maximizing its profits over the long term and in accordance with their role. |
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| 1.4. | Creating an appropriate balance between the various compensation components (such as fixed versus variable components, and short-term versus long-term components). |
Approval of compensation for an Office Holder in accordance with the Compensation Policy shall be done by the Company's competent organs, and subject to the provisions of any law, as applicable from time to time. The Board is responsible for managing the Compensation Policy, including its implementation, as well as for any and all actions required for such purpose, including the authority to interpret the provisions of the Compensation Policy in any case of doubt regarding its application. The Compensation Committee and the Board shall review, from time to time, the Compensation Policy and the need for adjustment thereof, inter alia, in accordance with the considerations and principles specified therein. Such adjustments shall be presented for approval in the manner prescribed by law.
It is clarified that the Compensation Policy does not confer any right on any of the Company's Office Holders, and it should not be deemed as an undertaking by the Company to confer such a right. The granting of terms of office and employment to an Office Holder shall be subject to approval by the Company's competent organs in accordance with the provisions of the law.
| 2. | Parameters for reviewing compensation terms |
The general parameters that shall be considered when examining the compensation terms of the Company's Office Holders are as follows:
| 2.1. | The Office Holder’s education, qualifications, expertise, professional experience and achievements. |
| 2.2. | The Office Holder’s role, responsibilities and previous salary agreements of the Company that were signed with the Office Holder. |
| 2.3. | The Office Holder's contribution to the Company's performance, profits and stability. |
| 2.4. | The Office Holder’s purview given their role in the Company. |
| 2.5. | The Company's need to retain the Office Holder in light of their skill, knowledge and/or unique expertise. |
| 2.6. | The Company's goals and the strategy it has adopted to achieve its goals. |
| 2.7. | Other relevant parameters that the Compensation Committee (following its appointment) and the Board shall deem relevant, including standard compensation terms in the market, the Company's size and the nature of its operations. |
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| 3. | Ratio between the Office Holder’s compensation and the compensation of the Company's other employees |
The determination of the Office Holder’s compensation terms shall include the ratio between the cost of the CEO's terms of office and employment and the average cost of the terms of office and employment of the Office Holders, and the average and median cost of salary of the Company's other employees. As of the date of release of the Compensation Policy, the ratio between the CEO's cost of salary and the average cost of salary of the Company's Office Holders, and the average and median cost of salary of the Company's other employees, is x2.7 and x1.6, and x3.6 and x2.2 (respectively). In the estimation of the Board, the said ratio is reasonable in the circumstances and in view of the Company's management structure, and does not affect working relations at the Company.
"Agency Workers Employed by the Company" – Staffing agency employees whose de facto employer is the Company, and service contractor employees who provide services at the Company; for this purpose, "Staffing Agency", "Service Contractor", "De Facto Employer" – as defined in the Employment of Workers by Staffing Agencies Law, 5756-1996; and "Salary" – the income for which The National Insurance Institute contributions are paid pursuant to Chapter O of the National Insurance Law [Consolidated Version], 5755-1995.
| 4. | Compensation terms – general |
| 4.1. | The compensation terms offered to the Company's Office Holders are determined in reference to the existing compensation terms of the Office Holders and the assessment of the Board, inter alia in view of its experience and to the best of its knowledge of the standard compensation terms in the market and in the industry in which the Company operates for Office Holders holding similar positions. |
| 4.2. | The Company shall be entitled to grant (all or some of) the Office Holders a compensation plan, which shall include salary, a bonus and/or equity-based payment. |
| 4.3. | The term of the Company's employment agreement with the Office Holders may be fixed or indefinite, with an option for termination by either party. |
All amounts stated in the Compensation Policy, except for the amounts in Section 5.1.5 below, shall be indexed to the Consumer Price Index (CPI) published in October 2025.
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| 5. | Compensation terms – fixed component |
| 5.1. | Base salary and Social benefits / management fees |
| 5.1.1. | The base salary / management fees constitute fixed compensation, the primary purpose of which is to provide certainty and stability for the Company and the Office Holders. |
| 5.1.2. | The Officer's base salary / management fees shall be determined during negotiations for their employment with the Company, inter alia, according to the parameters specified in Section 2 above, and in reference to the existing salary conditions of the Company's other Office Holders, the standard salary conditions in the market, and the salary conditions of the candidate for the Office Holder position prior to their appointment at the Company, taking into consideration their qualifications, experience, education and expertise. |
| 5.1.3. | The Office Holder employed by the Company shall be entitled to contributions to a provident fund for provident payments and severance pay, and according to the discretion of the Company's competent organs – to a study fund. In addition, an Office Holder's compensation may include additional benefits, such as: car maintenance (including gross-up of the tax thereon and subject to the maximum specified below), a mobile phone, annual leave days over and above the legal requirement, adjustment payment, work disability insurance and/or reimbursement of personal expenses (the "Social benefits"). It is clarified that the Social benefits shall be as is standard at the Company at the time of approval of the Compensation Policy, and may be reviewed from time to time by the Compensation Committee and updated accordingly. |
Expense reimbursement – The Company may determine that it will bear part or all of the expenses of the Office Holder (including directors and Office Holders who are the controlling shareholders) that are incurred for the purpose of carrying out their duties, including telephone, internet, accommodation (in and outside of Israel), per diems, hospitality, travel expenses in Israel and overseas, newspapers, professional literature, professional organization membership fees, etc., against the submission of invoices, in accordance with the expense reimbursement policy that is approved by the Board from time to time.
| 5.1.4. | Office Holders who provide services to the Company other than under a personal employment agreement, i.e., through a management company, are not entitled to Social benefits, but the cost of salary (as defined below) of these Office Holders shall include the value of the said Social benefits. |
| 5.1.5. | In any event, the annual cost of the base salary and the Social benefits, or alternatively, of the management fees, shall not exceed the maximum specified below (indexed to the Consumer Price Index (the "CPI") published in April 2021): |
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| Rank* | In terms of cost to the Company1 | |
| Maximum | Position percentage | |
| Chairman of the Board | ILS 1,200 thousand | Full-time |
| Director holding another role | ILS 1,200 thousand | Full-time |
| CEO | ILS 1,000 thousand | Full-time |
| VP | ILS 900 thousand | Full-time |
| * | Should there be any change in the position percentage, the ranges of the above engagements shall be adjusted proportionally. It is clarified that a change in an Office Holder's compensation resulting from a change in the position percentage shall require any and all approvals required by law. It is further clarified that, it is the position of the Board, given the nature of the Company's activities, that no engagement in terms of office and employment with a part-time Office Holder shall be deemed as a deviation from the ordinary course of business or from the Compensation Policy. |
It is clarified that a deviation of up to 5% from the maximum stated in this section above shall not be deemed as a deviation from the Compensation Policy.
| 5.1.6. | The Company shall be entitled to index the Office Holder's salary to a rise in the CPI. |
| 5.1.7. | Subject to completion of the listing of the Company's securities on a stock exchange outside of Israel, the fixed salary maximum in the Compensation Policy shall automatically increase as follows: |
| ● | Chairman of the Board – x1.5. |
| ● | CEO – x2. |
| ● | VP – x1.5. |
| 5.1.8. | The Compensation Committee and the Board may approve the granting of equity-based compensation to an Office Holder in lieu of salary, in whole or in part, by way of the granting of restricted stock units (RSUs), restricted stock (RS) or unlisted options exercisable for shares of the Company, which shall vest on a monthly basis. In such a case, the calculation of the value of the equity-based compensation that is granted, compared with the base salary, shall include a discount of up to 50%. |
| 5.1.9. | The Compensation Committee and the Board may decide to grant equity-based compensation to an Office Holder in lieu of an unpaid salary debt to the Office Holder, including to controlling shareholders and/or relatives of the controlling shareholders, by way of granting RSUs, RS or options or any other equity-based compensation according to the Company's equity-based compensation plan, as being from time to time ("Equity-based compensation in Lieu of Salary Debt"). The terms of the Equity-based compensation in Lieu of Salary Debt will be as follows: (1) Vesting period – at least one month; (2) All the other terms of Equity-based compensation in Lieu of Salary Debt shall be as specified in Section 6.2 below. |
| 1 | Exclusive of VAT, where relevant. |
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| 5.2. | Terms of termination of employment/services |
| 5.2.1. | Advance notice |
| 5.2.1.1. | The advance notice period for separation of employment shall be determined with each Office Holder, in reference to the parameters specified in Section 2 above and the existing advance notice periods in the employment agreements of the Company's other Office Holders. |
| 5.2.1.2. | The advance notice period for any Office Holder who is not the CEO shall be limited to 6 months, and for the CEO shall be limited to 9 months. |
| 5.2.1.3. | The Company may require the Office Holder to continue working during the advance notice period or to stop working before the end of the advance notice period. It is clarified that the Office Holder shall be entitled to the full payment due to them for the advance notice period. |
| 5.2.2. | Severance pay |
| 5.2.2.1. | An Office Holder who is an employee of the Company shall be entitled to severance pay, in an amount that shall not exceed the relevant Office Holder's gross monthly salary at the time of separation of their employment with the Company, multiplied by the number of years of their employment with the Company, or to severance pay pursuant to Section 14 of the Severance Pay Law, 5723-1963, both upon separation of the Office Holder's employment with the Company at the Company's initiative and upon separation of the Office Holder's employment with the Company at their own initiative. |
| 5.2.2.2. | An Office Holder who is employed by the Company through a service agreement shall not be entitled to severance pay. |
| 5.2.3. | Retirement grant |
| 5.2.3.1. | The Compensation Committee and the Board shall have the option to give a retirement grant to an Office Holder whose term of office exceeds 4 years, provided that they do not leave in circumstances that justify the denial of severance pay according to law or agreement ("Retirement Grant"). |
Subject to the Maximum Retirement Grant (as described in Section 5.2.3.2 below) and to the decision of the Compensation Committee and the Board, the Retirement Grant may be paid in cash, in an amount equal to the monthly cost of the fixed component multiplied by the total number of full years of the Office Holder’s employment (provision of services), and shall be determined taking into account, among other things, the following criteria and considerations: (1) The Office Holder’s term of office or employment; (2) Their terms of office and employment in that period; (3) The Company's performance in the said period; (4) The Office Holder's contribution to achievement of the Company's targets and maximization of its profits; and (5) The circumstances of the retirement.
The Compensation Committee and the Board may determine that the Retirement Grant shall be given subject to a confidentiality clause and an undertaking by the Office Holder not to compete with the Company and its business activities.
| 5.2.3.2. | The Retirement Grant for the Chairman of the Board, the CEO and a VP shall not exceed a cash amount equal to 18 gross monthly salaries. |
| 5.2.4. | Exercise of options and/or accelerated vesting of options |
In the event of an Office Holder's termination of employment/services, the provisions of the Company's option plan, as being from time to time, shall apply to the exercise of options and/or accelerated vesting of options.
| 5.2.5. | It is clarified that the sum of the payments (in the aggregate) to an Office Holder for advance notice and the Retirement Grant (as stated in Sections 5.2.1 and 5.2.3 above) shall not exceed a cash amount equal to 24 gross monthly salaries (without taking into account bonuses and equity-based compensation). |
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| 5.3. | Exemption, indemnity and insurance for the Office Holders |
| 5.3.1. | The Company shall include the Office Holders in the Directors’ and Officers’ liability insurance policy that the Company shall purchase, subject to the approvals required by law. |
The limits of liability in the said policy shall be up to the sum of U.S. $40 million per claim and per annual insurance period, plus reimbursement of reasonable legal costs, over and above the said liability limit.
The cost of the Company's deductible and the annual premium shall be at market prices as of the date of the engagement in the said policy and in an amount that is not material relative to the Company's profitability, assets or liabilities.
| 5.3.2. | Subject to the provisions of the law and the approval of the competent organs, the Company may grant an Office Holder an indemnity undertaking and/or a letter of exemption from liability, in the wording attached hereto as Annex D and Annex E (respectively) in Chapter 8 of the prospectus. |
| 5.3.3. | Run-off insurance – In the event of a Change of Control (as defined in the Compensation Policy) or a material change in the risks applicable to the Company, the Company may purchase run-off insurance for up to 7 years, at a premium that shall be up to 4 times the last annual premium paid by the Company for the D&O insurance policy. |
| 6. | Compensation terms – variable component |
| 6.1. | Cash bonus |
Office Holders (excluding directors) may be entitled to a bonus, to be paid in cash, as part of the compensation terms. The said entitlement shall be determined according to quantitative measurable criteria (the "Measurable targets Bonus") and/or qualitative non-measurable criteria (the "Non-Measurable Bonus").
| 6.1.1. | Measurable targets Bonus |
| 6.1.1.1. | Measurable targets |
The Company may determine a Measurable targets Bonus mechanism for the CEO and the Office Holders who report to the CEO, which shall be based on measurable targets and calculated based on measurable criteria, to be determined (if determined) by the Company's competent organs (and with respect to Office Holders who report to the CEO – after receipt of the CEO's recommendation), according to the relevant Office Holder's role, such as (but not necessarily limited to):
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| a. | Sales and marketing targets; |
| b. | Revenue growth targets; |
| c. | Engagement in agreements with revenue potential in a predetermined amount; |
| d. | Engagement in collaboration agreements; |
| e. | Engagement in material and/or strategic agreements; |
| f. | Achievement of product development milestones; |
| g. | Reduction of costs; |
| h. | Achievement of targets/milestones related to the Company's products and projects; |
| i. | Advancement of strategic plans and targets, including targets set for the Office Holder, which are relevant to their field; |
| j. | Obtaining regulatory approvals and/or intellectual property-related approvals; |
| k. | Achievement of financial metric targets: Gross profit, operating income/loss, net profit/loss, cash balance, revenues; |
| l. | Achievement of financing targets: Loan raising, private placement, public offering or rights offering for shares, bonds, etc. |
The target/s may be defined in advance by the Company's competent organs, and each target or several targets in the aggregate shall be assigned a weight out of the target-based compensation component to which the Office Holder shall be entitled if the said target/s are achieved.
| 6.1.1.2. | Where relevant, an annual bonus for a partial period shall be paid pro rata to the Office Holder's term of office in the relevant period. |
| 6.1.1.3. | The Compensation Committee and the Board may pay the Office Holder for the achievement of measurable targets on a quarterly, semi-annual or annual basis, and grant equity-based compensation in lieu of the cash bonus to which an Office Holder is entitled, in whole or in part. |
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| 6.1.1.4. | Annual bonus based on measurable targets for an Office Holder who is a controlling shareholder or their relative: |
Upon fulfillment of all the conditions listed in Subsection (a) or Subsection (b) below, the setting of the targets for which a bonus shall be paid in a given year to a controlling shareholder or their relative, shall be determined by the Compensation Committee and the Board (and not by the general meeting):
| a. | The decision of the Compensation Committee and the Board regarding the setting of the targets is consistent with the Compensation Policy; the targets that are set are measurable targets only; the potential bonus amount to be granted based on the said targets does not exceed three (3) salaries; the targets were set in advance by the Compensation Committee and the Board. |
| b. | (1) The number of other Office Holders to whom the same targets apply is significantly greater than the number of Office Holders who are the controlling shareholder or their relatives; (2) The potential bonus that may be derived for the other Office Holders is significantly higher than the potential bonus that may be derived for a controlling shareholder and their relatives from the same targets (in absolute terms); (3) The cost of the bonuses attributable to the controlling shareholder, taking into account their holding rates in the Company, shall be significantly higher than the bonus amount they would be entitled to in the event of achievement of the targets, such that it is clear that the controlling shareholder has a minor and negligible interest in the setting of the targets. |
Annual bonus based on measurable targets for directors (excluding external and/or independent directors):
Upon fulfillment of all the conditions listed in Subsection (a) or Subsection (b) below, the setting of the targets for which a bonus shall be paid in a given year to a director shall be determined by the Compensation Committee and the Board (and not by the general meeting):
| a. | The decision of the Compensation Committee and the Board regarding the setting of the targets is consistent with the Compensation Policy; the targets that are set are measurable targets only; the potential bonus amount to be granted based on the said targets does not exceed three (3) monthly salaries; the targets were set in advance by the Compensation Committee and the Board. |
| b. | The decision of the Compensation Committee and the Board regarding the setting of the targets is consistent with the Compensation Policy; the Office Holder for whom the said targets are set is an Office Holder who, in addition to their office as a director, also holds a managerial or operational role in the Company; approval of the said targets at the Compensation Committee and the Board shall be obtained without the participation of the directors who receive target-based compensation from the Company (whether in their capacity as directors or in their capacity as other Office Holders of the Company). |
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| 6.1.2. | Non-Measurable Bonus |
Subject to approval by the Company's competent organs, the Company may grant an Office Holder of the Company a Non-Measurable Bonus, provided that the sum of the Non-Measurable Bonus, together with the Measurable targets Bonus, does not exceed the Maximum Bonus. However, for the CEO, the sum of the Non-Measurable Bonus shall not exceed 3 monthly salaries.
The criteria that shall be used to determine the entitlement to a bonus for the Non-Measurable Bonus component shall include, inter alia:
| 6.1.2.1. | The supervisor’s assessment of the Office Holder's personal contribution to the Company's performance, achievement of its targets, maximization of its profits, and its success. |
| 6.1.2.2. | Assessment by the Office Holder’s supervisor of the quality of their performance. |
| 6.1.2.3. | A material change in the Office Holder's role. |
| 6.1.2.4. | The Company's need to retain an Office Holder with unique skills, knowledge or expertise. |
| 6.1.2.5. | Compliance with internal procedures, legal and/or regulatory targets. |
| 6.1.2.6. | The Office Holder’s purview. |
| 6.1.2.7. | Contribution to a special event in the Company's life. |
| 6.1.2.8. | Handling of external changes that adversely affected the annual bonus. |
The qualitative assessment shall be performed by the Office Holder’s supervisor, who shall submit their recommendation to the Compensation Committee. For this purpose, the qualitative assessment of the CEO shall be performed by the Compensation Committee and the Board.
The Compensation Committee and the Board may reduce the amount of the Office Holder’s bonus, at their discretion.
The Compensation Committee and the Board may approve a pro rata bonus if an Office Holder leaves during the course of a specific calendar year, as long as the Office Holder was not dismissed for cause with denial of severance pay.
It is clarified that a Non-Measurable Bonus is not contingent on threshold conditions.
| 6.1.3. | Bonus Maximum |
The total amount of the annual bonus for the CEO and the Office Holders who report to the CEO shall not exceed the sum of 15 monthly salaries and the sum of 10 monthly salaries, respectively, excluding a deferred bonus (if any) (the "Maximum Bonus ").
| 6.1.3.1. | Subject to completion of the listing of the Company's securities on a stock exchange outside of Israel, the maximum for the Measurable targets Bonus in the Compensation Policy for Office Holders who report to the CEO shall automatically increase to up to the sum of 15 monthly salaries. |
| 6.1.4. | Deferred bonus |
According to the deferred bonus mechanism, the Office Holder shall receive 80% of the Measurable targets Bonus on the date scheduled for review of achievement of the targets (the "Grant Date"), while the balance of the Measurable targets Bonus shall be deferred and paid in the current year following the Grant Date, provided that the Office Holder is still employed by / providing services to the Company.
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| 6.2. | Equity-based payment |
Equity-based payments, alongside the fixed salary and current bonuses, reinforce the correlation between the sum of the Office Holder's compensation and maximization of value for the Company's shareholders. The equity-based compensation is also intended to link the Office Holder's compensation to the achievement of the Company's targets over the long term, given the time required for appreciation of the Company's existing and future investments.
The Company reserves the right to grant its Office Holders options for ordinary shares or restricted ordinary shares or restricted stock units (RSUs), in accordance with the equity-based compensation plans that have been and shall be adopted from time to time, and subject to any relevant law.
| 6.2.1. | Maximum Value on the Grant Date |
If the Company grants equity-based compensation to an Office Holder, the annual benefit in respect of this compensation shall be subject to the following maximum (in terms of a full-time position):
|
Rank |
Max. Percentage out of annual cost of salary |
Max. Percentage out of the Company’s issued and paid-up capital (on a fully diluted basis on the date of the allotment) |
| Chairman of the Board | 85% | 0.8% |
| CEO | 200% | 1.5% |
| Director holding another role | 85% | 0.8% |
| VP | 150% | 1.2% |
It is clarified that the maximum shall be determined according to the annual benefit produced by dividing the economic value of the equity-based compensation on the Grant Date, which was calculated for purposes of the financial statements, by the number of years required until full vesting (the "Annual Benefit Value"). The annual benefit for purposes of the maximum shall be based on the economic value prior to any deduction attributable to forfeiture rates, should such a deduction be made.
| 6.2.2. | Vesting period |
The options granted to an Office Holder shall vest in several tranches, to be determined by the Compensation Committee and the Board, provided the period required until full vesting is at least 3 years from the Grant Date.
| 6.2.3. | Exercise price (options) |
The exercise price shall be determined by the Compensation Committee and the Board for every grant to an Office Holder, and shall be no less than the minimum required according to the instructions and directives of the stock exchange on which the Company is traded at such time.
| 6.2.4. | Expiry date (options) |
Options that are allotted and not exercised shall expire within a period not exceeding 10 years from the date of their allotment (subject to the provisions regarding the expiry of options upon separation of employment or cessation of provision of the Office Holder's services to the Company).
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| 6.2.5. | Immediate acceleration mechanism |
In the event of a Change of Control (as defined below) and/or in any case of an Office Holder’s termination of employment/services other than “for cause” (as defined in the relevant employment / service agreements), the Compensation Committee and the Board may determine immediate, partial or full acceleration of equity-based compensation granted to the Office Holder that has not vested by such date.
"Change of Control": Acquisition of the Company's shares or merger of the Company or a sale or transfer of all or substantially all of the issued and paid-up share capital or all or substantially all of the Company's assets or any transaction or series of transactions following which the Company's shareholders prior to the transaction hold, directly or indirectly, less than 50% (fifty percent) of the voting rights in the Company (or in the surviving entity under the transaction).
| 6.2.6. | The Board shall not set a maximum on the exercise value of the equity component. |
| 6.3. | Special bonus for the sale of the Company or a material part of its operations (by way of shares, assets or a merger): |
The Company may grant a bonus to directors who are not external directors, and including the Chairman of the Board, the CEO, and persons who report to the CEO, to be determined by the Compensation Committee and the Board, in the event of performance of a transaction for the sale of the Company or a material part of its operations (by way of shares, assets or a merger). The bonus shall be derived from the value of the transaction, subject to an aggregate maximum of 8% of the value of the transaction for directors, including the Chairman of the Board, the CEO and the persons who report to the CEO who hold office in the Company (without taking into account the remuneration due to the said persons due to their rights in the Company's capital or any other bonus or remuneration). For the avoidance of doubt, the special bonus shall be granted in addition to measurable target-based bonuses and/or discretionary bonuses.
| 6.4. | Sign-on bonus and retention bonus – The Company may pay an Office Holder a sign-on and/or retention bonus in special cases, according to the Office Holder's contribution to the Company's success and the Company's financial condition. Any sign-on and/or retention bonus of an Office Holder shall be presented to the Compensation Committee and the Board for approval. The maximum on each of the bonuses shall be up to 6 monthly salaries of the Office Holder, and the aggregate amount payable for a sign-on bonus and a retention bonus for an Office Holder shall not exceed up to 6 monthly salaries of the Office Holder. |
| 7. | Clawback of compensation given based on erroneous financial information |
| 7.1. | An Office Holder will be required to reimburse the Company for excess payments made to them as part of their terms of employment, if they were paid based on figures that transpired to be erroneous and were restated in the Company's financial statements within a period of 3 years after payment thereof. |
| 7.2. | The sum of the amounts that the Office Holder shall reimburse shall be determined according to the difference between the amount they received and the amount that would have been received according to the corrected financial figures that were restated in the financial statements (the "Clawback Amount"). |
| 7.3. | The Company may offset the Clawback Amount due thereto as aforesaid against any amount that it is required to pay the Office Holder (even if the Office Holder's employment at the Company shall have come to an end). |
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| 8. | Ratio between fixed compensation and variable compensation components |
| 8.1. | The mix of the different compensation components is intended to create a balance and an appropriate ratio between the fixed compensation and the variable compensation, with the aim of creating a performance-based compensation system that promotes the Company's targets and aligns with its risk management policy. In view of the characteristics of the Company's activity as aforesaid, the Compensation Policy relies heavily on performance-based compensation components. |
| 8.2. | Therefore, the percentage of the Office Holder's fixed compensation out of the Office Holder's total compensation, in terms of cost to the Company and in reference to the potential compensation maximum, may constitute between 0-100% of the Office Holder's total compensation, as shall be determined by the Compensation Committee and the Board with respect to each Office Holder. |
| 9. | Director remuneration |
| 9.1. | The remuneration of the Company's directors, excluding the Chairman of the Board, may be determined in accordance with the provisions of the Companies Regulations (Rules on External Directors' Remuneration and Expenses), 5760-2000 (the "Remuneration Regulations"), according to the Company’s classification under these regulations, from time to time. |
| 9.2. | Subject to any law (including the provisions of the Remuneration Regulations), and without derogating from the provisions of Section 6.2 above, the Company may grant the directors, excluding directors who are controlling shareholders thereof, equity-based payment, with an Annual Benefit Value of up to 300% of the total annual remuneration paid to the directors of the Company (excluding directors who are controlling shareholders of the Company), excluding remuneration for attending meetings, under the conditions as stated in Section 6.2 above (except with respect to the maximum value as stated in Section 6.2.1 above), mutatis mutandis. |
| 10. | Non-material changes to the terms of employment of Office Holders who report to the CEO |
The provisions of the Compensation Policy notwithstanding, it is clarified that in accordance with Section 1B3 of the Companies Regulations (Exemptions in Transactions with Interested Parties), 5760-2000, a non-material change in the terms of office and employment of an Office Holder who reports to the CEO shall not require the approval of the Compensation Committee, if it is approved by the CEO and is within the limits set forth in the Compensation Policy.
"Non-Material Change to Terms of Office and Employment": A change of no more than 5% relative to all the Office Holder's terms of office and employment in any calendar year, but in the aggregate no more than 10% relative to all the Office Holder's terms of office and employment as approved by the Compensation Committee and the Board (and by the general meeting of the Company’s shareholders, where relevant), and provided the compensation complies with the other provisions of the Compensation Policy.
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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 December 12, 2025 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 | |
| March 11, 2026 |
Exhibit 99.1
TURBOGEN ltd.
22 Efal Street, Kiryat Aryeh
Petah Tikva 4951122, Israel
March 11, 2026
Via EDGAR
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
| Re: | TurboGen Ltd. (the “Company,” “we,” “our” and similar terminology) |
Registration Statement on Form F-1
Representation under Item 8.A.4 of Form 20-F
Dear Mesdames:
The undersigned, TurboGen Ltd., a company organized under the laws of the State of Israel (the “Company”), is making this representation to the Securities and Exchange Commission in connection with the Company’s Registration Statement on Form F-1 (the “Registration Statement”) relating to the uplisting and proposed initial public offering in the United States of its ordinary shares.
The Company has included in the Registration Statement its audited consolidated financial statements as of December 31, 2024 and 2023 and for the years then ended and unaudited interim consolidated financial statements as of June 30, 2025 and for each of the six-month periods ended June 30, 2025 and 2024.
Item 8.A.4 of Form 20-F requires that in the case of a company’s initial public offering, the registration statement on Form F-1 shall contain audited financial statements as of a date not older than 12 months from the date of the filing. The Company is submitting this letter pursuant to Instruction 2 to Item 8.A.4 of Form 20-F, which provides that “[a] company may comply with only the 15-month requirement in this item if the company is able to represent that it is not required to comply with the 12-month requirement in any other jurisdiction outside the United States and that complying with the 12-month requirement is impracticable or involves undue hardship.”
The Company hereby represents that:
| 1. | The Company is not required by any jurisdiction outside the United States to comply with the 12 months requirement under Item 8.A.4 of Form 20-F. |
| 2. | Compliance with Item 8.A.4 of Form 20-F at present is impracticable and involves undue hardship for the Company. |
| 3. | The Company does not anticipate that its audited financial statements as of and for the year ended December 31, 2025 will be available until April 2026. |
| 4. | In no event will the Company seek effectiveness of its Registration Statement on Form F-1 if its audited financial statements are older than 15 months at the time of the offering. |
The Company is submitting this representation as an exhibit to the Registration Statement pursuant to Instruction 2 to Item 8.A.4 of Form 20-F.
Sincerely,
TURBOGEN LTD.
| By: | /s/ Neta Zruya Hashai | |
| Neta Zruya Hashai | ||
| Chief Financial Officer |