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As filed with the Securities and Exchange Commission on June 17, 2024

 

Registration No. 333-279737

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

 

Form F-1/A

(Amendment No. 1)

 

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

 

 

Holdco Nuvo Group D.G Ltd.

(Exact Name of Registrant as Specified in Its Charter)

 

State of Israel   3841   Not Applicable

(State or Other Jurisdiction of
Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

94 Yigal Alon St.

Tel Aviv, Israel 6789155

1-800-554-9041

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

 

Nuvo Group USA, Inc.
c/o Robert Powell

300 Witherspoon Street, Suite 201

Princeton, NJ 08542

1-800-554-9041

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Copies to:

 

Robert L. Grossman, Esq.

Win Rutherfurd, Esq.

Greenberg Traurig, P.A.

333 S.E. 2nd Avenue, Suite 4400

Miami, FL 33131

(305) 579-0500

 

Yoav Sade

Ran Camchy

Meitar | Law Offices

16 Abba Hillel Silver Rd.

Ramat Gan 52506, Israel

Telephone: (+972) (3) 610-3100

Fax: (+972) (3) 610-3111

  Charles Phillips, Esq.
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas
New York, NY 10105
(212) 370-1300

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and on completion of the business combination described in the enclosed proxy statement/prospectus.

 

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 of 1933 (as amended, 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 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 this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 
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 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 U.S. Securities and Exchange Commission, or “SEC,” is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED JUNE 17, 2024

 

PRELIMINARY PROSPECTUS

 

Holdco Nuvo Group D.G Ltd.

 

Up to        Ordinary Shares and Accompanying Series A Warrants to Purchase up to        Ordinary Shares and Series B Warrants to Purchase up to        Ordinary Shares

 

Or

 

Pre-Funded Warrants to Purchase up to        Ordinary Shares and

Accompanying Series A Warrants to Purchase up to        Ordinary Shares and Series B Warrants to Purchase up to        Ordinary Shares

 

Up to        Ordinary Shares Underlying the Pre-Funded Warrants, Series A Warrants and Series B Warrants

 

We are offering up to        ordinary shares, no par value per share (“Ordinary Shares”), together with Series A Warrants to purchase up to        Ordinary Shares (the “Series A Warrants”) and Series B Warrants to purchase up to        Ordinary Shares (the “Series B Warrants” and, together with the Series A Warrants, the “Series Warrants”) at an assumed combined public offering price of $       per share and accompanying Series Warrants, which is equal to the last reported sale price per Ordinary Share on the Nasdaq Stock Market LLC, (“Nasdaq”) on       , 2024 (and the Ordinary Shares that are issuable from time to time upon exercise of the Series Warrants) pursuant to this prospectus. The Ordinary Shares and the Series Warrants will be issued separately but must be purchased together and the Series Warrants will be issued to purchasers in the ratio of one to one per Ordinary Share.

 

The Series A Warrants will be immediately exercisable (the “Initial Exercise Date”), at an exercise price of $       per share and will expire on the five-year anniversary of the Initial Exercise Date. The Series B Warrants will be immediately exercisable, at an exercise price of $       per share, or pursuant to the alternate cashless exercise option, and will expire on the one-year anniversary of the Initial Exercise Date.

 

Under the alternate cashless exercise option of the Series B Warrants, the holder of the Series B Warrant, has the right to receive an aggregate number of Ordinary Shares equal to the product of (x) the aggregate number of Ordinary Shares that would be issuable upon a cash exercise of the Series A Warrant and (y)       . Subject to certain exceptions, the Series A Warrants will provide for an adjustment to the exercise price and number of Ordinary Shares underlying the Series A Warrants upon our issuance of our Ordinary Shares or Ordinary Share equivalents at a price per share that is less than the exercise price of the Series A Warrants. In addition, the Series A Warrants and Series B Warrants will include a provision that resets their respective exercise price in the event of a reverse split of our Ordinary Shares, to a price equal to the lesser of (i) the then exercise price and (ii) lowest volume weighted average price (“VWAP”) during the period commencing five trading days immediately preceding and the five trading days commencing on the date we effect a reverse share split in the future with a proportionate adjustment to the number of Ordinary Shares underlying the Series A Warrants and Series B Warrants.

 

 

 

 

We are also offering to each purchaser, if any, whose purchase of Ordinary Shares in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99%, or, at the election of the purchaser, 9.99% of our outstanding Ordinary Shares immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded warrants (the “Pre-Funded Warrants”), in lieu of Ordinary Shares that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99%, or, at the election of the purchaser, 9.99% of our outstanding Ordinary Shares. Each Pre-Funded Warrant will be immediately exercisable for one Ordinary Share and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. The purchase price of each Pre-Funded Warrant will equal the price per share at which the Ordinary Shares are being sold to the public in this offering, minus $0.001, the exercise price of each Pre-Funded Warrant. For each Pre-Funded Warrant we sell, the number of Ordinary Shares we are offering will be decreased on a one-for-one basis. Because we are issuing an accompanying Series A Warrant and Series B Warrant with each Ordinary Share and/or Pre-Funded Warrant, the mix in the number of ordinary Shares and Pre-Funded Warrants sold will not change the number of Series Warrants being issued. This offering also relates to the Ordinary Shares issuable upon exercise of any Pre-Funded Warrants and Series Warrants sold in this offering. See “Description of Securities we are Offering” for more information.

 

Our Ordinary Shares and public warrants are listed on Nasdaq, under the trading symbols “NUVO” and “NUVOW” respectively. On June 14, 2024, the closing price for our Ordinary Shares on Nasdaq was $1.67. On June 14, 2024, the closing price for our public warrants on Nasdaq was $0.0206.

 

We have engaged Roth Capital Partners, LLC (“Roth” or the “Lead Placement Agent”) and      (“      ”, and together with Roth, the “Placement Agents”), to act as our exclusive placement agents in connection with this offering. The Placement Agents have agreed to use their best efforts to arrange for the sale of the securities offered by this prospectus. The Placement Agents are not purchasing or selling any of the securities we are offering and the Placement Agents are not required to arrange the purchase or sale of any specific number of securities or dollar amount. We have agreed to pay to the Placement Agents the placement agent fees set forth in the table below, which assumes that we sell all of the securities offered by this prospectus. There is no minimum number of securities or minimum aggregate amount of proceeds that is a condition of the closing of this offering. We will bear all costs associated with the offering. See “Plan of Distribution” on page 238 of this prospectus for more information regarding these arrangements.

 

We have assumed a public offering price of $       per Ordinary Share and accompany Series Warrants, or $       per Pre-Funded Warrant and accompany Series Warrants. The actual public offering price will be negotiated between us, the Placement Agents and the investors in this offering which may be based on, among other things, the trading of our Ordinary Shares prior to the offering and may be at a discount to the current market price. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the final public offering price. In addition, there is no established public trading market for our Pre-Funded Warrants or Series Warrants and we do not expect such markets to develop. We do not intend to apply for a listing of the Pre-Funded Warrants or Series Warrants on any national securities exchange. Without an active trading market, the liquidity of the Series Warrants and the Pre-Funded Warrants will be limited.

 

This offering will terminate on       , unless we decide to terminate the offering (which we may do at any time in our discretion) prior to that date. We will have one closing for all the securities purchased in this offering. The combined public offering price per Ordinary Share (or Pre-Funded Warrant) and accompanying Series Warrants will be fixed for the duration of this offering.

 

We may sell fewer than all securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund if we do not sell all of the securities offered hereby. We have not established an escrow account in conjunction with this offering. Because there is no escrow account and no minimum number of securities or amount of proceeds, investors could be in a position where they have invested in us, but we have not raised sufficient proceeds in this offering to adequately fund the intended uses of the proceeds as described in this prospectus. 

 

We are a “foreign private issuer” as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company disclosure and reporting requirements. See “Prospectus Summary-Foreign Private Issuer.” We are also 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 of the U.S. Securities Act of 1933, as amended, or the Securities Act, and are eligible for reduced public company reporting requirements.

 

 

 

 

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 23 of this prospectus and other risk factors contained in the documents incorporated by reference herein for a discussion of information that should be considered in connection with an investment in our securities.

 

Neither the U.S. Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

    Per Share and
Series Warrants
    Per
Pre-Funded
Warrant and
Series Warrants
    Total  
Public offering price           $       $    
Placement Agent fees(1)           $       $    
Proceeds to us, before expenses(2)           $       $    

 

 
(1) We have agreed to pay the Placement Agents a total cash fee equal to 7.0% of the aggregate gross proceeds raised in this offering and to reimburse the Lead Placement Agent for its legal fees and expenses and other out-of-pocket expenses in an amount up to $250,000. See “Plan of Distribution” for a complete description of the compensation to be received by the Placement Agents.
(2) Because there is no minimum number of securities or amount of proceeds required as a condition to closing in this offering, the actual public offering amount, Placement Agent fees, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth above. In addition, this does not include proceeds from the cash exercise of the Pre-Funded warrants, if any, or Series Warrants. For more information, see “Plan of Distribution.”

 

Delivery of the securities is expected to be made on or about        , 2024.

 

Roth Capital Partners

 

 

 

Prospectus dated      , 2024

 

 

 

 

TABLE OF CONTENTS

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS   2
PROSPECTUS SUMMARY   10
THE OFFERING   21
RISK FACTORS   23
USE OF PROCEEDS   77
DIVIDEND POLICY   78
CAPITALIZATION   79
DILUTION   80
Unaudited pro forma condensed combined financial information   81
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   95
BUSINESS   111
MANAGEMENT   188
BENEFICIAL OWNERSHIP OF SECURITIES   208
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS   210
DESCRIPTION OF SECURITIES WE ARE OFFERING   213
SHARES ELIGIBLE FOR FUTURE SALE   223
Material U.S Federal Income Tax Considerations to U.S. Holders   225
MATERIAL ISRAELI TAX CONSIDERATIONS   234
Plan of distribution   238
EXPENSES   241
LEGAL MATTERS   241
EXPERTS   241
ENFORCEABILITY OF CIVIL LIABILITIES AND AGENT FOR SERVICE OF PROCESS IN THE UNITED STATES   242
WHERE YOU CAN FIND ADDITIONAL INFORMATION   243
INDEX TO FINANCIAL STATEMENTS   F-1
PART II INFORMATION NOT REQUIRED IN PROSPECTUS   II-1

 

i

 

 

ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form F-1 that we filed with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Act.

 

For investors outside of the United States: Neither we nor the Placement Agents 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.

 

Throughout this prospectus, unless otherwise designated, the terms “we,” “us,” “our,” “the Company” and “our Company” refer to Holdco Nuvo Group D.G Ltd., a limited liability company incorporated with limited liability under the laws of the State of Israel (“Holdco”), following the consummation of the Business Combination, which operates the business of Nuvo Group Ltd., a limited liability company organized under the laws of the State of Israel (“Nuvo”), and its subsidiaries following the consummation of the Business Combination, and Nuvo prior to the consummation of the Business Combination.

 

References to “U.S. Dollars,” “USD,” “US$” and “$” in this prospectus are to United States dollars, the legal currency of the United States. Discrepancies in any table between totals and sums of the amounts listed are due to rounding. Certain amounts and percentages have been rounded; consequently, certain figures may add up to be more or less than the total amount and certain percentages may add up to be more or less than 100% due to rounding. In particular and without limitation, amounts expressed in millions contained in this prospectus have been rounded to a single decimal place for the convenience of readers.

 

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.

 

The audited consolidated balance sheets of Nuvo and its subsidiary as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders’ capital deficiency and cash flows for each of the three years in the period ended December 31, 2023, and the related notes, included in this prospectus have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and are presented in U.S. Dollars.

 

The historical financial statements of LAMF Global Ventures Corp. (“LAMF”) were prepared in accordance with U.S. GAAP and are denominated in U.S. Dollars.

 

As the successor in interest to LAMF, we confirm there were no material changes to the such historical financial statements from December 31, 2023 to March 31, 2024 to necessitate the inclusion in this prospectus of interim financial statements of LAMF as of and for the three month period ended March 31, 2024.

 

The historical audited financial statements of Holdco as at July 20, 2023 and as at December 31, 2023, included in this prospectus, were prepared in accordance with U.S. GAAP and are denominated in U.S. dollars.

 

The unaudited pro forma condensed combined financial information of Holdco as of and for the year ended December 31, 2023 and the comparative per share information included in this prospectus been prepared in accordance with U.S. GAAP and in accordance with Article 11 of Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are presented in U.S. dollars.

 

Certain amounts that appear in this prospectus may not sum due to rounding.

 

You should rely only on the information contained or incorporated by reference in this prospectus or any supplement. Neither we nor the Placement Agents have authorized anyone else to provide you with different information. The securities offered by this prospectus are being offered only in jurisdictions where the offer is permitted. You should not assume that the information in this prospectus or any supplement is accurate as of any date other than the date on the front of each document. Our business, financial condition, results of operations and prospects may have changed since that date.

 

1

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains or may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve significant risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements include information about our possible or assumed future results of operations or our performance. Words such as “expects,” “intends,” “plans,” “believes,” “anticipates,” “estimates,” and variations of such words and similar expressions are intended to identify the forward-looking statements.

 

Forward-looking statements in this prospectus may include, for example, statements about:

 

the benefits of the Business Combination;

 

the Company’s financial performance following the Business Combination;

 

the ability to maintain the listing of Ordinary Shares on the Nasdaq Global Market and the Holdco Warrants on the Nasdaq Capital Market following the Business Combination;

 

the projected financial information, anticipated growth rate, and market opportunity for the Company, and estimates of expenses and profitability;

 

the potential liquidity and trading of public securities of Holdco;

 

the ability to raise financing in the future by Holdco;

 

the effectiveness and profitability of Nuvo’s collaborations and partnerships, its ability to maintain current collaborations and partnerships and enter into new collaborations and partnerships;

 

estimates related to future revenue, expenses, capital requirements and need for additional financing;

 

the impact of natural disasters or health epidemics/pandemics, including a resurgence of the COVID-19 pandemic;

 

the effects of increased competition as well as innovations by new and existing competitors in our industry;

 

geopolitical risk, including the impacts of the ongoing conflict between Russia and Ukraine, and the war between Israel and Hamas;

 

Nuvo’s ability to demonstrate the feasibility of its INVU platform for commercial applications;

 

Nuvo’s ability to generate revenue in accordance with its business model;

 

Nuvo’s expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

 

Nuvo’s ability to develop, market and sell its INVU platform;

 

Nuvo’s ability to develop its sales and marketing organization;

 

2

 

 

changes in applicable laws or regulations;

 

the outcome of any known and unknown litigation and regulatory proceedings; and

 

regulatory developments in the United States and foreign countries.

 

By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and are based on potentially inaccurate assumptions. Forward-looking statements are not guarantees of future performance. These risks and uncertainties include, but are not limited to, those factors described in the section herein entitled “Risk Factors” and in our periodic filings with the Securities and Exchange Commission (the “SEC”). Other sections of this prospectus describe additional factors that could adversely affect the results of operations, financial condition, liquidity and the development of Nuvo and Holdco, and the industry the Company operates in. New risks can emerge from time to time, and it is not possible to predict all such risks, nor can it be assessed the impact of all such risks on the Company’s business or to the extent which any such risks or combinations of risks and other factors may cause actual results to differ materially from those contained in any forward-looking statements. Given these results and uncertainties, you should not rely on forward-looking statements as a prediction of actual results.

 

Accordingly, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. The Company does not undertake any obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this prospectus or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks described in the reports filed by the Company from time to time with the SEC after the date of this prospectus. Our SEC filings are available publicly on the SEC website at www.sec.gov.

 

3

 

 

EXPLANATORY NOTE

 

On May 1, 2024, Holdco consummated the previously announced Business Combination pursuant to the Business Combination Agreement, dated as of August 17, 2023 (as amended, the “Business Combination Agreement”), by and among LAMF, Nuvo, Holdco, Assetco, and Merger Sub. Capitalized terms used in this section but not otherwise defined herein have the meanings given to them in the Business Combination Agreement. Pursuant to the Business Combination Agreement and the related ancillary agreements:

 

After the SPAC Effective Time on April 30, 2024, LAMF merged with and into Assetco (the “SPAC Merger”) with Assetco continuing as the surviving corporation (Assetco, in its capacity as the surviving entity of the SPAC Merger, the “SPAC Surviving Company”).

 

Pursuant to the SPAC Merger, each Class A ordinary share of LAMF, par value $0.0001 per share (the “LAMF Class A Ordinary Shares”), issued and outstanding immediately prior to the SPAC Effective Time was automatically cancelled and converted into the right to receive outstanding ordinary shares of Holdco, no par value (“Ordinary Shares”).

 

On May 1, 2024, the date of the closing of the Business Combination (the “Closing”), Merger Sub merged with and into Nuvo (the “Acquisition Merger”) with Nuvo continuing as the surviving corporation (Nuvo, in its capacity as the surviving entity of the Acquisition Merger, the “Acquisition Surviving Sub”).

 

Pursuant to the Acquisition Merger, (i) each of the ordinary shares of Nuvo, par value NIS 0.01 per share (the “Nuvo Shares”), issued and outstanding immediately prior to Acquisition Effective Time were automatically cancelled and converted into the right to receive a number of Ordinary Shares determined pursuant to an equity exchange ratio of 96.139% (the “Equity Exchange Ratio”), which is equal to the equity value per share (determined by dividing an aggregate equity value of approximately $300 million upon achieving a commercial milestone (the “Equity Value”), by the fully diluted share capital of Nuvo), divided by $10.20 per share, (ii) each of the preferred shares of Nuvo, par value NIS 0.01 per share (the “Nuvo Crossover Preferred Shares”), issuable in connection with the securities purchase agreements Nuvo and Holdco entered into with certain investors prior to the execution of the Business Combination Agreement (the “Interim Financing”) issued and outstanding immediately prior to the effective time of the Acquisition Merger were automatically cancelled and converted into the right to receive a number of preferred shares of Holdco (the “Preferred Shares”) determined by the Equity Exchange Ratio, (iii) each warrant for the purchase of Nuvo Shares issued and outstanding immediately prior to the effective time of the Acquisition Merger were automatically cancelled and converted into the right to receive one warrant to purchase a number of Ordinary Shares determined by the Equity Exchange Ratio, and (iv) each outstanding and unexercised option to purchase Nuvo Shares, whether or not then vested or fully exercisable, were assumed by Holdco and converted into an option to purchase a number of Ordinary Shares as determined by the Equity Exchange Ratio, in each case subject to the adjustments described in the Business Combination Agreement.

 

After the SPAC Merger and the Acquisition Merger, the SPAC Surviving Company distributed any amounts remaining in LAMF’s trust account (the “Trust Account”) to Holdco and was then liquidated (the “Liquidation”).

 

The SPAC Merger, the Acquisition Merger, the Liquidation and the other transactions contemplated by the Business Combination Agreement are referred to as the “Business Combination”.

 

Prior to, upon and following the execution of the Business Combination Agreement, Nuvo and Holdco entered into securities purchase agreements (the “Interim Financing Agreements”) with certain investors (the “Interim Financing Investors”) pursuant to which (i) Nuvo has issued Nuvo Crossover Preferred Shares to the Interim Financing Investors and (ii) upon the Closing, Holdco issued an aggregate of 3,823,530 Ordinary Shares to the Interim Financing Investors, which shares are not registered under the Securities Act in connection with the Business Combination Agreement, and which provided Nuvo with an aggregate of approximately $13,000,000 of gross proceeds as a result of the Interim Financing. Certain of the Interim Financing Investors are affiliated with LAMF and the Sponsor and invested an aggregate of $2,000,000 in the Interim Financing (such investors the “Sponsor Investors”). These affiliates are: (i) Jeffrey Soros, LAMF’s Chairman, who invested $500,000, (ii) Tamim Mourad, a strategic investor of LAMF and an affiliate of a member of the Sponsor, who invested $500,000 and (iii) Gaingels 10X Capital Diversity Fund I, LP, a Delaware limited partnership and an affiliate of a member of the Sponsor, that invested $1,000,000.

 

Concurrently with the consummation of the Business Combination shareholders and warrantholders of LAMF (including through units previously issued by LAMF) became shareholders and warrantholders of Holdco, other than those holders of the LAMF Class A Ordinary Shares who elected to redeem their LAMF Class A Ordinary Shares. The other shareholders and equityholders of Holdco include management of Nuvo and investors in Nuvo immediately before the Closing.

 

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FREQUENTLY USED TERMS

 

In this prospectus:

 

“Acquisition Effective Time” means such time as the Acquisition Merger becomes effective.

 

“Assetco” means Nuvo Assetco Corp., a Cayman Islands exempted company and a wholly owned subsidiary of Holdco. 

 

“Amended Articles” means the amended and restated articles of association of Holdco effective immediately prior to the closing of the Business Combination.

 

“Bridge Financing” means the bridge financing (the “Bridge Financing”) undertaken by Nuvo by issuing to investors Bridge Financing Notes since November 2023 which notes, if executed prior to April 2024, were amended in March and April 2024 to extend the maturity date thereof to no earlier than six months from the Closing.

 

“Bridge Financing Notes” means the secured convertible bridge notes issued in the Bridge Financing, as amended.

 

“Business Combination” means the Mergers and the other transactions contemplated by the Business Combination Agreement, collectively.

 

“Business Combination Agreement” means the Business Combination Agreement, dated as of August 17, 2023 by and among Nuvo, Holdco, Nuvo Assetco, LAMF, and Merger Sub.

 

“Business Day” means any day other than a Friday, a Saturday, a Sunday or other day on which commercial banks in New York, New York, Israel or the Cayman Islands are authorized or required by legal requirements to close.

 

“Closing” means the consummation of the Business Combination.

 

“Closing Date” means May 1, 2024, the date on which the Business Combination was consummated.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Companies Law” means the Israeli Companies Law, 5759-1999, as amended from time to time, including the regulations promulgated thereunder, or any other law that may come in its stead, including all amendments made thereto.

 

“Equity Exchange Ratio” means the quotient obtained by dividing (a) the Equity Value Per Share by (b) the Reference Price.

 

“Equity Value” means an amount equal to $299,999,993.

 

“Equity Value Per Share” means an amount equal to (a) the Equity Value divided by (b) the number of Fully Diluted Nuvo Equity Securities.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Founder Shares” means the LAMF Class B Ordinary Shares held by Sponsor, which were converted into LAMF Class A Ordinary Shares on May 11, 2023.

 

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“Fully Diluted Nuvo Equity Securities” means (a) the Nuvo Shares and Nuvo Preferred Shares, in each case outstanding immediately prior to the Acquisition Effective Time and (b) the Nuvo Shares that, immediately prior to the Acquisition Effective Time are issuable upon the exercise of Nuvo Warrants and Nuvo Options (whether or not vested or currently exercisable), provided, however, that Fully Diluted Nuvo Equity Securities shall not include any (i) Earnout Shares (as defined in the Business Combination Agreement) or (ii) Nuvo Shares issuable upon the conversion of then outstanding Nuvo Preferred Shares.

 

“Holdco” means Holdco Nuvo Group D.G Ltd., a limited liability company incorporated with limited liability under the laws of the State of Israel to serve as “Holdco” for all purposes under the Business Combination Agreement.

 

“Holdco Board” means the board of directors of Holdco.

 

“Holdco Shareholders” means the shareholders of Holdco.

 

“Holdco Warrant” means a warrant to purchase one Ordinary Share. each of which is exercisable for one Ordinary Share, in accordance with its terms, at an exercise price of $11.50 per share, and was formerly a LAMF Warrant.

 

“Interim Financing” means the cross-over interim round of financing by Nuvo, whereby the Nuvo Crossover Preferred Shares were issued pursuant to the Interim Financing Agreements to the Interim Financing Investors (which Nuvo Preferred Shares were exchanged for Preferred Shares in the Acquisition Merger) and, in addition as an incentive, upon and subject to the Closing, Holdco issued Ordinary Shares to the Interim Financing Investors.

 

“Interim Financing Agreements” means the securities purchase agreements entered into by and between Nuvo, Holdco and the Interim Financing Investors in connection with the Interim Financing.

 

“Interim Financing Investors” means those certain investors in the Interim Financing.

 

“IPO” means LAMF’s initial public offering of LAMF Units, which was consummated on November 16, 2021.

 

“IRS” means the U.S. Internal Revenue Service.

 

“LAMF” means LAMF Global Ventures Corp. I, a Cayman Islands exempted company.

 

“LAMF Board” means the board of directors of LAMF.

 

“LAMF Class A Ordinary Shares” means LAMF’s Class A ordinary shares, par value $0.0001 per share.

 

“LAMF Class B Ordinary Shares” means LAMF’s Class B ordinary shares, par value $0.0001 per share.

 

“LAMF Insiders” means the Sponsor and certain officers and directors and advisors of LAMF.

 

“LAMF Ordinary Shares” means, collectively, the LAMF Class A Ordinary Shares and the LAMF Class B Ordinary Shares.

 

“LAMF Shareholders” means the holders of LAMF Ordinary Shares.

 

“LAMF Units” means the 25,300,000 LAMF units issued in connection with the IPO, each of which consists of one LAMF Class A Ordinary Share and one-half of one Public Warrant.

 

“LAMF Warrants” means, collectively, the Public Warrants and the Private Placement Warrants.

 

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“LAMF Warrant Agreement” means the Warrant Agreement, dated as of November 10, 2021, by and between LAMF and Continental Stock Transfer & Trust Company, as warrant agent.

 

“Merger Sub” means H.F.N Insight Merger Company Ltd., a limited liability company organized under the laws of the State of Israel and a wholly owned subsidiary of LAMF.

 

“Mergers” means the Acquisition Merger and the SPAC Merger.

 

“Nasdaq” means the Nasdaq Global Market.

 

“Nuvo” means Nuvo Group Ltd., a limited liability company organized under the laws of the State of Israel.

 

“Nuvo Crossover Preferred Shares” means the preferred shares of Nuvo, with par value NIS 0.01 per share, issued in connection with the Interim Financing.

 

“Nuvo Convertible Loans” means the convertible loans made by certain investors pursuant to several loan agreements entered into from May 29, 2022 through June 30, 2023 (as amended in August 2023 in connection with the execution of the Business Combination Agreement), by and between Nuvo and each such investor, which loans represented an aggregate principal amount of approximately $7.9 million bear interest at a rate of 2% per month, matured on the Closing Date, at which time the principal amount and accrued interest on such loans were applied to the related Nuvo SAFEs issued to such investors in connection with provision of the Nuvo Convertible Loans.

 

“Nuvo Loan Amendment” means the amendments to the Nuvo Convertible Loans to cause each Nuvo Convertible Loan to be automatically converted prior to the Acquisition Effective Time into Nuvo Shares pursuant to the terms of such Nuvo Convertible Loan and under the terms of the Nuvo SAFE Amendment.

 

“Nuvo Options” means each outstanding and unexercised option to purchase Nuvo Shares, whether or not then vested or fully exercisable, granted prior to the Acquisition Effective Time to any current or former employee, officer, director or other service provider of Nuvo or its direct and indirect subsidiaries.

 

“Nuvo Optionholders” means the holders of the Nuvo Options.

 

“Nuvo Preferred Shares” means the Nuvo Crossover Preferred Shares.

 

“Nuvo SAFEs” means the Simple Agreements for Future Equity of the Company entered into by and between Nuvo and certain investors, service providers and lenders, from June 2020 through April 2023 (as amended in August 2023 pursuant to the Nuvo SAFE Amendment).

 

“Nuvo SAFE Amendment” means the amendments to cause each Nuvo SAFE to be automatically converted prior to the Acquisition Effective Time into Nuvo Shares pursuant to the terms of such Nuvo SAFEs.

 

“Nuvo Shares” means the ordinary shares of Nuvo, with par value NIS 0.01 per share.

 

“Nuvo Shareholders” means the shareholders of Nuvo.

 

“Nuvo Warrants” means the warrants issued on May 20, 2015 by Nuvo, exercisable to purchase up to 45,428 Nuvo Shares at an exercise price per share of NIS 0.01.

 

“Ordinary Shares” means the ordinary shares of Holdco, no par value.

 

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“Original Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of November 10, 2021, by and among LAMF, Sponsor and certain other parties thereto.

 

“PFIC” means passive foreign investment company.

 

“Preferred Shares” means the preferred shares of Holdco, which shall be entitled to rights and preferences as is customary for the preferred stock of a company whose stock is traded on a national securities exchange, including those expressly set forth in the “Rights of Company Crossover Preferred Shares” attached as Exhibit E to the Business Combination Agreement and, upon conversion, they shall entitle the holder to receive Ordinary Shares.

 

Pre-Funded Warrants” means, with respect to each purchaser, if any, whose purchase of Ordinary Shares in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99%, or, at the election of the purchaser, 9.99% of our outstanding Ordinary Shares immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded warrants in lieu of Ordinary Shares that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99%, or, at the election of the purchaser, 9.99% of our outstanding Ordinary Shares.

 

“Private Placement Units” means the 1,106,000 private placement units, purchased by the Sponsor at a price of $10.00 per Private Placement Unit in a private placement consummated concurrently with the closing of the IPO, each consisting of one LAMF Class A Ordinary Share and one-half of one Private Placement Warrant.

 

“Private Placement Warrants” means the warrants to purchase LAMF Class A Ordinary Shares purchased in a private placement in connection with the IPO, at an exercise price of $11.50 per share.

 

“Public Warrants” means the warrants included in the LAMF Units sold in the IPO, each of which is exercisable for one LAMF Class A Ordinary Share, in accordance with its terms, at an exercise price of $11.50 per share.

 

“Redemption Right” means the right to redeem LAMF Class A Ordinary Shares in connection with the approval of the Business Combination.

 

“Reference Price” means $10.20.

 

“Registration Rights Agreement” means the registration rights agreement, dated as of May 1, 2024, by and among Holdco, Nuvo, LAMF, Sponsor, certain affiliates and members of the Sponsor and certain Nuvo Shareholders, which is in the form attached to the Business Combination Agreement as Exhibit C.

 

Series A Warrants” means Series A Warrants to purchase up to        Ordinary Shares.

 

Series B Warrants” means Series B Warrants to purchase up to        Ordinary Shares.

 

Series Warrants” means the Series A Warrants and the Series B Warrants.

 

“Shareholder Support Agreement” means the Shareholder Support Agreement, dated as of August 17, 2023 by and among LAMF, the Nuvo Shareholders, Nuvo and Holdco.

 

“SPAC Effective Time” means such time as the SPAC Merger becomes effective.

 

“SPAC Exchange Ratio” means 1.00.

 

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“SPAC Merger” means the merger of LAMF with and into Assetco upon the terms and subject to the conditions set forth in the Business Combination Agreement, the plan of merger relating to the SPAC Merger and in accordance with the applicable provisions of the Companies Act, whereupon the separate corporate existence of LAMF ceased and Assetco continued its existence under the Companies Act as the surviving company.

 

“Sponsor” means LAMF SPAC Holdings I LLC, a Cayman Islands limited liability company.

 

“Sponsor Shares” means the LAMF Class A Ordinary Shares and LAMF Class B Ordinary Shares held by Sponsor.

 

“Sponsor Support Agreement” means the Sponsor Support Agreement, dated as of August 17, 2023 by and among LAMF, Nuvo, Holdco, Sponsor and the LAMF directors and executive officers signatories thereto.

 

“Transaction Documents” means, collectively, the Business Combination Agreement, the Sponsor Support Agreement, the Shareholder Support Agreement, Registration Rights Agreement, the Amended Articles, the Interim Financing Agreements, the Warrant Assignment, Assumption and Amendment Agreement and all the agreements, documents, instruments and certificates entered into in connection therewith and any and all exhibits and schedules thereto.

 

“Transaction Expenses” means to the extent not paid prior to Closing, all out-of-pocket fees, costs and expenses of counsel, accountants, investment bankers, experts and consultants to a party to the Business Combination Agreement incurred by such party or on its behalf in connection with the consummation of the Transactions or related to the authorization, preparation, negotiation, execution and performance of the Business Combination Agreement.

 

“Transactions” means, collectively, the Mergers and each of the other transactions contemplated by the Business Combination Agreement or any of the other Transaction Documents.

 

“Trust Account” means the U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental acting as trustee, that held a portion of the proceeds of the IPO and the concurrent sale of the Private Placement Warrants.

 

“U.S.” means the United States.

 

“U.S. GAAP” means generally accepted accounting principles in the United States as are in effect from time to time.

 

“Warrant Assignment, Assumption and Amendment Agreement” means the warrant assignment, assumption and amendment agreement entered into by and among LAMF, Holdco and Continental at the SPAC Effective Time, pursuant to which LAMF assigned all its rights, title and interest in the LAMF Warrant Agreement to Holdco.

 

“Working Capital Loans” mean the $550,000 principal amount outstanding as of the Closing under the unsecured convertible promissory note issued by LAMF to the Sponsor on February 2, 2024, which converted pursuant to the terms of such note into 55,000 private placement units of LAMF, consisting of 55,000 LAMF Class A Ordinary Shares and 27,500 private LAMF Warrants immediately prior to the Closing.

 

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PROSPECTUS SUMMARY

 

This summary highlights certain information about us, this offering and selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in the securities covered by this prospectus. You should read the following summary together with the more detailed information in this prospectus, including the information set forth in the section titled “Risk Factors” in their entirety before making an investment decision.

 

Overview

 

We are a women’s health and connected pregnancy care company, and have developed INVU by Nuvo, an FDA-cleared, prescription-initiated, remote pregnancy monitoring platform that enables the delivery of remote non-stress tests and maternal and fetal heart rate monitoring, helping expectant mothers adhere to their prescribed care plan.

 

 

Our Business

 

We believe Nuvo has the potential to become a leader in remote fetal monitoring for pregnancy care. We are leading the transformation from a world where pregnancy care is limited by outdated technology and barriers to accessing care to a world where data-driven, clinically relevant, actionable insights can be accessed both at home and in the clinic, during the 32nd week of pregnancy until the beginning of labor (the “INVU monitoring period”), by an expectant mother and her clinician. Current poor fetal and maternal health outcomes, limited accessibility to care, and soaring costs all indicate the need for a change in the way that pregnancies are monitored and managed, and we believe Nuvo’s innovative solution, which we refer to as our INVU platform, is the only solution that is positioned to address complete accessibility to care while looking significantly deeper into the pregnancy than standard of care solutions do today. Recognizing that the tools used today to monitor and manage pregnancies may not be the same tools used a decade from now, Nuvo believes its solution is well positioned to be at the forefront of this market shift. Strategically, Nuvo’s platform is currently being commercialized by tapping into a key part of the pregnancy journey, fetal non-stress tests (“NSTs”), by enabling these tests to be conducted remotely with clinical accuracy that has been demonstrated to be equivalent to the standard of care based off of our clinical studies and consumer-grade ease of use (see “Clinical Studies”). NSTs are medically necessary pregnancy screening procedures that measure fetal heart rate and reaction to movement to assess fetal well-being. NSTs are most commonly conducted with cardiotocography (“CTG”) machines, which were designed for intrapartum monitoring in clinics by experienced healthcare professionals. Through a combination of advanced wearable technology, AI & machine learning, and compelling user experiences (for expectant mothers and clinicians), INVU by NuvoTM (“INVU”) enables increased access to care, deeper insights into maternal-fetal health, reduced clinical staff burden, and improved patient satisfaction.

 

For a remote fetal and maternal monitoring program to be successfully implemented, we believe that the monitoring device should do the following: (i) be designed for self-application by the expectant mother and without the need for device repositioning by a medical professional; (ii) acquire valid data that accurately distinguishes between maternal and fetal heart rate (“MHR” and “FHR”, respectively); (iii) be capable of continuously monitoring MHR and FHR during the times in a pregnancy when protocol requires monitoring; (iv) have a very low rate of false results, such as detecting a fetal heartbeat when there is none or inaccurately detecting heart rate, to prevent false reassurance or anxiety outside of a clinical environment; (v) be comfortable; and (vi) have the capability of measuring other variables such as maternal uterine activity (“MUA”), more commonly known as contractions, maternal and fetal electrocardiography, measuring the heart’s electrical activity and the pattern of the heart beats (“mECG” and “fECG”, respectively) and others to offer other tests, such as NSTs, and be able to analyze such data to identify phenomena and to develop screening and predictive models, including through the discovery of biomarkers, and enable population health strategies. However, currently available technology has difficulty reliably and efficiently measuring most of the above, has not proven to reliably measure FHR at certain times in a pregnancy or MUA in most cases, if at all, and does not aggregate and analyze data in a sophisticated manner. Our INVU platform was designed to be a fully remote, medical-grade maternal and fetal monitoring solution that addresses each of the aforementioned challenges and more.

 

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INVU is composed of a hardware component (wearable), with digital signal processing and cloud analytics, and interfaces for every participant involved in the pregnancy care. The hardware component of our INVU platform is a proprietary self-administered wireless sensor band that clinicians prescribe to expectant mothers who wear the sensor band during virtual visits to capture real-time data on key maternal and fetal health metrics. During these visits, a live reading allows the expectant mother to access simplified data and insights via the paired INVU application. Our wireless sensor band captures a unique set of in-depth physiological data from the expectant mother and unborn baby in a passive manner, without sending energy signals into the womb. Next, the data is digitized and sent wirelessly for analysis on our cloud-based servers by our sophisticated algorithms. Today, when obstetrics clinicians connect to our INVU platform, they have access to a digital dashboard that contains fetal and maternal heart rate and uterine activity tracings recorded during the session and data derived from these measurements for all expectant mothers and unborn babies in their care that use our INVU platform. This data is comparable to the fetal surveillance procedures that normally occur once or twice weekly in the last trimester of pregnancies1 that have some indication for risk. According to a study in the American Journal of Obstetrics and Gynecology (“AJOG”) analyzing approximately ten million pregnancies, 38% were identified as low risk and 62% were identified as high risk for unexpected complications.2

 

Our INVU platform is also capable of integrating with other peripheral and medical devices, such as blood pressure cuffs, subject to and in accordance with FDA regulation, which would allow expectant mothers and their clinicians to easily record and track important vitals all on one application to inform personalized care plans. In the future, we intend to seek FDA clearance to use advanced machine-learning and AI capabilities to analyze the data we collect to provide clinicians and expectant mothers with significantly more actionable predictive data and insights. In order to do so, we have developed an external data platform which automatically captures and analyzes all data recorded by our INVU platform in research, clinical and commercial domains, to the extent we have a data sharing agreement in place, which we believe will enable the rapid development of future AI models. First, we plan to provide a rule-based decision support system based on the automation of existing clinical guidelines to support clinicians in clinical decisions they are already making, which we believe will only require technical validation. Second, we plan to develop AI models aimed at providing obstetrics clinicians with new information they otherwise would not have access to, such as predicting risks before they become visible later in pregnancy, which will require clinical validation and FDA clearance. However, there is no assurance that we will be able to develop such rule-based decision support system or AI models as planned or, if developed, that such programs will be received favorably by clinicians or expectant mothers.

 

Currently, our products are categorized as Class II devices and subject to the premarket notification requirements under section 510(k) of the Federal Food, Drug, and Cosmetic Act of 1938 (the “FDCA”). Our INVU platform received 510(k) clearance from the FDA in March 2020 to conduct a five-minute trace of MHR and FHR, for singleton pregnancies, or a pregnancy with one baby, from the 32nd week of pregnancy until the beginning of labor. We refer to this five-minute trace as a fetal surveillance and to this time frame as the INVU monitoring period. MUA, more commonly known as contractions, and its intended use, in conjunction with MHR and FHR, for NSTs during the INVU monitoring period, received FDA clearance in May 2021, allowing us to perform fetal surveillance and measure MUA, and as a result, offer NSTs during the INVU monitoring period.

 

We have over a dozen commercial agreements, including purchase orders, with health systems, large private practice groups and independent women’s health practices in the United States and Israel. We refer to our commercial contracts with major healthcare systems and obstetrician-physician practice management groups as enterprise level agreements. For a discussion of our current and intended enterprise level agreements, please see “—Our Revenue Model.” If we successfully demonstrate that our INVU platform increases monitoring compliance, improves quality of care and healthcare outcomes, as well as reduces payer costs, we expect to focus on seeking long-term contracts with payers that allow us to benefit from a percentage of any cost-savings that we achieve. We also believe that any cost-savings achieved from utilizing our INVU platform will incentivize payers to encourage their obstetrician networks and expectant mothers to utilize our INVU platform.

 

 

 
1 The American College of Obstetricians and Gynecologists, “Indications for Outpatient Antenatal Fetal Surveillance”, ACOG Committee Opinion, Committee on Obstetric Practice Society for Maternal-Fetal Medicine, Volume 137, Number 828 (June 2021).
2 American Journal of Obstetrics and Gynecology, “Unexpected complications of low-risk pregnancies in the United States”, Volume 212, Issue 6, Article (June 2015).

 

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We intend to apply data algorithms and other innovative digital tools to conduct AI-powered machine learning and computer-based predictive analytics to make targeted predictive recommendations to individual expectant mothers who have health profiles for which we have identified particular, notable patterns and trends. We believe these predictive insights, such as identifying risks before they become visible later in pregnancy, have the potential to help clinicians improve monitoring schedules and frequency and identify appropriate times to intervene for individual pregnancies and facilitate population health strategies aimed at improving a specific population’s health outcome as efficiencies are improved and costs are reduced. We do not yet have access to such digital tools and AI capabilities, and there is no guarantee that we will be able to obtain access or benefit from such digital tools and AI capabilities. However, we anticipate that our ability to develop biomarkers and predictive analytics will set us apart from other pregnancy management monitoring systems and make us more effective at enabling proactive pregnancy management to improve outcomes for expectant mothers and unborn babies.

 

Our innovative technology is protected by an extensive global patent portfolio consisting of 16 issued U.S. patents, 10 pending U.S. utility patent applications, 44 issued foreign patents, 13 pending foreign utility patent applications and one pending international (“PCT”) patent application, which we constantly review and seek to expand. We believe that we will be able to obtain patents relating to data input, the means of analysis and the output from such analysis. We believe that our technology and the protection that we have afforded it currently give us a significant competitive advantage and is a barrier to competitors. Subject to the receipt of required regulatory clearances and approvals, we expect to further strengthen our INVU platform by gathering and analyzing more data and potentially identifying patterns and trends to develop predictive models and population health strategies.

 

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Our Platform

 

Our INVU platform was designed to allow for flexibility in implementation. In our current commercial model, the expectant mothers’ access prenatal care at home according to their clinicians’ protocol, through a self-administered and easy to use wireless sensor band that connects to our cloud-based platform and provides personalized clinical-quality care in a virtual environment, in real time.

 

The prescription initiated, protocol-driven process from the expectant mother’s completion of monitoring to return of our device is demonstrated below.

 

 

The “collect, compute and visualization” process of our wireless sensor band is demonstrated below.

 

 

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Key Attributes

 

We believe our INVU platform provides or will provide the following key benefits for expectant mothers, unborn babies, clinicians and payers. While some of the following benefits are benefits currently being provided with our FDA-cleared solution, others represent our goals with respect to the INVU platform that will require more data and monitoring and we may ultimately not be able to provide such benefits.

 

  Increased access to care: Expectant mothers can access clinical-quality pregnancy care anytime, anywhere according to clinician protocol, during the antepartum period subject to any restrictions as to time and place in any FDA clearance, without the need to travel to medical offices or spend time in waiting rooms and regardless of clinician proximity. We believe, according to Nuvo estimates and information provided by the American College of Obstetricians and Gynecologists (“ACOG”)3, that the INVU platform can save expectant mothers seven days of paid time off, 33 hours of travel and in-office time and approximately $120 in gas expenses, which we believe can lead to an approximate 75% reduction in lost workplace productivity amongst expectant employees. This is a benefit currently being provided with our FDA-cleared solution.

 

  Improved user experience: Expectant mothers can administer our wireless sensor band without assistance from a medical professional. Clinicians can integrate our INVU platform with other existing systems and protocols, subject to FDA clearance in some cases, can easily schedule monitoring sessions and conduct monitoring on short notice on a near real time basis if concerns arise, and can send messages to the expectant mothers in their care. Expectant mothers and their clinicians are reassured through the connection of the expectant mother to her care team and the near real-time, medical-grade data on key pregnancy health metrics that they each receive. This is a benefit currently being provided with our FDA-cleared solution.

 

  Reduced cost of care: We believe that use of our INVU platform will lead to fewer required in-person visits by expectant mothers to clinicians and healthcare facilities, and ultimately fewer procedures, which would result in lower costs across the healthcare system. We believe, according to Nuvo estimates, using datapoints from the US Centers for Disease Control and Prevention (“CDC”) relating to the number of annual pregnancies in the United States4, the average cost of emergency department visits from a 2019 United Health Group report5 and information from a study contained in the AJOG in 20176, that OB-ED avoidance alone in the United States would represent approximately $2.4 billion in system cost savings. Additionally, we believe, according to Nuvo estimates, using datapoints from Zipia regarding average OBGYN nurse salary7 and MDSave regarding OBGYN estimated average costs for patient office visits8, that approximately $21,000 would be saved in nurse time per year and the incremental annual revenue potential could be approximately $475,000. This is a benefit that may be provided with our FDA-cleared solution, but will require more data and monitoring of that data to support this claim definitively. In addition, future products, subject to FDA approvals, may further Nuvo’s claims on this topic.

 

  Improved outcomes: We believe that expectant mothers will be more likely to comply with our monitoring protocols, which, together with other benefits of our INVU platform, has the potential to result in better health outcomes if the frequency of complications and other events, such as C-sections, emergency department visits, hospital stays and neonatal intensive care unit stays are reduced. We intend to use integrated data and proprietary predictive analytics to develop personalized care recommendations for expectant mothers. This is a benefit that may be provided with our FDA-cleared solution, but will require more data and monitoring of that data to support this claim definitively. In addition, future products, subject to FDA approvals, may further Nuvo’s claims on this topic.

 

 

 
3 The American College of Obstetricians and Gynecologists, “Indications for Outpatient Antenatal Fetal Surveillance”, ACOG Committee Opinion, Committee on Obstetric Practice Society for Maternal-Fetal Medicine, Volume 137, Number 828 (June 2021).
4 US Centers for Disease Control and Prevention, National Vital Statistics Reports, “Births: Final Data for 2021”, Volume 72, Number 1 (January 31, 2023).
5 United Health Group, “18 Million Avoidable Hospital Emergency Department Visits Add $32 Billion in Costs to the Health Care System Each Year”, Report (July 2019).
6 American Journal of Obstetrics and Gynecology, “Non-Urgent and Urgent Emergency Department Use During Pregnancy: An Observational Study”, Volume 216, Issue 2 (February 2017).
7 Zippia, “OB/GYN Nurse Salary”, Article (Updated September 14, 2023).
8 MDSave, “OBGYN Established Patient Office Visit”, Article (Updated 2024).

 

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  Improved population health strategies: We believe that our future ability to analyze aggregated data will enable us to make highly useful and actionable predictive recommendations which will result in a healthier population of expectant mothers and unborn babies. This is a benefit that may be provided with our FDA-cleared solution, but will require more data and monitoring of that data to support this claim definitively. In addition, future products, subject to FDA approvals, may further Nuvo’s claims on this topic.

 

We believe our INVU platform is the only platform that contains all of the above attributes and that also (i) utilizes multimodality technology in one instrument to monitor pregnancy, (ii) utilizes electrocardiography and phonocardiography for remote monitoring, (iii) can monitor continuously, passively and remotely in accordance with clinician-prescribed protocol when the expectant mother is wearing our wireless sensor band, (iv) provides substantially equivalent results to CTG, which is the existing standard of care for pregnancy care monitoring and offers NSTs passively, remotely and through self-administration during the INVU monitoring period, (v) delivers high resolution and personalized medical-grade data to the clinician and the expectant mother and (vi) has the potential to aggregate data and apply innovative digital tools to make targeted predictive recommendations, as well as enable population health strategies.

 

Our Growth Strategies

 

Our goal is to become the standard of care for remote pregnancy monitoring and pregnancy care management through the development of our INVU platform. To achieve our growth plan, we expect to employ the following core strategies. Such strategies may be impacted by any of the risks disclosed under “Risk Factors—Risks Related to Our Business and Our INVU Platform”, “—Risks Related to Government Regulation and Our Industry” and —Risks Related to Israeli Law and Our Operations in Israel.”

 

Continue to scale our operations in the United States to accelerate the adoption of our INVU platform. We believe we have assembled a core operating infrastructure to support our future growth. For example, we have a seasoned management team based across Israel and the United States, as well as a comprehensive portfolio of intellectual property and strategic relationships with key suppliers, which we believe position us to rapidly grow our operations. We expect to scale our business in the United States by hiring additional U.S.-based managers as well as sales and marketing, product specialist and end-user support personnel to enhance our ability to acquire customers and retain and grow these relationships. As we grow, we intend to continue to remain asset-light by relying on a network of third-party suppliers and manufacturers to produce our hardware solutions, including our proprietary wireless sensor bands, and to clean and fulfill new orders for our wireless sensor bands.

 

Build a growing user and partner base through a stepwise approach, from providers to payers, while investing in expanding awareness of our INVU platform. We expect strategic partnerships with care providers to increase traction for our services and allow us to scale more quickly. We believe we have a healthy pipeline of U.S. and international providers and payers of strategic relevance, which we believe we will be able to convert to long-term partners and customers over time. In addition, we intend to spend considerable time and resources seeking to educate expectant mothers and their clinicians about the benefits of our remote monitoring technology. We intend to leverage content creation, advertising, social media and other marketing mechanisms to increase awareness of our solutions among expectant mothers. To increase awareness of our solutions among clinicians, prenatal care providers and other medical professionals, we intend to participate in industry conferences, advertise in medical journals and seek and promote customer testimonials and payer recommendations. We expect that increased awareness among these groups will highlight the benefits of our INVU platform, including ease of use, cost savings, access, and quality of data, which should increase adoption and accelerate our growth.

 

Aggregate the data we capture to enable us to effectively utilize our actual and potential data-related competitive advantages to benefit our user community and population health in general. Collecting data from users on our INVU platform will provide us with significant data that has not been previously captured, either in-office or remotely, about the different stages of pregnancy for both the unborn baby and expectant mother. We expect to expand the data we collect by seeking clearance to extend our INVU monitoring period. Aggregating such data will enable us to effectively utilize the competitive advantages our data collection and analysis capabilities provide to, for example, identify patterns and trends that are associated with certain risks and outcomes from which we should be able to make highly useful and actionable recommendations to expectant mothers and their clinicians.

 

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Continue investing in research and development to enhance the quality and performance of our INVU platform. We have spent considerable time and resources developing our INVU platform and its enhanced system of remote pregnancy monitoring, as well as the intellectual property protecting it. We believe that continued investment in our research and development capabilities will enable us to obtain additional regulatory clearances to support the expansion of our service offerings from our INVU platform. We believe we are one of a few remote providers to be able to capture, compute and visualize this data to clinicians. A comparative study that we have conducted demonstrated that our measurements of MUA are substantially equivalent to those taken with an intrauterine pressure catheter (“IUPC”), a device used during labor to measure the frequency, duration and strength of uterine contractions and which is considered to be the most accurate for MUA measurements. Next, we plan to develop and utilize the measurements within our capabilities, such as mECG, fECG, fPCG, mPCG, fetal activity, fetal position, maternal respiration and amniotic fluid volume, to power and fuel our predictive model. We may also expand our offerings by seeking clearance to provide some of these measurements to expectant mothers and clinicians. We expect that continued investment in research and development will allow us to improve our product offerings and enable our products to become the standard of care for remote pregnancy monitoring and pregnancy care management. We believe that maintaining and growing our intellectual property portfolio will protect and expand our competitive position. See “—Our Competitive Advantages” and “—Research and Development.”

 

We intend to expand our reach globally. Our ambition is to improve pregnancy care globally. We filed for a CE mark in Europe in March 2023, which if approved, should allow us to offer NSTs using our FHR, MHR and MUA capabilities in certain circumstances. Our business development work in this region indicates substantial demand for our solutions. We are in discussions already in the Netherlands, Germany and Israel with various enterprise-level healthcare systems as well as payer networks. In Germany we have established a partnership with Charite University to bring the previously established benefits of remote pregnancy monitoring to Europe for the first time, while also setting the stage for the use of predictive analytics to improve health outcomes in the future. Finally, we are also pursuing a relationship with one of the four leading health maintenance organizations (“HMOs”) in Israel that is an innovator in remote marketing, and we also have a relationship with a top ranking Israeli medical center that is a global leader in medical innovation. If we obtain clearances and approvals in these and other jurisdictions, we believe our expanded reach would allow us to become a leader in pregnancy solutions from the first days of pregnancy onward. If we are able to scale globally, we expect to maintain our fundamental approach to commercialization to focus on building strong relationships with local care networks and payers as our anchor partners.

 

Our Challenges

 

We face company and market challenges to meet our objectives, including the following:

 

  Corporate growth: we are a company headquartered in Israel with the development of our INVU technology far from where it will be commercialized. Product-market match is a difficult endeavor anywhere, but particularly when development is done far from where it will be applied. Building a commercial team and operations in a new market far from headquarters is a challenge, but one that we are addressing with a US-based CEO, CFO, Vice President, product specialists, and customer support. The majority of the new hires planned for 2024 will be in the U.S. market to support growth targets. See “—Research and Development”, “—Manufacturing and Supply” and “—Sales and Marketing”.

 

  Product development: moving from prototype to mass manufacturing is difficult, as will working to continue reducing costs over time. In addition, we may continue to face challenges to ensure that upstream innovation will be able to be commercialized within regulatory and reimbursement frameworks.

 

  Regulatory approvals: the pre-natal market is relatively new to in-home monitoring. The risks of the population – the unborn baby and expectant mother – presents additional challenges and sparks extra review by the FDA. Safety record, a lack of adverse events and reports, among others, can help allay issues with respect to regulatory approvals in this space. See “—Government Regulation” and “Risk Factors—Risks Related to Government Regulation and Our Industry”.

 

  Competition: there are several competitive devices/solutions that are aiming for commercialization. We believe this is a validation of the commercial opportunity. The vast majority of these new competitors seem to be doing away with traditional Doppler/TOCO technology and attempting to monitor with direct physiological signals, such as biopotential, which is further validation of Nuvo’s direction. However, this is something to be mindful of because competitors are fast approaching with the ability to collect similar signals, and we will have to continue to innovate and execute effectively to achieve our objectives. See “—Competition.”

 

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Recent Developments

 

Business Combination

 

For a discussion of the Business Combination see above under “Explanatory Note” above.

 

As of June 11, 2024, there were 13,223,440 Ordinary Shares available for issuance upon the exercise of outstanding Holdco Warrants. The exercise of the Holdco Warrants, and any proceeds we may receive from their exercise, are highly dependent on the trading price of our Ordinary Shares and the spread between the exercise price of the Holdco Warrant and the trading price of our Ordinary Shares at the time of exercise. The exercise price of our Warrants is $11.50 per share and the closing price of our Common Stock as of June 14, 2024, was $1.67. Accordingly, we believe that it is currently unlikely that Holdco Warrant holders will exercise their Holdco Warrants. See “Summary of the Prospectus” and “Risk Factors—The exercise price for Holdco Warrants is higher than the price of our Ordinary Shares, and, accordingly, the Holdco Warrants are more likely to expire worthless” for further details. The likelihood that Holdco Warrant holders will exercise their Holdco Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our Ordinary Shares. If the trading price for our Ordinary Shares remains less than $11.50 per share, we believe our Holdco Warrant holders will be unlikely to exercise their Holdco Warrants. There is no guarantee that the Holdco Warrants will be in the money prior to their expiration, and as such, the Holdco Warrants may expire worthless and we may receive no proceeds from the exercise of the Holdco Warrants. To the extent that any of the Holdco Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Holdco Warrants will decrease, or we may not receive any cash proceeds at all. We do not expect to rely on the cash exercise of Holdco Warrants to fund our operations.

 

Bridge Financing

 

Since November 2023 Nuvo has been engaged in a bridge financing (the “Bridge Financing”), which involves the issuance of secured convertible bridge notes (individually, a “Bridge Financing Note”; collectively, the “Bridge Financing Notes”) to investors (“Bridge Financing Holders”).

 

The Bridge Financing Notes carry a 15% annual interest rate and upon conversion on the applicable Maturity Date (as defined in the Bridge Financing Notes), (i) Nuvo will pay the Holders all accrued interest on the Bridge Financing Notes up to the date of payment or conversion, and (ii) the Holders in their sole discretion, may choose to either (a) receive the principal amount of the Bridge Financing Note in cash; or (b) convert the principal amount of the investment into Nuvo Shares at a price per share of $7.3087 (which reflects the application of the equity exchange ratio of 96.139%).

 

As of the date hereof, approximately $12.5 million in principal amount of Bridge Financing Notes has been received by Nuvo, and the offering of the Bridge Financing Notes remains ongoing. The Company is authorized to issue up to $13 million in aggregate principal amount of Bridge Financing Notes.

 

From March 24, 2024 through April 8, 2024, Nuvo entered into amendments to all of the existing Bridge Financing Notes at that time representing $6.5732 million principal amount of the Bridge Financing Notes, to extend the maturity dates thereof (the “Bridge Financing Notes Amendments”). All new Bridge Financing Notes since April 8, 2024 include the amended maturity definition. Prior to the Bridge Financing Notes Amendments, the Bridge Financing Notes were scheduled to mature on the earlier of (i) twelve months from the issuance date thereof, (ii) the closing of the Business Combination, (iii) the closing of an initial public offering, or (iv) the closing of a bona fide financing by Nuvo for the principal purpose of raising capital, through the sale of Nuvo securities in whatever form or type (whether debt or equity) that raises in excess of $10,000,000 in gross proceeds. Pursuant to the Bridge Financing Notes Amendments, the maturity date of the amended Bridge Financing Notes was revised to be the earlier of (i) twelve months from the issuance date thereof, (ii) six (6) months following the closing of the Business Combination, (iii) six (6) months following the closing of an initial public offering, or (iv) the closing of a bona fide financing by Nuvo for the principal purpose of raising capital, through the sale of Nuvo securities in whatever form or type (whether debt or equity) that raises in excess of $25,000,000 in gross proceeds.

 

Each Bridge Financing Note is secured by all of Nuvo’s intellectual property, and Nuvo has filed collateral assignments/financing statements with the United States Patent & Trademark Office and is in the process of filing collateral assignments/financing statements with Nuvo’s Registrar in Israel. Gaingels 10x Capital Diversity Fund I, LP, a Bridge Financing Holder and an affiliate of a member of the Sponsor serves as collateral agent with respect to the collateral securing the Bridge Financing Notes. Upon the occurrence of any event of default described therein, the outstanding balance under the Bridge Financing Notes shall become immediately due and payable upon election of the Bridge Financing Holder and following a written demand notice sent to Nuvo.

 

In consideration for the services to be rendered under certain advisory services agreements between the Bridge Financing Holders and Nuvo, Nuvo issued a warrant to each Bridge Financing Holder, whereby the Bridge Financing Holder is given the right to purchase such number of Nuvo Shares (or, post-Closing, Ordinary Shares after applying the equity exchange ratio of 96.139%) equal to (2x) the principal amount of the Holder’s Bridge Financing Note divided by the same price per share noted above (i.e., $7.3087), at an exercise price of NIS 0.01.

 

This summary is qualified in its entirety by reference to the full text of each of the form of Bridge Financing Note, the form of Bridge Financing warrant and the form of Bridge Financing Notes Amendment, which are filed as exhibits to the registration statement of which this prospectus forms a part.

 

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Expanded Commercial Partnership with Philips

 

We and Philips Electronics Nederland B.V., or Philips, entered into a master purchase agreement (“Philips MPA”), in August 2023, the scope of which consists of Philips or one of its affiliates procuring products and services from Nuvo. Products include Nuvo’s proprietary INVU remote patient maternity monitoring system, or the INVU System, and services include professional services rendered by Nuvo in connection with Nuvo’s delivery of the INVU System. The aggregate amount paid under the Philips MPA to date is $0. The designated territory for this commercial arrangement is the United States (the “Territory”).

 

Other important terms under the Philips MPA include:

 

Nuvo has granted Philips limited exclusivity to market the INVU System to certain market segments.

 

The parties have agreed to create a steering committee made up of three senior representatives from each organization. The committee will be tasked with various governance-related responsibilities, such as overseeing the progress of the parties; generally planning and scheduling; considering any proposed changes or modifications to the Philips MPA; conflict resolution; and such other matters as may be agreed between the parties from time to time.

 

The pricing model involves essentially an all-in price (i.e., the ‘transfer price’) per pregnancy which includes delivery of the INVU sensor band, access/use of the INVU solution, and the support provided by Nuvo. Professional services, if any, that Nuvo may be requested to carry out will be charged separately.

 

Each party will maintain ownership of its respective pre-existing intellectual property, as well as any modifications made to such intellectual property during the course of the agreement. The Philips MPA contains certain provisions protecting Nuvo’s intellectual property and confidential information in a commercially reasonable manner.

 

The Philips MPA has a five-year initial term, unless either party terminates it after the first three years upon 180 days’ notice to the other party, upon a commercially reasonable basis.

 

This Philips MPA was preceded by a Master Pilot Agreement that was signed in 2021. Since then, Nuvo and Philips have activated different workgroups that meet regularly and cover all aspects of the partnership, including integration, marketing, regulatory, order management, and contracting/supplier qualification. All paperwork behind the joint offering integration is complete in the form of an amendment to the Master Pilot Agreement that was signed in January 2023. Nuvo believes that the parties are currently on track to activate their vision of distribution of the joint offering to hospital networks in the United States within the next six months.

 

Emerging Growth Company

 

We qualify as an “emerging growth company” as defined in the JOBS Act, and we will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the Closing, (b) in which Holdco has total annual gross revenue of at least $1.235 billion or (c) in which Holdco is deemed to be a large accelerated filer, which means the market value of Holdco Shares held by non-affiliates exceeds $700 million as of the last Business Day of Holdco’s prior second fiscal quarter, and (ii) the date on which Holdco issued more than $1.0 billion in non-convertible debt during the prior three-year period. Holdco intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that Holdco’s independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation.

 

In addition, Section 102(b)(1) of the JOBS Act exempts “emerging growth companies” from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

 

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Furthermore, even after we no longer qualify as an “emerging growth company,” as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including, but not limited to, the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, we will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and are not required to comply with Regulation FD, which restricts the selective disclosure of material information.

 

Foreign Private Issuer

 

We are subject to the information reporting requirements of the Securities Exchange Act of 1934, or “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 reports with the SEC and are not required to file current reports as frequently or promptly as U.S. domestic reporting companies. Furthermore, our officers, directors and principal shareholders are exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. These exemptions and leniencies reduce the frequency and scope of information and protections available to you in comparison to those applicable to shareholders of U.S. domestic reporting companies.

 

Our Corporate Information

 

Holdco was incorporated under the laws of the State of Israel on July 20, 2023 for the sole purpose of effectuating the Business Combination. Following and as a result of the Business Combination, the business of Holdco is conducted through Nuvo, its direct, wholly-owned subsidiary, which was incorporated in Israel on June 28, 2006.

 

Our principal executive offices are located at 94 Yigal Alon St., Tel Aviv, Israel 6789155 and our telephone number is: 1-800-554-9041. Nuvo’s wholly owned U.S. subsidiary, Nuvo Group USA, Inc., incorporated in Delaware, has been appointed our agent in the United States, and its registered address is 300 Witherspoon Street, Suite 201, Princeton, New Jersey 08542. Our website address is https://www.nuvocares.com. The information contained in, or accessible through, our website does not constitute a part of this prospectus.

 

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers, such as we, that file electronically, with the SEC at www.sec.gov.

 

Summary Risk Factors

 

Investing in our securities entails a high degree of risk as more fully described under “Risk Factors.” You should carefully consider such risks before deciding to invest in our securities. These risks include, among others:

 

  Nuvo is a development-stage company with a limited operating history, and may never be able to effectuate its business plan, achieve meaningful revenue or attain profitability.

 

  Nuvo is highly dependent on the successful development, marketing and sale of the INVU platform and the related products and services.

 

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  Nuvo will need to obtain additional financing to fund its future operations and continue as a going concern.

 

  Without the proceeds of this offering, our very limited funds currently on hand will only be sufficient for us to operate for a relatively limited amount of time, and, even if this offering is completed, we may need to seek additional equity or debt financing to provide the capital required to implement our business plan, or we could be required to seek bankruptcy protection or other alternatives that would likely result in our securityholders losing some or all of their investment in us.

 

  The manufacturing and supply of the INVU platform is subject to various factors outside Nuvo’s direct control, including those related to Nuvo’s dependence on third-party manufacturers and suppliers.

 

  Nuvo’s medical device operations are subject to pervasive and continuing FDA regulatory requirements, and failure to comply with these requirements could harm its business, financial condition and results of operations.

 

  Healthcare reform initiatives and other administrative and legislative proposals may harm Nuvo’s business.

 

  The results of Nuvo’s clinical trials may not support the INVU platform claims or may result in the discovery of adverse side effects.

 

  Conditions in Israel could materially and adversely affect Nuvo’s business.

 

  Nuvo may be unable to obtain and maintain patent or other intellectual property protection for any product it develops for its technology.

 

  Holdco will incur increased costs as a result of operating as a public company.

 

  A market for Ordinary Shares may not develop, which would adversely affect the liquidity and price of Ordinary Shares.

 

  The price of Ordinary Shares may be volatile.

 

  It is not expected that Holdco will pay dividends in the foreseeable future after the Business Combination.

 

  Holdco may not be able to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it.

 

  As a foreign private issuer and a company treated as an emerging growth company for certain purposes, Holdco has different disclosure and other requirements than U.S. domestic registrants and non-emerging growth companies.

 

  Holdco may lose its foreign private issuer status, which would then require Holdco to comply with the Exchange Act’s domestic reporting regime and cause Holdco to incur significant legal, accounting and other expenses.

 

  If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about Holdco’s business, the price of Ordinary Shares and Holdco trading volume could decline.

 

If you purchase securities in this offering, you will incur immediate and substantial dilution in the book value of your Ordinary Shares, including Ordinary Shares that may be issued upon the exercise of any Pre-Funded Warrants and Series Warrants.

 

There is no established market for the Pre-Funded Warrants or Series Warrants being offered in this offering.

 

Holders of the Pre-Funded Warrants or Series Warrants purchased in this offering will have no rights as shareholders until such holders exercise their Pre-Funded Warrants and Series Warrants and acquire our Ordinary Shares.

 

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THE OFFERING

 

Issuer  

Holdco Nuvo Group D.G Ltd.

     
Ordinary Shares offered by us   Up to          Ordinary Shares in the aggregate, consisting of Ordinary Shares or Ordinary Shares issuable upon exercise of the Pre-Funded Warrants.
     
Pre-Funded Warrants   We are offering to certain purchasers whose purchase of Ordinary Shares in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding Ordinary Shares immediately following the closing of this offering, the opportunity to purchase, if such purchasers so choose, Pre-Funded Warrants, in lieu of Ordinary Shares that would otherwise result in any such purchaser’s beneficial ownership, together with its affiliates and certain related parties, exceeding 4.99% (or, at the election of such purchaser, 9.99%) of our outstanding Ordinary Shares immediately following the consummation of this offering. The purchase price of each Pre-Funded Warrant is equal to the purchase price of the Ordinary Shares and accompanying Series Warrants in this offering minus $0.001, the exercise price of each Pre-Funded Warrant. Each Pre-Funded Warrant is immediately exercisable and may be exercised at any time until it has been exercised in full. For each Pre-Funded Warrant we sell, the number of Ordinary Shares we are offering will be decreased on a one-for-one basis. This offering also relates to the Ordinary Shares issuable upon exercise of any Pre-Funded Warrants sold in this offering.

 

Series Warrants

 

 

For each Ordinary Share, or each Pre-Funded Warrant in lieu of one Ordinary Share, we are offering one Series A Warrant and one Series B Warrant. The Series A Warrants will be immediately exercisable, at an exercise price of $       per share and will expire on the five-year anniversary of the Initial Exercise Date. The Series B Warrants will be immediately exercisable, at an exercise price of $       per share, or pursuant to the alternate cashless exercise option, and will expire on the one-year anniversary of the Initial Exercise Date.

 

Under the alternate cashless exercise option of the Series B Warrants, the holder of the Series B Warrant, has the right to receive an aggregate number of Ordinary Shares equal to the product of (x) the aggregate number of Ordinary Shares that would be issuable upon a cash exercise of the Series A Warrant and (y)       . Subject to certain exceptions, the Series A Warrants will provide for an adjustment to the exercise price and number of Ordinary Shares underlying the Series A Warrants upon our issuance of our Ordinary Shares or Ordinary Share equivalents at a price per share that is less than the exercise price of the Series A Warrants. In addition, the Series A Warrants and Series B Warrants will include a provision that resets their respective exercise price in the event of a reverse split of our Ordinary Shares, to a price equal to the lesser of (i) the then exercise price and (ii) lowest VWAP during the period commencing five trading days immediately preceding and the five trading days commencing on the date we effect a reverse share split in the future with a proportionate adjustment to the number of Ordinary Shares underlying the Series A Warrants and Series B Warrants.

     
Ordinary Shares to be outstanding after this offering  

          Ordinary Shares, assuming no sales of Pre-Funded Warrants which, if sold, would reduce the number of Ordinary Shares that we are offering on a one-for-one basis.

 

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Use of Proceeds  

We estimate that the net proceeds from this offering will be approximately $      million based on an assumed combined public offering price, based on the last reported sale price on           , 2024, of $      per Ordinary Share and accompanying Series Warrants, after deducting estimated placement agent fees and estimated offering expenses payable by us and excluding the proceeds, if any, from the cash exercise of the Series Warrants issued in this offering.

 

We intend to use the net proceeds from this offering to hire incremental sales and marketing personnel and focus resources on building the commercial aspects of our business, to continue to incur significant research and development expenses associated with moving our current product offering forward, including personnel related expenses and costs of conducting preclinical studies and clinical trials, to expand our accounting, finance and administrative staff and resources in connection with our transition to a public company, and for general corporate purposes. Assuming net proceeds of approximately $      million from this offering (assuming an offering with gross proceeds of $      million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs through       under our current business plan. Assuming net proceeds of approximately $      million from this offering (assuming an offering with gross proceeds of $      million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs to the end of       under our current business plan. Assuming net proceeds of $      million from this offering (assuming an offering with gross proceeds of $      million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs to the end of       under our current business plan. Assuming net proceeds of $      million from this offering (assuming an offering with gross proceeds of $      million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs through       under our current business plan. See “Use of Proceeds” for additional information.

 

Lock-Up Agreements

 

We and all of our executive officers and directors will enter into lock-up agreements in connection with the offering. Under these agreements, we and each of these persons may not, without the prior written approval of the Placement Agents, offer, sell, contract to sell or otherwise dispose of or hedge Ordinary Shares or securities convertible into or exchangeable for Ordinary Shares, subject to certain exceptions. The restrictions contained in these agreements will be in effect for a period of 90 days after the date of the closing of this offering. For more information, see “Plan of Distribution” on page 238 of this prospectus.

     
Market for our Ordinary Shares   Our Ordinary Shares are listed on Nasdaq under the trading symbol “NUVO”.

 

Listing of Pre-Funded Warrants and Series Warrants

 

We do not intend to list the Pre-Funded Warrants or the Series Warrants on any securities exchange or nationally recognized trading system. Without a trading market, the liquidity of the Pre-Funded Warrants and Series Warrants will be extremely limited.

 

Risk Factors   Prospective investors should carefully consider the “Risk Factors” for a discussion of certain factors that should be considered before buying the securities offered hereby.

 

The number of Ordinary Shares outstanding after this offering is based on 33,261,549 Ordinary Shares issued and outstanding as of May 1, 2024. This number excludes:

 

3,633,440 options held by our employees and directors to purchase Ordinary Shares under Nuvo’s 2015 Share Incentive Plan (the “Nuvo 2015 Plan”);

 

4,939,811 Ordinary Shares available for future issuance under our 2024 share incentive plan (the “2024 Plan”);

 

1,646,604 Ordinary Shares available for future issuance under our 2024 Employee Share Purchase Plan (the “ESPP”);

 

13,223,440 Ordinary Shares available for future issuance upon exercise of the Holdco Warrants;

 

1,586,314 Ordinary Shares available for future issuance pursuant to certain outstanding options granted to Nuvo’s founder and former Chief Innovation Officer;

 

913,081 Ordinary Shares available for future issuance upon conversion of the Bridge Financing Notes; and

 

1,713,010 Ordinary Shares available for future issuance upon the exercise of Bridge Financing warrants.

 

Unless otherwise indicated, all information in this prospectus assumes no exercise of outstanding notes, options or warrants described above, including the exercise of the Series Warrants.

 

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RISK FACTORS

 

You should carefully consider the following risk factors, together with all of the other information included in this prospectus, before making an investment decision. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on our business, financial condition, results of operations, prospects and trading price. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by us, which later may prove to be incorrect or incomplete. We may face additional risks and uncertainties that are not presently known to us, or that are currently deemed immaterial, but which may also ultimately have an adverse effect on us. This could cause the trading price of the securities to decline, and you may lose all or part of your investment.

 

Risks Related to Our Business and Our INVU Platform

 

We are a development-stage company with a limited operating history. We may never be able to effectuate our business plan, achieve meaningful revenue or attain profitability.

 

We are a development-stage company and are subject to all of the risks inherent in the establishment of a new business enterprise. We have a limited operating history and only a preliminary and unproven business plan upon which investors may evaluate our prospects. We have not yet scaled commercial adoption of our INVU platform. Additionally, our INVU platform is currently cleared by the FDA for only limited monitoring capabilities, and the future commercial interest in our INVU platform, if any, will require FDA and other regulatory clearances or approvals for additional capabilities, and we may never obtain such clearances or approvals. Our ability to generate significant revenue from our operations and, ultimately, achieve profitability will depend on, among others things, whether we can commercialize our INVU platform as currently planned, whether we can complete the development of other features of our INVU platform, whether we can utilize the data we capture to make predictive recommendations and monetize these capabilities, our obtaining additional regulatory clearances, commercial adoption of our INVU platform, whether we can manufacture INVU on a commercial scale in such amounts and at such costs as we anticipate would be required to begin to achieve commercial success, and whether we can achieve market acceptance of our INVU platform and business model. We may never generate meaningful revenue or operate on a profitable basis. Even if we achieve profitability, we may not be able to sustain it.

 

It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. If actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be materially affected.

 

We have a history of net losses, and we expect to continue to incur losses for the foreseeable future. If we ever achieve profitability, we may not be able to sustain it.

 

We have incurred losses since our inception, and we expect to continue to incur losses for the foreseeable future. For the years ended December 31, 2023, 2022 and 2021, we reported net losses of $33.655 million, $20.679 million and $34.512 million, respectively. As a result of these losses, as of December 31, 2023, 2022 and 2021, we had an accumulated deficit of $143.774 million, $110.119 million and $89.440 million, respectively. We expect to continue to incur significant sales and marketing expenses as we expand our sales and marketing efforts to increase adoption of our INVU platform, including through scaling our business in the United States and globally, expanding relationships with care providers, payer networks and strategic partners, and increasing awareness of our solutions among expectant mothers and their clinicians. In addition, we expect to continue to incur significant research and development and other expenses as we develop and utilize the measurements within our capabilities, expand our offerings by seeking clearance to provide some of these measurements to expectant mothers and clinicians, conduct additional clinical trials and studies on our INVU platform, and maintain and grow our intellectual property portfolio. In addition, we expect our general and administrative expenses to increase following the Business Combination due to the additional costs associated with being a public company. The net losses that we incur may fluctuate significantly from period to period. We will need to generate significant revenue and maintain or improve our gross margins to achieve and sustain profitability. Even if we achieve profitability, we may not remain profitable for any substantial period of time.

 

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We believe that, without the proceeds of this offering, our very limited funds currently on hand will only be sufficient for us to operate for a relatively limited amount of time. Since we will be unable to generate sufficient funds, if any, to fund our operations for at least the immediate future, we will need to seek additional equity or debt financing to provide the capital required to implement our business plan. If we are unable to raise capital, we could be required to seek bankruptcy protection or other alternatives that would likely result in our securityholders losing some or all of their investment in us.

 

We believe that, without the proceeds of this offering, our very limited funds currently on hand will only be sufficient for us to operate for a relatively limited amount of time, through August 2024. See “Management’s Discussion and Analysis of Results of Operations—Liquidity and Capital Resources.” If the proceeds of this offering are lower than anticipated, we may similarly only be able to operate for a relatively limited amount of time. Since we do not anticipate being able to generate sufficient revenue or cash flow to fund our operations in the immediate future, we will need to seek additional equity or debt financing to provide the capital required to implement our business plan.

 

Additionally, this offering is being made on a best efforts basis and we may sell fewer than all of the securities offered hereby and may receive significantly less in net proceeds from this offering, which will provide us only limited working capital. We believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will meet our capital needs for the next six to nine months under our current business plan. Without giving effect to the receipt of any proceeds from this offering, we currently estimate that our existing cash and cash equivalents are sufficient to fund business operations into the third quarter of 2024.

 

Other than the approximately $500,000 remaining authorized capacity under the Bridge Financing, for which there is no guarantee we will be able to raise in full, if at all, we do not currently have any arrangements or credit facilities in place as a source of funds. There can be no assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all. If such financing is not available on satisfactory terms, or is not available at all, we may be required to further delay, scale back or eliminate the development of business opportunities and our operations and financial condition may be materially adversely affected. Furthermore if we are unable to raise capital, we could be required to seek bankruptcy protection or other alternatives that would likely result in our securityholders losing some or all of their investment in us. See also “Risk Factors — Risks Related to Our Business and Our INVU Platform —The audited consolidated financial statements for the year ended December 31, 2023, include an explanatory paragraph in our independent registered public accounting firm’s audit report stating that there are conditions that raise substantial doubt about our ability to continue as a going concern, and we will need to obtain additional financing to fund our future operations and continue as a going concern. If we are unable to obtain such financing, we may be unable to complete the development and commercialization of our INVU platform.”

 

Our business model contemplates, among other things, an expansion of the approved uses for our INVU platform, proof to payers of reduced cost of delivering quality healthcare to expectant mothers, and additional collaborations with partners willing to recommend and prescribe the use of our INVU platform, all of which are subject to numerous risks and uncertainties and could result in the failure of our business model.

 

We have not yet demonstrated the feasibility of our INVU platform for commercial applications, including its ability to provide clinical-quality remote pregnancy care on a commercial scale. Currently, our INVU platform is cleared by the FDA to measure FHR, MHR and MUA during the antepartum period and the provision of remote NSTs. In addition, the ability to deliver MHR and FHR data is not necessarily novel and therefore may not enable us to gain or sustain a competitive advantage. Our business plan contemplates that our INVU platform ultimately provides monitoring for additional data and metrics. We may not be able to develop and utilize such additional measurements and include such measurements in our offerings, and even if we are able to do so, such data may not be of medical quality or equivalent to the data obtained from current standard of care. The expansion of our INVU platform’s usable capabilities, or the modification of our existing FDA cleared platform in response to feedback from third parties, such as medical professionals, also requires additional FDA clearance, which we may never receive, and any delay in receiving such clearance could also have a material adverse effect on our business. Additionally, we intend to expand globally and our INVU platform may be subject to the regulatory regimes of other non-U.S. jurisdictions, such as in Europe where we filed for a CE mark in March 2023 to offer NSTs using our FHR, MHR and MUA capabilities. Approval or clearance from the FDA, or comparable regulatory agency in other jurisdictions, including with respect to the CE mark, to capture certain measurements and perform certain tests using our INVU platform, is not guaranteed and may take longer than planned. Also, regulatory approval in one jurisdiction does not mean that we will succeed in obtaining regulatory approval in other jurisdictions. For example, we may not receive regulatory approval for a CE mark to offer NSTs using our INVU platform for monitoring FHR, MHR and MUA, which has been approved by the FDA, which would adversely affect our expansion plans and business strategy.

 

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The software component of our INVU platform uses a cloud computing environment that processes and analyzes data and, ultimately, transmits personalized reports on maternal and fetal health metrics to the expectant mother and her clinician through digital visualization tools. The development of this cloud computing environment requires a considerable investment of technical, financial, and legal resources, which may not be available to us. It may also require separate regulatory clearances or approvals. Furthermore, it may not be technically viable for care providers and our partners to integrate the cloud with their businesses or platforms. There may also be public concerns regarding privacy and compliance with restrictive laws or regulations, including those with respect to management of health data, as well as concerns regarding hardware and software security and reliability issues associated with third-party mobile devices such as smartphones that would be used to access our cloud services.

 

Further, our business model contemplates the collection of a significant amount of personalized health data to develop a database sufficient for us to develop algorithms that may allow for effective and accurate predictive tools. We have yet to develop such a database, and we are not yet cleared to provide any such analytics, nor have we yet applied for or sought such clearances. Furthermore, even if we are able to develop such a database, we may not successfully develop effectively predictive algorithms. As a result, we may never ultimately develop our planned capabilities, or, if we do, care providers, expectant mothers or payers may not find such capabilities useful or cost effective.

 

The success of our business model also depends on our ability to:

 

generate widespread awareness, acceptance and adoption of our INVU platform and future products or services;

 

prove out cost savings such that providers and payers clearly see value in the prescribing and use of our INVU platform;

 

develop enhanced or new technologies or features that improve the convenience, efficiency, safety or perceived safety, and productivity of our INVU platform and future products or services, including the receipt of all regulatory clearances and approvals necessary for such enhanced or new technologies and features;

 

significantly expand our commercial and strategic partnerships with enterprise-level entities in order to develop necessary product awareness and scale;

 

properly identify customer needs and deliver new products or services or product enhancements to address those needs;

 

obtain the regulatory approvals in a timely and cost-effective manner; attract and retain qualified personnel and collaborators;

 

maintain quality control as we continue to commercialize our INVU platform;

 

protect our inventions with patents or otherwise develop proprietary products and processes; and

 

secure sufficient capital resources to expand both our continued research and development, and sales and marketing efforts.

 

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Given the foregoing, our success depends significantly upon, among other things, our ability to obtain additional regulatory approvals for our INVU platform’s more advanced capabilities and further expand such capabilities, materially expand our strategic partnerships to drive brand awareness and product usage, and prove that INVU reduces the cost of delivering quality healthcare for expectant mothers in order to help convince payers that INVU should be regularly prescribed and used. Our failure to successfully accomplish the foregoing could have a material adverse effect on our business, prospects, results of operation and financial position.

 

Our operating results may fluctuate from quarter to quarter, which makes our future results difficult to predict.

 

Our operating results and financial condition may fluctuate from quarter-to-quarter and year-to-year and are likely to vary due to a number of factors, many of which will not be within our control. Our operating results in any given quarter can be influenced by numerous factors, many of which are unpredictable or outside of our control, including:

 

the degree of market acceptance of our INVU platform and future products;

 

our ability to compete with competitors and new entrants into our markets;

 

the timing of our sales and deliveries of our INVU platform and future products to customers;

 

changes in our pricing policies or those of our competitors, including our response to price competition;

 

the effectiveness of our securing new orders and fulfilling existing orders;

 

changes in the amount that we spend to develop and manufacture new products or technologies;

 

changes in the amounts that we spend to promote our solutions;

 

our ability to introduce new features and services and enhance our existing platform and our ability to generate significant revenue from new features and services and personalization to the products;

 

our ability to respond to competitive developments, including pricing changes and the introduction of new products and services by our competitors;

 

changes in the cost of satisfying our warranty obligations and servicing our products;

 

litigation related expenses and/or liabilities;

 

developments or disputes concerning our intellectual property or proprietary rights or our solutions, or third-party intellectual property or proprietary rights;

 

fluctuations in currency exchange rates;

 

general economic and political conditions and government regulations in the countries where we currently have significant numbers of systems, or where we currently operate or may expand in the future; and

 

natural disasters, such as earthquakes, hurricanes, wildfires, and threats to public health, such as a resurgence of the COVID-19 pandemic.

 

The impact of one or more of the foregoing and other factors may cause our operating results to vary significantly. As such, quarter-to-quarter comparisons of our operating results may not be meaningful and should not be relied upon as an indication of future performance. If we fail to meet or exceed the expectations of investors or securities analysts, the trading price of the Ordinary Shares could fall substantially, and we could face costly lawsuits, including securities class action suits.

 

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Our business model contemplates a revenue model that is yet to be proven viable and is subject to numerous risks and uncertainties.

 

Our ability to generate significant revenue, and ultimately achieve profitability, will depend on securing commercial contracts on favorable economic terms. Currently, we have signed over a dozen commercial contracts with health systems, large private practice groups, and independent women’s health practices in the United States and Israel. We plan to focus on long-term enterprise level agreements with larger obstetrician-physician practice management groups and U.S. healthcare systems. We have entered into a strategic partnership with Philips primarily focused on providing a jointly integrated remote fetal monitoring solution targeted toward hospital networks in the U.S. However, we may not prove the benefits of our INVU platform, or such entities may not find our pricing to be attractive, either of which could cause our pricing model to fail. Ultimately, we aim to seek long-term contracts with payers, where we expect to receive revenue based, at least in part, on a percentage of cost-savings achieved by the applicable payers. We may not be able to develop a substantial body of data to prove to care providers and payers that the use of our INVU platform reduces medical care costs, and even if we are able to collect such data, we may not demonstrate cost savings, including as a result of the improvement of cost baseline in the long term, whether due to the success of our INVU platform or as other cost-effective offerings become available, or demonstrate improved quality of care and healthcare outcomes, in order to incentivize payers to encourage their obstetrician networks and expectant mothers to utilize our INVU platform. Our revenue model is also subject to many other factors, including the following:

 

payment models for remote healthcare solutions are still evolving, and the pricing arrangement we favor may not be accepted by care provider or payers;

 

we may not be able to find a sufficient number of implementers to stimulate market interest or reach the scale necessary to make our INVU platform a cost-effective solution, which is a key factor for acceptance by care providers and ultimately the payers;

 

even if we can demonstrate cost savings from use of our INVU platform, we may be unable to secure arrangements with payers that share any cost-saving with us, on favorable terms to us or at all;

 

we may not be able to secure meaningful up-front and ongoing payments;

 

contracted payment terms will likely vary among counterparties, making it difficult to predict revenues;

 

manufacturing or maintenance costs may be higher than expected and we may not be able to adjust our pricing model to accommodate for these increases, which will increase our operating expenses and reduce our margins; and

 

we may not be able to accumulate sufficient data of the type and quality we need to develop predictive tools, and even if we are able to do so, we may not be successful in generating revenue from these tools.

 

Manufacturers of medical devices have a history of price competition, and we may not be able to achieve or maintain satisfactory pricing for our INVU platform. If we are forced to lower the price we charge for our INVU platform, our gross margins will decrease, which will harm our ability to invest in and grow our business. If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode. We may be subject to significant pricing pressure, which could harm our business and results of operations. Any of these risks and uncertainties could cause our revenue model to fail.

 

Our success depends in large part on our ability to develop, market and sell our INVU platform. If we are unable to successfully develop, market and sell this product, our business prospects will be significantly harmed and we may be unable to achieve revenue growth or profitability.

 

Our future financial success will depend substantially on our ability to further development, and effectively and profitably market and sell, our INVU platform. Our products may not gain market acceptance in the United States or internationally or otherwise attain and maintain any level of market share.

 

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The commercial success of our INVU platform and any of our planned or future products will depend on a number of factors, including, but not limited to, the following:

 

the actual and perceived effectiveness, safety and reliability, and clinical benefit, of our INVU platform, especially relative to the current standard of care obtained within healthcare facilities;

 

the degree to which expectant mothers, care providers, such as large healthcare systems obstetrician- physician practice management groups, and payer networks adopt and continue to use and prescribe our INVU platform;

 

the degree to which expectant mothers use our INVU platform correctly and consider it a valuable tool during their pregnancies;

 

the availability, relative cost and perceived advantages and disadvantages of alternative technologies for pregnancy monitoring;

 

the results of additional clinical and other studies relating to the health, safety, economic or other benefits of our INVU platform;

 

whether key thought leaders in the medical community adopt our INVU platform over alternatives and products offered by our competitors, and the extent to which we are successful in educating physicians and healthcare providers about the benefits of our INVU platform;

 

the success of our strategic partnerships and our current and future strategic partners;

 

our ability to successfully market, sell and distribute our INVU platform and any related platform products, including, without limitation, any of our planned cloud-based solutions derived from the data we expect to collect from expectant mothers, including our plan to identify patterns and trends associated with certain risks and outcomes from which we may derive predictive recommendations that could be useful to individual expectant mothers;

 

our reputation among care providers, such as obstetrician-physician management groups;

 

our ability to obtain, maintain, protect and enforce our intellectual property rights in and to our INVU platform;

 

our ability to maintain compliance with all regulatory requirements applicable to our INVU platform; and

 

our ability to continue to maintain quality control and real-time data processing ability as we continue to commercialize our INVU platform.

 

If we fail to successfully market and sell our products cost-effectively and develop, maintain and expand our market share, we will not be able to achieve profitability, which will harm our business, financial condition and results of operations. Our ability to grow our revenue in future periods will depend on our ability to successfully penetrate our target markets and increase sales of our product, which will, in turn, depend in part on our success in driving adoption and increased use of our products as well as the prices we can charge.

 

We are highly dependent on the successful development, marketing and sale of our INVU platform and the related products and services.

 

Our INVU platform comprises the basis of our business. As a result, the success of our business plan is highly dependent on our ability to develop, manufacture and commercialize our INVU platform and related products and services, and our failure to do so could cause our business to fail. Successful commercialization of medical devices, such as our INVU platform, is a complex and uncertain process, dependent on the efforts of management, manufacturers, medical professionals, third-party payers, our strategic partners, as well as general economic conditions, among other factors. Any factor that adversely impacts the development and commercialization of our INVU platform will have a negative impact on our business, financial condition, results of operations and prospects. Some potential factors include:

 

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our ability to significantly scale our pregnancy care population, together with the necessary increase in manufacturing capacity that would be required to produce the hardware components of our INVU platform to serve a much larger population of expectant mothers;

 

our ability to adapt our INVU platform to the extent necessary to work for a substantial majority of expectant mothers;

 

our ability to achieve sufficient market acceptance by expectant mothers, strategic partners, commercial customers, and other medical and clinical professionals, third-party payers and others in the medical community;

 

our ability to compete with existing pregnancy care solutions, such as currently standard in-person, non-remote, monitoring solutions and current or future competing remote solutions;

 

our ability to establish, maintain and expand our sales, marketing and distribution networks, such as the Philips distribution channel;

 

our ability to obtain or maintain necessary regulatory approvals, including with respect to any changes to our products based upon feedback from third parties such as medical professionals; and

 

our ability to effectively protect our intellectual property.

 

Our inability to successfully obtain clearance or approval for and subsequently commercialize our INVU platform or related products and services would have a material adverse effect on our business, financial condition, results of operations and prospects.

 

Our commercial success will depend upon attaining significant market acceptance of our INVU platform among expectant mothers, care providers, payers and others in the medical community. If we are unable to successfully achieve substantial market acceptance and adoption of our INVU platform, our business, financial condition and results of operations would be harmed.

 

Our commercial success will depend in large part on the acceptance of our INVU platform by expectant mothers, care providers, payers and others in the medical community as safe for both an expectant mother and her unborn baby, useful and cost-effective. We cannot predict how quickly, if at all, care providers, such as obstetrician-physician practice management groups, hospitals and healthcare systems, and payers will accept our INVU platform. These participants may not readily accept our INVU platform over current standard of care obtained within healthcare facilities or competing products or alternatives in the near term or at all. Additionally, expectant mothers may prefer the current standard of care, including in-office visits during which they have the in-person attention of a medical professional. Further, some expectant mothers may be unwilling to use our INVU platform given that it represents new technology without a significant history of use and results. Care providers, or value analysis committees at their hospitals, as well as third-party payers, may also perceive our products to be too costly, or may believe that the benefits of our INVU platform and results from clinical trials, such as relative ease of use, are not sufficiently greater than other alternatives to justify our INVU platform’s pricing. This perception may continue to be heightened due to any budgetary and financial constraints faced by care providers, including hospitals and other facilities. Moreover, the medical community may be unwilling to depart from the current standard of care for pregnancy monitoring and pregnancy care management. Medical professionals tend to be slow to change their medical diagnostic practices because of perceived liability risks arising from the use of new technology or products, and they may not recommend our INVU platform or other products integrated with our technology until there is long-term clinical evidence to convince them to alter or modify their existing pregnancy monitoring methods. The use of wearable technology, artificial intelligence, machine learning and other technology-based platforms to provide pregnancy monitoring and care management is a recent phenomenon, and therefore, our INVU platform may not become broadly accepted by physicians, patients, hospitals and others in the medical community, even if it is approved by the appropriate regulatory authorities for marketing and sale. Our efforts to educate expectant mothers, care providers, payers and others in the medical community on the benefits of our INVU platform require significant resources and may not be successful. Our efforts to educate the marketplace may require more resources than are required by conventional technologies marketed by our competitors. Moreover, in the event that our INVU platform or other products integrated with our technology are the subject of guidelines, clinical studies or scientific publications that are unfavorable or damaging, or otherwise call into question its benefits. Our ability to grow sales of our INVU platform and drive market acceptance will depend on successfully educating expectant mothers, care providers, such as obstetrician-physician practice management groups, payers and others in the medical community of the relative benefits of our INVU platform and its cost-effectiveness.

 

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The degree of market acceptance by both care providers and expectant mothers of our INVU platform will depend on a number of additional factors, including:

 

regulatory requirements regarding product labeling or product inserts;

 

limitations or warnings contained in the labeling cleared or approved by the FDA or other regulatory authorities;

 

the existence of current in-person monitoring for expectant mothers, including that certain expectant mothers may prefer in-person care by a medical professional;

 

coverage determinations and reimbursement levels of third party payers;

 

pricing and cost of our INVU platform in relation to alternative products and methods;

 

timing of market introduction of competing products and the sales and marketing initiatives of such products;

 

the access to, ease of use, stability of device performance and error rate of our INVU platform by both care providers and expectant mothers relative to alternative products and methods;

 

the willingness and ability of expectant mothers to adopt new technology, including its perceived safety and ease of use;
   
our ability to provide incremental clinical and economic data that show the safety, clinical efficacy and cost-effectiveness of, and benefits from, our INVU platform; and

 

the effectiveness of our sales and marketing efforts for our INVU platform.

 

If we are unable to successfully achieve substantial market acceptance and adoption of our INVU platform, our business, financial condition and results of operations would be harmed. Even if our INVU platform achieves market acceptance, it may not maintain that market acceptance over time if competing products or technologies, which are more cost effective or received more favorably, are introduced. Failure to achieve or maintain market acceptance or market share would limit our ability to generate revenue and would significantly harm our business, financial condition and results of operations.

 

We currently have a limited sales and marketing organization. If we are unable to develop our sales and marketing capability on our own or through collaborations with marketing partners, we will not be successful in commercializing our INVU platform.

 

Currently, our sales and marketing team consists of our VP Marketing, Product Specialist and our business development team in Israel and, as a result, we have no meaningful marketing and sales capabilities. We intend to sell our INVU platform primarily to and through our implementers in the near term, and ultimately through third-party payers. We also intend to utilize the data we capture to make predictive recommendations and monetize these capabilities. However, we may not be successful in doing so. To the extent that we enter into co-promotion or other licensing arrangements, our INVU platform revenue is likely to be lower than if we directly marketed or sold our INVU platform. In addition, any revenue we receive will depend in whole or in part upon the efforts of such third parties, which may not be successful and are generally not within our control. If we are unable to enter into such arrangements on acceptable terms or at all, we may not be able to successfully commercialize our INVU platform. If we are not successful in commercializing our INVU platform, either on our own or through collaborations with one or more third parties, our future revenue will suffer and we may incur significant additional losses.

 

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The success of our business may be dependent on our strategic partnerships and collaborations.

 

Strategic relationships with our implementers and validators are and will be important to the success of our business. See “Business—Business Overview—Sales and Marketing.” We anticipate deriving a significant portion of revenues in the near term from our implementers, which are provider partners with an installed base of clinicians that understand how to prescribe and use our INVU platform for the expectant mothers they care for. We currently have over a dozen enterprise-level agreements, and our future success depends on our ability to enter into such agreements with additional implementers. Our prospects also depend on our validators to build robust clinical evidence based on our already developed INVU platform, as well as research experts, mainly academic centers, to analyze our data signals and help determine predictive markers through such data. Our strategic partners may have the right to abandon the use of our INVU platform and terminate applicable agreements, including payment obligations, prior to or upon the expiration of the agreed-upon agreement terms. We may not be successful in establishing strategic partnerships or collaborative arrangements on acceptable terms or at all, our collaborative partners may terminate any such agreements prior to their stated terms, our collaborative arrangements may not result in successful product development, validation or commercialization and we may not derive any revenues from such arrangements. If we do not successfully develop and maintain strategic partnerships or collaborative arrangements, our business, financial condition and results of operations would be materially and adversely affected.

 

Any strategic partnerships or collaborative arrangements that we have established or may establish in the future may not be successful or we may otherwise not realize the anticipated benefits from these strategic partnerships or collaborations. We do not control third parties with whom we have or may have strategic partnerships or collaborative arrangements, and we will rely on them to achieve results which may be significant to us. In addition, any current or future strategic partnerships or collaborative arrangements may place the development and commercialization of our technology outside our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us.

 

We have entered into certain, and expect to enter into additional, strategic partnerships or collaborative arrangements with respect to the development, validation and commercialization of our INVU platform with different relevant industry participants, including our implementers and validators. Any future potential strategic partnerships or collaborative arrangements may require us to rely on external consultants, advisors and experts for assistance in several key functions, including research and development, manufacturing, regulatory, intellectual property, commercialization and distribution. We cannot and will not control these third parties, but we may rely on them to achieve results, which may be significant to us. Relying upon these strategic partnerships or collaborative arrangements subjects us to a number of risks, including:

 

we may not be able to control the amount and timing of resources that our partners or collaborators may devote to our technology;

 

should a partner or collaborator fail to comply with applicable laws, rules or regulations when performing services for us, we could be held liable for such violations;

 

we may be required to relinquish important rights, such as marketing and distribution rights, including the ability to distribute to hospital networks without Philips in accordance with the exclusivity terms set by the Philips MPA, pursuant to meeting certain sales targets;

 

business combinations or significant changes in a partner or collaborator’s business strategy may adversely affect such person’s willingness or ability to complete its obligations under any arrangement;

 

our partners or collaborators may default on their payments to us or fail to deliver standby letters of credit or financial guarantees, and it may be time consuming and difficult to enforce such payment obligations and obligations to provide standby letters of credit and financial guarantees in various jurisdictions, and we may be unsuccessful in enforcing such obligations;

 

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our current or future partners or collaborators may utilize our proprietary information in a way that could expose us to competitive harm;

 

our partners or collaborators could obtain ownership or other control over intellectual property that is material to our business, or we may be required to jointly own certain of our intellectual property with such third parties; and

 

strategic partnerships or collaborative arrangements are often terminated or allowed to expire or remain unformalized by a written agreement, which could delay the ability to commercialize our technology.

 

In addition, if disputes arise between us and any of our partners or collaborators, it could result in the delay or termination of the development, validation or commercialization of products containing our technology, lead to protracted and costly legal proceedings, or cause partners or collaborators to act in their own interest, which may not be in our interest. As a result, the strategic partnerships or collaborative arrangements that we have entered into or may enter into may not achieve their intended goals.

 

If any of these scenarios materialize, they could have a material adverse effect on our business, financial condition, results of operations and prospects.

 

The audited consolidated financial statements for the year ended December 31, 2023, include an explanatory paragraph in our independent registered public accounting firm’s audit report stating that there are conditions that raise substantial doubt about our ability to continue as a going concern, and we will need to obtain additional financing to fund our future operations and continue as a going concern. If we are unable to obtain such financing, we may be unable to complete the development and commercialization of our INVU platform.

 

Our operations have consumed substantial amounts of cash since inception. Our net losses were $33.655 million, $20.679 million and $34.512 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, our primary sources of liquidity were cash and cash equivalents totaling $0.6 million. We anticipate that our future cash requirements will continue to be significant. As a result of the above, in connection with our assessment of going concern considerations performed in connection with the audit for the year ended December 31, 2023, management has determined that our liquidity condition raises substantial doubt about our ability to continue as a going concern through twelve months from the date those audited consolidated financial statements are available to be issued. As discussed in the “Management’s Discussion and Analysis—Liquidity and Capital Resources—Funding Requirements,” without the proceeds from this offering, or an alternative financing, the availability of which, on commercially reasonable terms, if at all, there can be no guarantee, we only anticipate having funds to operate the business through August 2024, assuming utilization in full of the authorized capacity under the Bridge Financing. Additionally, the opinion of our independent registered accountants on our audited financial statements included in this prospectus contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our ability to continue operations as a going concern will depend on, among other things, our ability to obtain funding through equity and/or debt financing, potential partnership arrangements, sale of products, as well as our ability to manage our expenses. While we believe our strategies will generate funding that will be sufficient to continue as a going concern, if these strategies are unsuccessful, then we may need to realize assets and extinguish liabilities other than in the ordinary course of business and at amounts different to those disclosed in our financial statements. Our financial statements do not contain any adjustments to the amounts or classifications of recorded assets or liabilities that might be necessary if we do not continue as a going concern. The financial statements take no account of the consequences, if any, of the effects of unsuccessful product development or commercialization, nor of any inability of our company to obtain adequate funding in the future. We expect that we will need to obtain additional financing to implement our business plan as described in this prospectus. Such financing could include equity financing, which may be dilutive to shareholders, or debt financing, which would likely restrict our ability to borrow from other sources. In addition, such securities may contain rights, preferences or privileges senior to those of the rights of our current shareholders. Additional funds may not be available when we need them, on terms attractive to us, or at all. If adequate funds are not available on a timely basis, we may be required to curtail the development of our INVU platform and related products or services, or materially delay, curtail, reduce or terminate our research and development and commercialization activities. We could be forced to sell or dispose of our rights or assets. Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, financial condition, results of operation and prospects, including the possibility that a lack of funds could cause our business to fail and liquidate with little or no return to investors.

 

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The manufacturing and supply of our INVU platform is subject to various factors outside our direct control, including those related to our dependence on third-party manufacturers and suppliers, which could harm our business, financial condition and results of operations.

 

In 2019, we began a hybrid production process, involving both in-house assembly of our wearable wireless sensor band and the use of sub-contractors for the supply and production of the component elements. In 2021, we started to fully outsource our manufacturing operation for our first production batch to Flextronics Medical Sales and Marketing, Ltd., a company located in Israel, and we currently anticipate continuing to do so for all future production batches. Pursuant to our manufacturing plan, our printed circuit boards, or PCBs, are manufactured in China and Israel and fabricated in China, acoustic sensors are sourced from Japan, reusable ECG sensors are sourced from China and accessories are sourced from Israel and the United States. The products are then shipped to Israel where they are assembled into a complete sensor band. Accessories are added in the United States and the product is packaged and ready for delivery to the expectant mother. While the foregoing manufacturing and supplier relationships are adequate for our current operations, our successful growth will require that we either expand our existing manufacturing and supplier relationships or enter into new relationships, which we may not be able to do on a commercially reasonable basis or at all. We do not have significant experience with scalable manufacturing, and we expect to remain dependent for the foreseeable future on third parties. Given our dependence on third-party manufacturers and suppliers, we are subject to additional risks relating to these third parties, including: insufficient capacity or delays in meeting our demand (including due to any problems with our third-party manufacturers’ and suppliers’ respective supply chains); inadequate manufacturing yields, inferior quality and excessive costs; inability to manufacture products that meet the agreed upon specifications; inability to obtain an adequate supply of materials; inability to comply with the relevant regulatory requirements for the manufacturing process; limited warranties on products supplied to us; inability or failure to comply with our contractual obligations; potential increases in prices; and increased exposure to potential misappropriation of our intellectual property. Additionally, we currently do not have immediate contingency arrangements if one of our primary suppliers or manufacturers became unable to meet our product demand, including, without limitation, due to international shipping delays, whether due to trade embargo issues, weather-related delays or otherwise.

 

The manufacture and supply of our INVU platform, both in-house and by our third-party manufacturing and supply partners, in compliance with ISO standards and the FDA’s regulations requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. We and our third-party manufacturers and suppliers may encounter difficulties in production, including difficulties with production costs and yields, quality control, quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced FDA requirements, other federal and state regulatory requirements, as well as foreign regulations. If we fail to manufacture our INVU platform in compliance with ISO standards and the FDA’s regulations, or if the manufacturing facilities suffer disruptions, machine failures, slowdowns or disrepair, we may not be able to fulfill customer demand and our business would be harmed. Further, we do not expect to maintain excess product inventory on hand and intend to manufacture our INVU platform using near term demand forecasts and customer orders. As a result, deviations from our forecasts or large unexpected customer orders may result in delays in fulfilling customer orders, which would cause customer dissatisfaction and may harm our reputation. Finally, failure to comply with local laws, regulations and standards, in the countries in which our manufacturing facilities are located, which may be outside of our control, may subject us to legal and regulatory scrutiny, proceedings and penalties from such outside authorities.

 

A majority of our software development team is based in Ukraine and our business could be harmed if political instability or military conflict disrupts our team’s ability to operate.

 

In February 2022, Russia invaded Ukraine and global sanctions were announced by the U.S., European Union, Japan and additional countries against Russia, which caused disruptions in the energy, metal and other commodities supply chain and increased costs. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

 

We are actively monitoring the situation in Ukraine and will continue to assess any impact it may have on our business. We have a team of software engineers based in Ukraine that are responsible for a portion of our engineering and software development initiatives. If this team’s operations were disrupted or discontinued due to local instability or political, economic or military conditions, then our ability to provide services to some of our current customers and the development of new products or enhancement of existing products could be delayed, and our results of operations could be adversely affected. While the conflict in Ukraine has not yet had any material impact on our business to date, there is no way of predicting the progress or outcome of the conflict as it continues to rapidly develop and is out of our control.

 

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Holdco will incur increased costs as a result of operating as a public company.

 

As a public company, Holdco will incur significant legal, accounting and other expenses that Nuvo did not incur as a private company. As a public company, Holdco is subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Holdco’s management and other personnel need to devote a substantial amount of time to these compliance initiatives and may not effectively or efficiently manage the transition into a public company. Moreover, Holdco expects these rules and regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. For example, such rules and regulations may make it more difficult and expensive for Holdco to obtain director and officer liability insurance and Holdco may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. Holdco cannot predict or estimate the amount or timing of additional costs it may incur to respond to these requirements. The impact of these requirements could also make it more difficult for Holdco to attract and retain qualified persons to serve on the Holdco Board, its Board committees or as executive officers.

 

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies in the United States. The additional demands associated with being a public company may disrupt regular operations of Holdco’s business by diverting the attention of some of its senior management team away from revenue producing activities to management and administrative oversight, adversely affecting Holdco’s ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing its businesses. Holdco’s management team may not successfully or efficiently manage its transition to being a public company subject to significant regulatory oversight and reporting obligations under the U.S. federal securities law and the continuous scrutiny of securities analysts and investors.

 

In addition, the public reporting obligations associated with being a public company in the United States may subject Holdco to litigation as a result of increased scrutiny of its financial reporting. If Holdco is involved in litigation regarding its public reporting obligations, this could subject Holdco to substantial costs, divert resources and management attention from Holdco’s business and seriously undermine Holdco’s business.

 

Any of these effects could harm Holdco’s business, financial condition and results of operations.

 

Our business is subject to the risks associated with doing business in China.

 

As a result of our reliance on third-party suppliers located in China, our results of operations, financial condition, and prospects are subject to a certain degree to economic, political and legal developments in China, including government control over capital investments or changes in tax regulations that are applicable to us. China’s economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate and control of foreign exchange, and allocation of resources. Since we rely on certain suppliers located in China for certain parts, our business is subject to the risks associated with doing business in China, including:

 

trade protections measures, such as tariff increases, and import and export licensing and control requirements;

 

potentially negative consequences from changes in tax laws;

 

difficulties associated with the Chinese legal system, including increased costs and uncertainties associated with enforcing contractual obligations in China;

 

historically lower protection of intellectual property rights;

 

changes and volatility in currency exchange rates; and

 

unexpected or unfavorable changes in regulatory requirements.

 

The United States and China historically had a complex relationship that has included actions that have impacted trade between the two countries and globally. If trade relations with the United States were to result in trade restrictions, if social or political unrest were to disrupt business in China, or if other events in China significantly reduced or disrupted business activities in China, that may materially and adversely harm our business.

 

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If we fail to grow or optimize our sales and marketing capabilities and develop widespread brand awareness cost-effectively, our growth will be impeded and our business may suffer.

 

We intend to commercialize our INVU platform and grow brand awareness, commencing in the United States, by establishing a network of implementers and validators, and strategically working with distribution partners such as Philips. We may also expand our presence in international territories in the future, with the goal of becoming a global leader in pregnancy solutions from the first days of pregnancy onward. We plan to take a measured approach to expand and optimize our sales infrastructure to grow our customer base and our business. In developing a U.S. team, identifying and recruiting qualified personnel and training them on the use of our INVU platform, on applicable federal and state laws and regulations and on our internal policies and procedures, will require significant time, expense and attention. It may take significant time before our sales representatives are fully trained and productive. In particular, if we are unable to hire, develop and retain talented sales personnel or if new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, we may not be able to realize the expected benefits of this investment or increase our revenue. Our business may be harmed if our efforts to expand either fail to generate a corresponding increase in revenue or otherwise result in a decrease in our operating margin.

 

We plan to dedicate significant financial and other resources to our marketing programs, particularly as we grow our sales territories, which may require us to incur significant upfront costs, such as in connection with care provider training seminars and sessions and relevant content generation and promotion.

 

In addition, we believe that developing and maintaining awareness of our INVU platform and the impact it has on providers, patients, and payers in a cost-effective manner is critical to achieving broad acceptance of our INVU platform and attracting new provider groups and expectant mothers. Brand promotion activities, such as advertising, social media and other communication channels, may not generate awareness or increase revenue and, even if they do, any increase in revenue may not offset the costs and expenses we incur in building our brand. If we fail to successfully promote, maintain and protect our brand, we may fail to attract or retain the care providers and expectant mothers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread brand awareness that is critical for broad customer adoption of our INVU platform.

 

We plan to do business globally, including in certain countries in which we may have limited resources and would be subject to additional regulatory burdens and other risks and uncertainties.

 

We expect to do business globally, currently including North America and certain countries in Europe. Commercialization of our INVU platform in foreign markets, either directly or through third parties, is subject to additional risks and uncertainties, including:

 

reimbursement and insurance coverage;

 

our inability to find strategic partners, dealers or distributors in specific countries or regions;

 

our inability to directly control commercial activities of third parties;

 

our limited resources to be deployed to a specific jurisdiction;

 

the burden of complying with complex and changing regulatory, tax, accounting and legal requirements;

 

different clinical practice and customs in foreign countries affecting acceptance of our INVU platform in the marketplace;

 

import or export licensing and other requirements;

 

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longer accounts receivable collection times;

 

longer lead times for shipping;

 

language barriers for technical training;

 

reduced protection of intellectual property rights in some foreign countries;

 

foreign currency exchange rate fluctuations; and

 

interpretations of contractual provisions governed by foreign laws in the event of a contract dispute.

 

Specifically, we are or may be subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act 2010, the Proceeds of Crime Act 2002, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 1977, the Israeli Prohibition on Money Laundering Law–2000 and possibly other anti-bribery and anti-money laundering laws in countries outside of the United States in which we conduct our activities. As we engage in business in certain countries, we and our agents and independent contractors may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We may be held liable for the corrupt or other illegal activities of these third-party business partners and intermediaries, our employees, representatives, contractors, partners and agents, even if we do not explicitly authorize such activities. As we expand our international business, our risks under these laws may increase, including that we may become subject to government actions against, fines, penalties and resultant reputational harm, any of which could have a material adverse effect on our business, financial position and results of operations.

 

We are highly dependent on our senior management team and key personnel, as well as other employees, and our business could be harmed if we are unable to attract and retain personnel necessary for our success.

 

We are highly dependent on our senior management team and directors and key personnel (many of whom are seasoned medical device professionals with a wide array of experience, such as women’s health, medical technology and healthcare), as well as other employees. Our success will depend on our ability to retain senior management and to attract and retain qualified personnel in the future, including sales and marketing professionals, engineers and other highly skilled personnel and to integrate current and additional personnel in all departments. The loss of members of our senior management, sales and marketing professionals and engineers as well as contract employees at our manufacturing facilities could result in delays in product development and harm our business. If we are not successful in attracting and retaining highly qualified personnel, it would have a negative impact on our business, financial condition and results of operations. At the end of February 2024, we experienced a substantial change in our management team, with the departure of our current Chief Executive Officer, Kelly Londy, who accepted a leading position at a non-competitive multinational healthcare company. Ms. Londy remains involved with Nuvo as a member of Nuvo’s Strategic Advisory Council. While Robert Powell, a member of our board of directors with extensive experience in the healthcare industry, assumed the role of Chief Executive Officer and while we believe we will continue to have a strong experienced leadership team, leadership changes can be inherently difficult to manage and may cause disruption to our business. Our business may be disrupted if we cannot successfully integrate our new Chief Executive Officer or we lose the services of any other members of senior management team and directors and key personnel.

 

Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all. Despite our efforts to retain valuable employees, members of our management and development teams may terminate their employment with us on short notice.

 

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Our industry is highly competitive and is subject to technological change, which may result in new products or solutions that are superior to our INVU platform or other future products we may bring to market from time to time. If we are unable to anticipate or keep pace with changes in the marketplace and the direction of technological innovation and customer demands, our technology may become less useful or obsolete and our operating results will suffer.

 

The pregnancy monitoring and management industry is rapidly evolving and subject to intense and increasing competition. To compete successfully and to be able to establish and maintain a competitive position in current and future technologies, we will need to demonstrate the advantages of our technology, specifically our INVU platform, over currently well-established alternative solutions, such as conventional in-person monitoring at an obstetrician’s office, in a hospital or at another healthcare facility. There are currently a number of existing monitoring devices that strive to provide rich and robust data, all of which are also limited to use within healthcare facilities. These include Monica Healthcare, now part of General Electric, Nemo Healthcare and Philips Avalon CL, and their respective competitive technologies and devices all have received regulatory approval for the intrapartum period for singleton pregnancies at healthcare facilities by medical professionals. There are also devices that seek to provide distributed care and generally work remotely, such as Sense4Baby, Pregnabit, Bloom, and Heramed. Furthermore, as the market expands, we expect the entry of additional competitors, such as cloud computing companies or leading IT companies, who may have longer operating histories, more extensive international operations, greater name recognition, and substantially greater technical, marketing and financial resources. If our technology is not, or our future products or services are not, competitive based on these or other factors, our business would be harmed.

 

Under applicable employment and anti-competition laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees.

 

We generally enter into non-competition agreements with our employees. These agreements prohibit our employees from competing directly with us or working for our competitors or customers for a limited period after they cease working for us. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefiting from the expertise that our former employees or consultants developed while working for us. For example, in Israel, where most of our employees are based, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the protection of a company’s trade secrets or other proprietary knowhow, and thus non-competition agreements with employees are generally unenforceable after termination of employment.

 

Environmental, social and corporate governance (“ESG”) issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.

 

There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet regulatory requirements or investor, customer, consumer, employee or other shareholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, board of directors and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us.

 

Customers, consumers, investors and other shareholders are increasingly focusing on environmental issues, including climate change, energy and water use, plastic waste and other sustainability concerns. Concern over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Changing customer and consumer preferences or increased regulatory requirements may result in increased demands or requirements regarding plastics and packaging materials, including single-use and non-recyclable plastic products and packaging, other components of our products and their environmental impact on sustainability, or increased customer and consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of substances present in certain of our products. Complying with these demands or requirements could cause us to incur additional manufacturing, operating or product development costs.

 

If we do not adapt to or comply with new regulations, including the SEC’s published proposed rules that would require companies to provide significantly expanded climate-related disclosures in their periodic reporting, which may require us to incur significant additional costs to comply and impose increased oversight obligations on our management and board of directors, or fail to meet evolving investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in our Company, we may become subject to penalties, and customers and consumers may choose to stop purchasing our products, if approved for commercialization, which could have a material adverse effect on our reputation, business or financial condition.

 

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Failure to maintain the security and functionality of our information systems, or to defend against or otherwise prevent a cybersecurity attack or data breach, could adversely affect our business, financial position, results of operations and liquidity.

 

We depend on our information technology systems for the efficient functioning of our business, including the manufacture, distribution and maintenance of our INVU platform, as well as for purchasing and inventory management. We also collect, store, use, retain, disclose, transfer and otherwise process a significant amount of confidential, sensitive and personal information from and about the expectant mothers that we care for and our employees, including tax information, health information and payroll data. In addition to internal resources, we rely on third party service providers in providing our services, including to provide continual maintenance and enhancements and security of any protected data. Such third-party service providers have access to confidential, sensitive and personal information about the expectant mothers we care for and employees, and some of these service providers in turn subcontract with other third-party service providers. Through contractual provisions and third-party risk management processes, we take steps to require that our service providers, and their subcontractors, protect our confidential, sensitive and personal information. However, due to the size and complexity of our technology platform and services, the amount of confidential, sensitive and personal information that we store and the number of expectant mothers, employees and third-party service providers with access to confidential, sensitive and personal information, we are vulnerable to a variety of intentional and inadvertent cybersecurity attacks and other security-related incidents and threats, which could result in legal risks, enforcement actions, fines, reputational damages and a material adverse effect on our business, financial position, results of operations and liquidity. Technological interruptions would disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain and otherwise adequately service providers or expectant mothers or disrupt their ability to use our INVU platform.

 

Threats to our information technology systems and data security can take a variety of forms. Hackers may develop and deploy viruses, worms and other malicious software programs that attack our networks and data centers or those of our service providers. Additionally, unauthorized parties may attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our employees or contractors, direct social engineering, phishing, credential stuffing, ransomware, denial or degradation of service attacks and similar types of attacks against any or all of us, the expectant mothers we care for and our service providers. Other threats include inadvertent security breaches or theft, misuse, unauthorized access or other improper actions by our employees, expectant mothers we care for, service providers and other business partners. Cybersecurity attacks and other security-related incidents are increasing in frequency and evolving in nature. Since the beginning of the war between Israel and Hamas which began on October 7, 2023, Israeli and Israeli associated companies have become more frequently the target of cyberattacks. As such, the risk of a cyberattack against our information technology systems and data security may become heightened.

 

We have implemented policy, procedural, technical, physical and administrative controls with the aim of protecting our networks, applications, bank accounts, and the confidential, sensitive and personal information entrusted to us from such threats. However, given the unpredictability of the timing, nature and scope of cybersecurity attacks and other security related incidents, our technology may fail to adequately secure the confidential health information and personally identifiable information we maintain in our databases and security procedures and controls that we or our service providers have implemented may not be sufficient to prevent such incidents from occurring. Furthermore, because the methods of attack and deception change frequently, are increasingly complex and sophisticated, and can originate from a wide variety of sources, including third parties such as service providers and even nation-state actors, it is possible that we may not be able to anticipate, detect, appropriately react and respond to, or implement effective preventative measures against, all cybersecurity attacks and other security-related incidents. As a result, our business, financial condition, results of operations and liquidity could be materially and adversely affected.

 

The occurrence of any actual or attempted cybersecurity attack or other security-related incident or a data breach, the reporting of such incidents, whether accurate or not, or our failure to make adequate or timely disclosures to the public or law enforcement agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could result in liability to the expectant mothers we care for and/or regulators, which could result in significant fines, litigation penalties, orders, sanctions, adverse publicity, litigation or actions against us or our service providers by governmental bodies and other regulatory authorities, expectant mothers we care for or third parties, that could have a material adverse effect on our business, consolidated financial condition, results of operations, cash flows and liquidity. Any such proceeding or action, any related indemnification obligation, even if we are not held liable, and any resulting negative publicity, could harm our business, damage our reputation, force us to incur significant expenses in defense of these proceedings, increase the costs of conducting our business, distract the attention of management or result in the imposition of financial liability.

 

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We may be required to expend significant capital and other resources to protect against the threat of cybersecurity attacks and security breaches or to alleviate problems caused by breaches, including unauthorized access to data regarding expectant mothers and unborn babies and personally identifiable information stored in our information systems, the introduction of computer viruses or other malicious software programs to our systems, cybersecurity attacks, email phishing schemes, network disruption, denial of service attacks, malware and ransomware. A cybersecurity attack or other incident that bypasses our, the expectant mothers we care for or third-party service providers’ information system’s security could cause a security breach that may lead to a material disruption to our information systems infrastructure or business and may involve a significant loss of business or patient health information and other confidential, sensitive or personal information. If a cybersecurity attack or other unauthorized attempt to access our systems or facilities, or those of the expectant mothers we care for or third-party service providers, were to be successful, it could result in the theft, destruction, loss, misappropriation or release of confidential, sensitive or personal information or intellectual property, and could cause operational or business delays that may materially impact our ability to provide various services. Any successful cybersecurity attack or other unauthorized attempt to access our systems or facilities, or those of the expectant mothers we care for or third-party service providers, also could result in negative publicity which could damage our reputation or brand with the expectant mothers we care for, referral sources, payers or other third parties and could subject us to substantial sanctions, fines and damages and other additional civil and criminal penalties under the Health Insurance Portability and Accountability Act, or HIPAA, the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, the HIPAA Omnibus Rule, and other federal and state privacy laws, in addition to litigation with those affected.

 

We and our third-party service providers may become the victims of these types of threats, attacks and security breaches. No security measures, procedures, technology or amount of preparation can provide guaranteed protection from these threats, or ensure that we, the expectant mothers we care for and our third-party service providers will not be victims in the future. Cybersecurity attacks may disrupt, or result in unauthorized access to, our networks, applications and confidential, personal or sensitive data, and those of the expectant mothers we care for or service providers, and successful attacks may occur in the future.

 

Our information systems require an ongoing commitment of significant resources to maintain, protect and enhance our existing systems. As we expand our business, we will need to continue to scale our information technology systems and personnel to support our growth, including the manufacture and supply chain management of our INVU platform. Difficulties with implementing new technology systems, delays in our timeline for planned improvements, significant system failures or our inability to successfully modify our information systems to respond to changes in our business needs may cause disruptions in our business operations and adversely affect our business, financial condition and results of operations. Failure to maintain the security and functionality of our information systems and related software, or to defend a cybersecurity attack or other attempt to gain unauthorized access to our systems, facilities or health information regarding expectant mothers and unborn babies could expose us to a number of adverse consequences, the vast majority of which are not insurable, including but not limited to disruptions in our operations, regulatory and other civil and criminal penalties, fines, investigations and enforcement actions (including, but not limited to, those arising from the SEC, Federal Trade Commission, the HHS Office of Inspector General, or OIG, or State Attorneys General), litigation with those affected by the data breach, loss of expectant mothers wanting to utilize our services, disputes with payers and increased operating expense, which either individually or in the aggregate could have a material adverse effect on our business, financial position, results of operations and liquidity.

 

Our collection, use, storage, disclosure, transfer and other processing of personal information, could give rise to significant costs, liabilities and other risks, including as a result of investigations, inquiries, litigation, fines, legislative and regulatory action and negative press about our privacy and data protection practices, which may harm our business, financial conditions, results of operations and prospects.

 

In the course of our operations, we collect, use, store, disclose, transfer and otherwise process an increasing volume of personal information, including from expectant mothers and their clinicians, customers, partners, candidates and employees, consultants, website visitors, leads and third parties with whom we conduct business. Additionally, our expansion plans for our INVU platform contemplate our collection, use and storage of an increasing amount of personal health data. The collection, use, storage, disclosure, transfer and other processing of personal information is increasingly subject to a wide array of federal, state and foreign laws and regulations regarding data privacy and security, including comprehensive laws of broad application, such as the EU General Data Protection Regulation (EU) 2016/679, or GDPR, which is applicable across all member states of the European Economic Area. The GDPR as transposed into the national laws of the UK (the “UK GDPR”), protects the privacy of personal information collected, used, stored, disclosed, transferred and otherwise processed in or from the governing jurisdiction. Our ability to collect, use, maintain or otherwise process personal data has been, and could be further, restricted by additional laws such as the California Consumer Privacy Act (the “CCPA”) and the Israeli Privacy Protection Law, 1981 and the regulations thereunder, or the Israeli Privacy Law. A current pending amendment to the Israeli Privacy Law, if passed into law, may enhance fines and sanctions for breaching the Israeli Privacy Law and to strengthen the enforcement capacity of the Israeli Privacy Protection Authority.

 

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These laws and regulations generally define personal data to include location data and online identifiers, which are commonly used and collected parameters in digital advertising and, among other things, impose stringent user consent requirements and permit data subjects to request we discontinue using certain data. In addition, some countries are considering or have enacted legislation requiring local storage and processing of data that could increase the cost and complexity of delivering our services.

 

Additionally, the uncertainty created by these laws and regulations can be compounded when services hosted in one jurisdiction are directed at users in another jurisdiction. The GDPR has a wide territorial scope and contains significant penalties for non-compliance. The GDPR, among other things, imposes requirements to provide detailed and transparent disclosures about how personal data is collected and processed, grants rights for data subjects to access, delete or object to the processing of their personal data, provides for mandatory breach notification to supervisory authorities (and in certain cases, affected individuals) of certain data breaches, sets limitations on the retention of personal data and outlines significant documentary requirements to demonstrate compliance through policies, procedures, training and audits. Additionally, supervisory authorities in the member states have some flexibility when implementing European directives and certain aspects of the GDPR, which can lead to diverging national rules. European supervisory authorities have been very active in terms of enforcing data protection rules, including with respect to cookie-related matters. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as means to identify and potentially target individuals, may lead to broader restrictions and impairments on our business and, specifically, online activities.

 

As we seek to expand our business, we are, and may increasingly become, subject to various laws, regulations and standards, as well as contractual obligations, relating to data privacy and security in the jurisdictions in which we operate. When conducting clinical trials, we face risks associated with collecting trial participants’ data, especially health data, in a manner consistent with applicable laws and regulations, such as GCP guidelines or FDA human subject protection regulations. The GDPR/UK GDPR would also increase our obligations with respect to any clinical trials conducted in the EEA/UK, requiring changes to informed consent practices and more detailed notices for clinical trial subjects and investigators. In particular, the processing of ’special category data’ (such as personal data relating to health and genetic information), which will be relevant to our operations in the context of our conduct of clinical trials, imposes heightened compliance burdens under European and UK data protection laws.

 

In many cases, these laws and regulations apply not only to third-party transactions, but also to transfers of information between or among us, any affiliates and other parties with whom we conduct business. These laws, regulations and standards may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may harm our business, financial condition and results of operations. The regulatory framework for data privacy and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.

 

We are subject to diverse laws and regulations relating to data privacy and security. The GDPR/UK GDPR is wide-ranging in scope and imposes numerous, significant and complex requirements on organizations that process personal data, including (without limitation) requirements relating to processing health and other sensitive data, establishing a legal basis for any processing of personal data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, limiting the collection and retention of personal data through ‘data minimization’ and ’storage limitation’ principles, implementing safeguards to protect the security and confidentiality of personal data, honoring increased rights for data subjects, providing notification of data breaches in some instances and taking certain measures when engaging third-party processors.

 

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In the United States, various federal and state regulators have adopted, or are considering adopting, laws and regulations concerning personal information and data security, including HIPAA. This patchwork of legislation and regulation may give rise to conflicts or differing views of personal privacy rights. For example, certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts. Additionally, new privacy rules are being enacted in the United States and globally, and existing ones are being updated and strengthened. For example, the CCPA, which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020. Among other things, the CCPA requires covered companies to provide new disclosures to California consumers and provide such consumers new data protection and privacy rights, including the ability to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. The CCPA was amended in September 2018 and November 2019, and on November 3, 2020, California voters approved a new privacy law, the California Privacy Rights Act, or the CPRA, which significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain personal information and creating a new state agency to oversee implementation and enforcement efforts. Many of the CPRA’s provisions became effective on January 1, 2023. It is possible that further amendments will be enacted, but even in its current form it remains unclear how various provisions of the CCPA will be interpreted and enforced. State laws are changing rapidly and there is discussion in Congress of a new federal data protection and privacy law to which we would become subject if it is enacted. All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time, may require us to modify our data processing practices and policies, divert resources from other initiatives and projects, and could restrict the way products and services involving data are offered, all of which may harm our business, financial condition and results of operations.

 

The GDPR/UK GDPR also imposes strict rules on the transfer of EEA/UK personal data to countries outside the EEA/UK. The GDPR/UK GDPR generally prohibits the transfer of EEA and UK personal data to third countries whose laws do not ensure an adequate level of protection, unless a valid data transfer mechanism has been implemented or an Article 49 GDPR/UK GDPR derogation applies. Recent legal developments in the EEA and UK have created complexity and uncertainty regarding transfers of personal data. On 16 July 2020, the Court of Justice of the European Union issued its judgement in Schrems II, which invalidated the EU-US Privacy Shield as a valid data transfer mechanism. The decision upheld the use of the European Commission Standard Contractual Clauses, or SCCs, as a valid data transfer mechanism, but required organizations to take supplementary measures when relying on the SCCs. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we operate our business and could harm our business, financial condition and results of operations. On June 4, 2021, the European Commission published a new set of modular SCCs. The new SCCs also apply only to the transfer of data outside of the EEA and not the UK. Although the European Commission adopted an adequacy decision for the UK on 28 June 2021, allowing the continued flow of personal data from the EEA to the UK, this decision will be regularly reviewed going forward and may be revoked if the UK diverges from its current adequate data protection laws following its exit from the European Union. In addition, the UK Information Commissioner’s Office, or ICO, has undergone a period of public consultation on its own specific international data transfer agreement. We are monitoring these developments, but we may, in addition to other impacts, experience additional costs associated with increased compliance burdens and be required to engage in new contract negotiations with third parties that aid in processing data on our behalf or localize certain data. We may also experience reluctance or refusal by prospective European customers to use our solutions, and we may find it necessary or desirable to make further changes to our handling of personal data of EEA- and UK-based data subjects. In addition, transfers of personal data outside of the UK are subject to the UK GDPR which restricts and limits our ability to transfer personal data globally.

 

Effective as of July 17, 2023, the EU-U.S. Data Privacy Framework (EU-U.S. DPF), the UK Extension to the EU-U.S. Data Privacy Framework (UK Extension to the EU-U.S. DPF), and the Swiss-U.S. Data Privacy Framework (Swiss-U.S. DPF) were respectively developed in furtherance of transatlantic commerce by the U.S. Department of Commerce and the European Commission, the UK Government, and the Swiss Federal Administration to provide U.S. organizations with reliable mechanisms for personal data transfers to the United States from the European Union European Economic Area, the United Kingdom (and Gibraltar), and Switzerland.

 

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While the DPF meant to enable an easier path for transfers of personal data to the U.S., it includes numerous obligation and complexities and therefore creates liabilities, costs and legal exposure to a U.S. entity that chose to use it as transfer method. Traditionally and repeatedly mechanisms for transferring information to the U.S. have been rejected by the Court of Justice of the European Union and therefore uncertainty surrounds the issue, and it is unclear whether the DPF will last and for how long. This causes uncertainty and may lead to legal and technological expenses.

 

In addition to government regulation, privacy advocates and industry groups have and may in the future propose self-regulatory standards from time to time. These and other industry standards may legally or contractually apply to us, or we may elect to comply with such standards. We expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. New laws, amendments to or re-interpretations of existing laws, regulations, standards and other obligations may require us to incur additional costs and restrict our business operations. Because the interpretation and application of laws, regulations, standards and other obligations relating to data privacy and security are still uncertain, it is possible that these laws, regulations, standards and other obligations may be interpreted and applied in a manner that is inconsistent with our data processing practices and policies or the features of our INVU platform and services. If so, in addition to the possibility of fines, lawsuits, regulatory investigations, public censure, other claims and penalties, and significant costs for remediation and damage to our reputation, we could be materially and adversely affected if legislation or regulations are expanded to require changes in our data processing practices and policies or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively impact our business, financial condition and results of operations. We may be unable to make such changes and modifications in a commercially reasonable manner, or at all. In relation to enforcement under the GDPR/UK GDPR, European and UK data protection laws now also provide for greater penalties for non-compliance than previous data protection laws, including, for example, separate administrative fines ranging from €10 million/£8.7 million to €20 million/£17.5 million or 2% to 4% of global annual revenue of any non-compliant organization for the preceding financial year, whichever is higher. Any inability to adequately address data privacy or security-related concerns, even if unfounded, or to comply with applicable laws, regulations, standards and other obligations relating to data privacy and security, could result in additional cost and liability to us, harm our reputation and brand, damage our relationships with consumers and harm our business, financial condition and results of operations.

 

We make public statements about our use and disclosure of personal information through our privacy policies, information provided on our website and press statements. Although we endeavor to comply with our public statements and documentation, we may at times fail to do so or be alleged to have failed to do so. The publication of our privacy policies and other statements that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices. Furthermore, in the EEA/UK, regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive are highly likely to be replaced in Europe by a regulation known as the ePrivacy Regulation, which will significantly increase fines for non-compliance, noting that the ePrivacy Regulation when it comes into effect will have no bearings on the UK in a post-Brexit world. Recent guidance and case law in the European Union and UK require opt-in, informed consent for the placement of a cookie or similar tracking technologies on a customer’s device and for direct electronic marketing. The GDPR/UK GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or tracking technology. While the text of the ePrivacy Regulation is still under development, recent European case law and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. This could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users, may lead to broader restrictions and impairments on our marketing and personalization activities and may negatively impact our efforts to understand our customers. Any concerns about our data privacy and security practices, even if unfounded, could damage the reputation of our business and harm our business, financial condition and results of operations.

 

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Complying with these numerous, complex and often changing regulations is expensive and difficult. Any failure or perceived failure by us or our service providers to comply with our posted privacy policies or with any applicable federal, state or similar foreign laws, regulations, standards, certifications or orders relating to data privacy, security or consumer protection, or any compromise of security that results in the theft, unauthorized access, acquisition, use, disclosure or misappropriation of personal information or other user data, could result in significant fines or penalties, negative publicity or proceedings or litigation by governmental agencies or consumers, including class action privacy litigation in certain jurisdictions, which would subject us to significant awards, penalties or judgments, one or all of which could require us to change our business practices or increase our costs and could materially and adversely affect our business, financial condition and results of operations. In addition, if our practices are not consistent, or viewed as not consistent, with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may also become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, criminal or civil sanctions, all of which may harm our business, financial condition and results of operations.

 

Navigating the rapidly changing landscape of data protection and privacy regulations is both challenging and costly. Failure to comply with such regulations, whether in our practices or those of our service providers, can lead to substantial fines, legal action, and negative publicity. As the regulatory environment constantly evolves, especially with emerging technologies like artificial intelligence and machine learning, adhering to these laws can restrict our operations, expose us to legal risks, and take compliance costs. Additionally, inconsistencies with legal requirements may trigger audits, investigations, and sanctions, all of which could significantly impact our business, finances, and operations.

 

We could become subject to product liability claims, product recalls, and warranty claims that could be expensive, divert management’s attention and harm our business reputation and financial results.

 

Our business exposes us to potential liability risks that are inherent in the marketing and sale of products used in healthcare. We may be held liable if our INVU platform or if any other product that integrates our technology causes injury or death or is found otherwise unsafe or unsuitable during usage, including misuse by the user or by care providers, whether or not such use is consistent with our products’ instructions. Additionally, while our INVU platform is currently cleared to measure FHR, MHR and MUA during the antepartum period, and as a result, offer NSTs, we plan to significantly expand our INVU platform’s permitted uses; and the added complexity may expose us to additional potential liability, including if our INVU platform provides incorrect data that leads to missed complications, false positives or negatives or other reported results that are inconsistent with otherwise accurate readings. Our INVU platform incorporates sophisticated components and computer software. Complex software can contain errors, particularly when first introduced. In addition, new products or enhancements may contain undetected errors or performance problems that, despite testing, are discovered only after installation. Patients could allege or possibly prove defects of our INVU platform or other products that integrate our technology. Additionally, disruptions in access to or availability of the cloud-based services on which our INVU platform will rely, whether due to service interruptions, cyberattacks or other reasons, could result in product liability issues, including as a result of the failure of our INVU platform to timely provide results to healthcare professionals.

 

A product liability claim, regardless of its merit or eventual outcome, could result in significant legal defense costs and divert management’s attention. Regardless of merit or eventual outcome, liability claims may result in:

 

decreased demand for our INVU platform;

 

injury to our reputation;

 

costs of related litigation;

 

substantial monetary awards to patients and others;

 

loss of revenue; and

 

the inability to commercialize future products.

 

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Any of these outcomes may have an adverse effect on our business, financial condition and results of operations, and may increase the volatility of our share price.

 

The coverage limits of our insurance policies we may choose to purchase to cover related risks may not be sufficient to cover future claims. If sales of our INVU platform or other products integrating our technology increase or we suffer future product liability claims, we may be unable to maintain product liability insurance at satisfactory rates or with adequate amounts or at all. A product liability claim, any product recalls or excessive warranty claims, whether arising from defects in design or manufacture or otherwise, could negatively affect our sales or require a change in the design or manufacturing process, any of which could harm our relationship with our customers and partners, and have a material adverse impact on our reputation and business, financial condition, results of operations and prospects.

 

In addition, if our INVU platform or other products integrating our technology are defective, we, our future customers or partners may be required to notify regulatory authorities and/or to recall the products. Any recall would divert management’s attention and financial resources and harm our reputation with customers, patients, medical professionals and third-party payers. A recall involving our INVU platform would be particularly harmful to our business. The adverse publicity resulting from any of these actions could adversely affect the perception of our customers or partners. These investigations or recalls, especially if accompanied by unfavorable publicity, could result in our incurring substantial costs, losing revenues and damaging our reputation, each of which would harm our business, financial condition, results of operations and prospects.

 

Our INVU platform is not yet approved for third-party payer coverage or reimbursement. If in the future we are approved for and are otherwise able to commercialize it, but are unable to obtain adequate reimbursement or insurance coverage from third-party payers, we may not be able to generate significant revenue, in which case we may need to obtain additional financing.

 

Our INVU platform is not yet approved for third-party payer coverage or reimbursement. Coding and coverage determinations as well as reimbursement levels and conditions are important to the commercial success of our INVU platform. The future availability of insurance coverage and reimbursement for newly approved medical devices is highly uncertain, and our future business will be greatly impacted by the level of reimbursement provided by third-party payers. In the United States, third-party payers decide which products and services they will cover, how much they will pay and whether they will continue reimbursement. Third-party payers may not cover or provide adequate reimbursement for our INVU platform or the related services, assuming we are able to fully develop and obtain all regulatory approvals and clearances to market it in the United States or other geographies. Accordingly, unless government and other third-party payers provide coverage and reimbursement for our services, patients and healthcare providers may choose not to use them, which would cause investors to lose their entire investment. A primary trend in the United States healthcare industry and elsewhere is cost containment. Government authorities and other third-party payers have attempted to control costs by limiting coverage and the amount of reimbursement for particular products and services. Reimbursement may not be available, or continue to be available, for our INVU platform, other products or systems using our technology or any other products we may develop in the future, or even if reimbursement is available, such reimbursement may not be adequate. We also will be subject to foreign reimbursement policies in the international markets we expect to enter. Decisions by health insurers or other third-party payers in these markets not to cover, or to discontinue reimbursing, our INVU platform could materially and adversely affect our business. If such decisions are made, they could also have a negative impact on our ability to generate revenues, in which case we may need to obtain additional financing.

 

Any default under Nuvo’s Bridge Financing Notes could have significant consequences.

 

The Bridge Financing Notes are secured by Nuvo’s intellectual property, evidenced by collateral assignments/financing statements Nuvo has filed with the United States Patent & Trademark Offices and is in the process of filing with Nuvo’s Registrar in Israel. The Bridge Financing Notes contain certain covenants, including regarding the payment of interest thereon, use of proceeds, and conduct of business, as well as representations and warranties made to the holders of such notes.

 

Nuvo’s ability to comply with these covenants in the Bridge Financing Notes may be affected by events beyond its control, including prevailing economic, financial and industry conditions. The breach of any of these covenants could result in an event of default, which would permit the holders of the Bridge Financing Notes to declare all outstanding debt to be due and payable, together with accrued and unpaid interest. If Nuvo is unable to repay the accelerated amounts, the holders of the Bridge Financing Notes could proceed against the collateral granted to them to secure such debt. If the payment of Bridge Financing Notes is accelerated, Nuvo’s assets may be insufficient to repay such debt in full, which could result in its insolvency. Any default by Nuvo under the Bridge Financing Notes could have a material adverse effect on its business, financial condition and results of operations.

 

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Risks Related to Government Regulation and Our Industry

 

We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations may, directly or indirectly, reduce our revenue, adversely affect our results of operations and financial condition and harm our business.

 

The health care industry is highly regulated, and the regulatory environment in which we operate may change significantly and adversely to us in the future. Areas of the regulatory environment that may affect our ability to conduct business include, without limitation:

 

federal and state laws applicable to medical device ordering, documentation of medical devices ordered, billing practices and claims payment and/or regulatory agencies enforcing those laws and regulations, including state licensing laws;

 

federal and state fraud and abuse laws;

 

federal and state laws applicable to pre-clinical and clinical human subject trials;

 

coverage and reimbursement levels by Medicare, Medicaid, other governmental payers and private insurers;

 

restrictions on coverage of, and reimbursement for, medical devices;

 

federal and state Occupational Safety and Health Administration rules and regulations; and

 

HIPAA, and similar state data privacy laws.

 

If we fail to comply with U.S. federal and state fraud and abuse and other healthcare laws and regulations, including those relating to kickbacks and false claims for reimbursement, we could face substantial penalties and our business operations and financial condition could be harmed.

 

Healthcare providers play a primary role in the distribution, recommendation, ordering and purchasing of any medical device for which we have or obtain marketing clearance or approval. Through our arrangements with healthcare professionals and customers, we are exposed to broadly applicable anti-fraud and abuse, anti-kickback, false claims and other healthcare laws and regulations that may constrain our business, our arrangements and relationships with customers, and how we market, sell and distribute our marketed medical device. We have a compliance program, code of conduct and associated policies and procedures, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent noncompliance may not be effective in protecting us from governmental investigations for failure to comply with applicable fraud and abuse or other healthcare laws and regulations.

 

In the United States, we are subject to various state and federal anti-fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and federal False Claims Act, or the FCA. There are similar laws in other countries. Our relationships with physicians, other health care professionals and hospitals, and obstetrician physician practice management groups are subject to scrutiny under these laws.

 

The laws that may affect our ability to operate include, among others:

 

The federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willingly soliciting, offering, receiving or paying remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual, or the purchase, order or recommendation of, items or services for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. The term “remuneration” has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of the law or a specific intent to violate. In addition, the government may assert that a claim, including items or services resulting from a violation of the Anti-Kickback Statute, constitutes a false or fraudulent claim for purposes of the FCA. There are a number of statutory exceptions and regulatory safe harbors protecting certain business arrangements from prosecution under the Anti-Kickback Statute; however, those exceptions and safe harbors are drawn narrowly, and there may be limited or no exception or safe harbor for many common business activities. Certain common business activities including, certain reimbursement support programs, educational and research grants or charitable donations, and practices that involve remuneration to those who prescribe, purchase or recommend medical devices, including discounts, providing items or services for free or engaging such individuals as consultants, advisors or speakers, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor and would be subject to a facts and circumstances analysis to determine compliance with the Anti-Kickback Statute. Our business may not in all cases meet all of the criteria for statutory exception or regulatory safe harbor protection from anti-kickback liability;

 

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Federal, civil and criminal false claims laws, including the FCA, and civil monetary penalties laws, which prohibit, among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds and knowingly making, using or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government. A claim including items or services resulting from a violation of the Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. Actions under the FCA may be brought by the government or as a qui tam action by a private individual in the name of the government. These individuals, sometimes known as “relators” or, more commonly, as “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. Many medical device manufacturers have been investigated and have reached substantial financial settlements with the federal government under the FCA for a variety of alleged improper activities, including causing false claims to be submitted as a result of the marketing of their products for unapproved and thus non-reimbursable uses and interactions with prescribers and other customers, including those that may have affected their billing or coding practices and submission of claims to the federal government. FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory monetary penalties for each false or fraudulent claim or statement. Because of the potential for large monetary exposure, healthcare and medical device companies often resolve allegations without admissions of liability for significant and material amounts to avoid the uncertainty of treble damages and per claim penalties that may be awarded in litigation proceedings;

 

HIPAA, which imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payers, or knowingly and willfully falsifying, concealing or covering up a material fact or making a materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services;

 

HIPAA, as amended by the HITECH Act, and their implementing regulations, also impose obligations, including mandatory contractual terms, on covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, as well as their business associates and their covered subcontractors that perform certain services for them or on their behalf involving the use or disclosure of individually identifiable health information with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

 

The federal Physician Payments Sunshine Act, also known as Open Payments, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually, with certain exceptions to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other “transfers of value” made to physicians, defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists and certified nurse-midwives; and

 

Analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require medical device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, which are state laws that require medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

 

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State and federal regulatory and enforcement agencies continue to actively investigate violations of healthcare laws and regulations, and the U.S. Congress continues to strengthen the arsenal of enforcement tools. Most recently, the Bipartisan Budget Act of 2018, or the BBA, increased the criminal and civil penalties that can be imposed for violating certain federal health care laws, including the Anti-Kickback Statute. Enforcement agencies also continue to pursue novel theories of liability under these laws. In particular, government agencies have increased regulatory scrutiny and enforcement activity with respect to manufacturer reimbursement support activities and patient support programs, including bringing criminal charges or civil enforcement actions under the Anti-Kickback Statute, federal FCA and HIPAA’s healthcare fraud and privacy provisions.

 

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under such laws, it is possible that some of our business activities, including certain sales and marketing practices of our INVU platform, and financial arrangements with physicians, other healthcare providers, and other customers, could be subject to challenge under one or more such laws. If an arrangement were deemed to violate the Anti-Kickback Statute, it may also subject us to violations under other fraud and abuse laws such as the federal FCA and civil monetary penalties laws. Moreover, such arrangements could be found to violate comparable state fraud and abuse laws.

 

Achieving and sustaining compliance with applicable federal and state anti-fraud and abuse laws may prove costly. If we, our employees or our contractors are found to have violated any of the above laws we may be subjected to substantial criminal, civil and administrative penalties, including imprisonment, exclusion from participation in federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties, forfeiture, disgorgement and damages, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. Any action or investigation against us for the violation of these healthcare fraud and abuse laws, even if successfully defended, could result in significant legal expenses and could divert our management’s attention from the operation of our business. Companies settling federal FCA, Anti-Kickback Statute or civil monetary penalties law cases also may be required to enter into a Corporate Integrity Agreement with the OIG, in order to avoid exclusion from participation (such as loss of coverage for their products) in federal healthcare programs such as Medicare and Medicaid. Corporate Integrity Agreements typically impose substantial costs on companies to ensure compliance. Defending against any such actions can be costly, time-consuming and may require significant personnel resources, and may harm our business, financial condition and results of operations.

 

In addition, the medical device industry’s relationship with physicians is under increasing scrutiny by the OIG, the U.S. Department of Justice, or the DOJ, the state attorney generals and other foreign and domestic government agencies. Our failure to comply with requirements governing the industry’s relationships with physicians or an investigation into our compliance by the OIG, the DOJ, state attorney generals and other government agencies, could harm our business, financial condition and results of operations.

 

Our employees, independent contractors, consultants, commercial partners and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could harm our business, financial condition and results of operations.

 

We are exposed to the risk that our employees, independent contractors, consultants, commercial partners, suppliers and distributors may engage in fraudulent or illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to us that violates: (i) the rules and regulations of the FDA and other similar foreign regulatory bodies, including those laws requiring the reporting of true, complete and accurate information to such regulators; (ii) manufacturing standards; (iii) healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws; or (iv) laws that require the true, complete and accurate reporting of financial information or data. These laws may impact, among other things, future sales, marketing and education programs. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commissions, certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.

 

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We have adopted a code of conduct, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant fines or other sanctions, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, imprisonment, additional integrity reporting and oversight obligations, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and curtailment of operations, any of which could adversely affect our ability to operate our business and our results of operations. Whether or not we are successful in defending against any such actions or investigations, we could incur substantial costs, including legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations, which could harm our business, financial condition and results of operations.

 

Regulatory compliance is expensive, complex and uncertain, and a failure to comply could lead to enforcement actions against us and other negative consequences for our business.

 

The FDA and similar agencies regulate our INVU platform as a medical device. Complying with these regulations is costly, time-consuming, complex and uncertain. For instance, before a new medical device, or a new intended use for, an existing device can be marketed in the United States, a company must first submit and receive either a 510(k) clearance, de novo authorization or approval of a PMA from the FDA, unless an exemption applies. FDA regulations and regulations of similar agencies are wide-ranging and include, among other things, oversight of:

 

product design, development, manufacturing (including suppliers) and testing;

 

laboratory, preclinical and clinical studies;

 

product safety and effectiveness;

 

product labeling;

 

product storage and shipping;

 

record keeping;

 

pre-market clearance or approval;

 

marketing, advertising and promotion;

 

product sales and distribution;

 

product changes;

 

product recalls; and

 

post-market surveillance and reporting of deaths or serious injuries and certain malfunctions.

 

Our INVU platform is subject to extensive regulation by the FDA and non-U.S. regulatory agencies. Further, improvements of our INVU platform and any potential new products will be subject to extensive regulation and will likely require permission from regulatory agencies and ethics boards to conduct clinical trials and clearance or approval from the FDA and non-U.S. regulatory agencies prior to commercial sale and distribution. Failure to comply with applicable U.S. requirements regarding, for example, promoting, manufacturing or labeling our INVU platform may subject us to a variety of administrative or judicial actions and sanctions, such as Form 483 observations, warning letters, untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution. Any enforcement action by the FDA and other comparable non-U.S. regulatory agencies could harm our business, financial condition and results of operations.

 

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Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any of the following actions:

 

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

 

unanticipated expenditures to address or defend such actions;

 

customer notifications for repair, replacement or refunds;

 

recall, detention or seizure of our INVU platform;

 

operating restrictions or partial suspension or total shutdown or production;

 

refusing or delaying our requests for 510(k) clearance or PMA of new products or modified products;

 

operating restrictions;

 

withdrawing 510(k) clearances or PMAs that have already been granted;

 

refusal to grant export approval for our INVU platform; or

 

criminal prosecution.

 

If any of these events were to occur, it would have a negative impact on our business, financial condition and results of operations.

 

The FDA also regulates the advertising and promotion of our INVU platform to ensure that the claims we make are consistent with our regulatory clearances and approvals, that there are adequate and reasonable data to substantiate the claims and that our promotional labeling and advertising is neither false nor misleading in any respect. If the FDA determines that any of our advertising or promotional claims are misleading, not substantiated or not permissible, we may be subject to enforcement actions, including warning letters, and we may be required to revise our promotional claims and make other corrections or restitutions.

 

Our medical device operations are subject to pervasive and continuing FDA regulatory requirements, and failure to comply with these requirements could harm our business, financial condition and results of operations.

 

Medical devices regulated by the FDA are subject to “general controls” which include: registration with the FDA; listing commercially distributed products with the FDA; complying with GMPs under QSR; filing reports with the FDA of, and keeping records relative to certain types of adverse events associated with devices under the medical device reporting regulation; assuring that device labeling complies with device labeling requirements; reporting certain device field removals and corrections to the FDA; and obtaining pre-market notification 510(k) clearance for devices prior to marketing. Some devices known as “510(k)-exempt” devices can be marketed without prior marketing-clearance or approval from the FDA. The current indications for use and the passive nature of our platform and hardware classifies our product as a Class II product, although future services or tools may subject our product to different classifications or regulatory pathways.

 

The medical device industry is now experiencing greater scrutiny and regulation by federal, state and foreign governmental authorities. Companies in our industry are subject to more frequent and more intensive reviews and investigations, often involving the marketing, business practices and product quality management. Such reviews and investigations may result in civil and criminal proceedings; the imposition of substantial fines and penalties; the receipt of warning letters, untitled letters, demands for recalls or the seizure of our INVU platform; the requirement to enter into corporate integrity agreements, stipulated judgments or other administrative remedies; and result in our incurring substantial unanticipated costs and the diversion of key personnel and management’s attention from their regular duties, any of which may harm our business, financial condition and results of operations, and may result in greater and continuing governmental scrutiny of our business in the future.

 

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Additionally, federal, state and foreign governments and entities have enacted laws and issued regulations and other standards requiring increased visibility and transparency of our interactions with healthcare providers. For example, Open Payments requires us to annually report to CMS payments and other transfers of value to all U.S. physicians and U.S. teaching hospitals, with the reported information made publicly available on a searchable website. Failure to comply with these legal and regulatory requirements could impact our business, and we have had and will continue to spend substantial time and financial resources to develop and implement enhanced structures, policies, systems and processes to comply with these legal and regulatory requirements, which could harm our business, financial condition and results of operations.

 

Material modifications to our INVU platform may require new 510(k) clearances or pre-market approvals or may require us to recall or cease marketing our INVU platform until clearances or approvals are obtained, which could harm our business, financial condition and results of operations.

 

Modifications that could significantly affect the safety and effectiveness of our approved or cleared products, such as changes to the intended use or technological characteristics of our INVU platform, will require new 510(k) clearances or PMAs or require us to recall or cease marketing the modified device until these clearances or approvals are obtained. Based on FDA published guidelines, the FDA requires device manufacturers to initially make and document a determination of whether or not a modification requires a new approval, supplemental approval or clearance; however, the FDA can review a manufacturer’s decision. Any modification to an FDA-cleared device that could significantly affect its safety or efficacy or that would constitute a major change in its intended use may require a new 510(k) clearance or possibly a PMA. We may not be able to obtain additional 510(k) clearances or PMAs for new products or for modifications to, or additional indications for, our INVU platform in a timely fashion, or at all. Delays in obtaining required future clearances or approvals could adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our future growth. For example, the FDA may request additional or new clinical studies to prove safety or efficacy. We may make additional modifications to our INVU platform in the future which could require additional clearances or approvals. If the FDA requires new clearances or approvals for these modifications, we may be required to recall and to stop selling or marketing such product as modified, which could harm our operating results and require us to redesign such product. In these circumstances, we may be subject to significant enforcement actions. The FDA may also change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may impact our ability to modify our currently approved or cleared products on a timely basis. Any of these actions could harm our business, financial condition and results of operations.

 

There is no guarantee that regulatory agencies will approve our CE mark application or that the FDA will approve a de novo classification application, grant 510(k) clearance or pre-market approval of any material modifications to our INVU platform or for future products and failure to obtain necessary clearances or approvals would adversely affect our ability to grow our business.

 

In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, in order to clear the proposed device for marketing. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence. In the de novo classification process, the FDA may classify a novel medical device as Class I or Class II if no predicate device is legally on the market.

 

The FDA’s de novo classification process generally takes six months from submission, but may take longer. The FDA’s 510(k) clearance process usually takes between three to 12 months from submission, but may last longer. The process of obtaining PMA approval is much more rigorous, costly, lengthy and uncertain than the 510(k) clearance process. It generally takes one to three years, or even longer, from the time the PMA is submitted to the FDA until an approval is obtained. In the PMA approval process, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not limited to, technical, pre-clinical, clinical trial, manufacturing and labeling data. Any delay or failure to obtain necessary regulatory approvals or clearances would have a material adverse effect on our business, financial condition and prospects.

 

The FDA can delay, limit or deny clearance or approval of a device for many reasons, including:

 

our inability to demonstrate to the satisfaction of the FDA that our INVU platform is safe or effective for its intended uses;

 

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the FDA may request additional information following the receipt of a de novo classification application;

 

the FDA may reject a de novo application upon identification of a legally marketed predicate device and require submission of a 510(k) clearance;

 

our inability to establish substantial equivalence with a predicate device;

 

the disagreement of the FDA with the design, conduct or implementation of our clinical trials or the analysis or interpretation of data from pre-clinical studies or clinical trials;

 

serious and unexpected adverse device effects experienced by participants in our clinical trials;

 

the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required;

 

our inability to demonstrate that the clinical and other benefits of the device outweigh the risks;

 

an advisory committee, if convened by the FDA, may recommend against approval of our PMA or other application or may recommend that the FDA require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions, or even if an advisory committee, if convened, makes a favorable recommendation, the FDA may still not approve the product;

 

the FDA may identify deficiencies in our marketing application, and in our manufacturing processes, facilities or analytical methods or those of our third-party contract manufacturers;

 

the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval; and

 

the FDA or foreign regulatory authorities may audit our clinical trial data and conclude that the data is not sufficiently reliable to support a PMA application.

 

Additionally, we have not obtained additional regulatory approval of our INVU platform or any of our other products outside of the United States and Israel and have not taken steps to do so, other than with respect to filing for a CE mark in Europe in March 2023 to offer NSTs using our INVU platform for monitoring FHR, MHR and MUA capabilities. Approval of a CE mark for our INVU platform is not guaranteed. If we are unable to obtain approval for any medical device for which we plan to seek approval, our business may be harmed.

 

Although we have obtained regulatory clearance in the United States through MHR and FHR physiological measurements, as well as measuring MUA, and as a result, offering NSTs, and we have similarly obtained certification from the Medical Device Division, or AMAR, of the Ministry of Health in Israel, they will remain subject to extensive regulatory scrutiny. If regulatory sanctions are applied or if regulatory clearance or approval is withdrawn, it would harm our business, financial condition and results of operations.

 

Although we have obtained regulatory clearance in the United States through MHR and FHR physiological measurements, as well as measuring MUA, and as a result, offering NSTs, and we have similarly obtained certification from the AMAR in Israel, our INVU platform will be subject to ongoing regulatory requirements for manufacturing, distributing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies and submission of safety, effectiveness and other post-market information, including both federal and state requirements in the United States and requirements of comparable non-U.S. regulatory authorities.

 

Our manufacturing facilities are required to comply with extensive requirements imposed by the FDA and comparable foreign regulatory authorities, including ensuring that quality control and manufacturing procedures conform to the QSR or similar regulations set by foreign regulatory authorities. As such, we will be subject to continual review and inspections to assess compliance with the QSR and adherence to commitments made in any 510(k), de novo classification, or PMA application. Accordingly, we continue to spend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

 

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Any regulatory clearances or approvals that we have received for our INVU platform will be subject to limitations on the cleared or approved indicated uses for which the product may be marketed and promoted, will be subject to the conditions of approval, or will contain requirements for potentially costly post-marketing testing. We are required to report certain adverse events and production problems, if any, to the FDA and comparable foreign regulatory authorities. Any new legislation addressing product safety issues could result in increased costs to ensure compliance. The FDA and other agencies, including the DOJ, closely regulate and monitor the post-clearance or approval marketing and promotion of products to ensure that they are marketed and distributed only for the cleared or approved indications and in accordance with the provisions of the cleared or approved labeling. We have to comply with requirements concerning advertising and promotion for our INVU platform.

 

Promotional communications with respect to devices are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the products’ cleared or approved labeling. As such, we may not promote our products for indications or uses for which they do not have clearance or approval. For certain changes to a cleared or approved product, including certain changes to product labeling, the holder of a cleared 510(k), de novo classification or approved PMA application may be required to submit a new application and obtain clearance or approval. We train our marketing and sales force against promoting our products for uses outside of the cleared or approved indications for use, known as off-label uses. However, physicians or healthcare providers may use our products for off-label purposes and are allowed to do so when in the physician’s independent professional medical judgment he or she deems it appropriate. If the FDA determines that our promotional materials or training constitute promotion of an off-label or other improper use, or that our internal policies and procedures are inadequate to prevent such off-label uses, it could subject us to regulatory or enforcement actions as discussed below.

 

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with our facilities where the product is manufactured or disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions on that product or on us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

 

subject our facilities to an adverse inspectional finding or Form 483, or other compliance or enforcement notice, communication or correspondence;

 

issue warning or untitled letters that would result in adverse publicity or may require corrective advertising;

 

impose civil or criminal penalties;

 

suspend or withdraw regulatory clearances or approvals;

 

refuse to clear or approve pending applications or supplements to approved applications submitted by us;

 

impose restrictions on our operations, including closing our suppliers’ facilities;

 

seize or detain products; or

 

require a product recall.

 

In addition, violations of the Federal Food, Drug and Cosmetic Act, relating to the promotion of approved products may lead to investigations alleging violations of federal and state healthcare fraud and abuse and other laws, as well as state consumer protection laws.

 

Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and negatively impact our ability to commercialize and generate revenue from our INVU platform. If regulatory sanctions are applied or if regulatory clearance or approval is withdrawn, it would harm our business, financial condition and results of operations.

 

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If we or our suppliers fail to comply with the FDA’s QSR, or any applicable state equivalent, our operations could be interrupted and our potential product sales and operating results could suffer.

 

Our manufacturing processes and those of our third-party suppliers are required to comply with the FDA’s QSR, which covers the design controls, document controls, purchasing controls, identification and traceability, production and process controls, acceptance activities, nonconforming product requirements, corrective and preventive action requirements, labeling and packaging controls, handling, storage, distribution and installation requirements, complaint handling, records requirements, servicing requirements and statistical techniques potentially applicable to the production of our medical device product. In addition, we must engage in extensive recordkeeping and reporting and must make available our manufacturing facilities and records for periodic announced or unannounced inspections by governmental agencies, including the FDA, state authorities and comparable agencies in other countries. If we experience an unsuccessful Quality System inspection, our operations could be disrupted and our manufacturing could be interrupted. Failure to take adequate corrective action in response to an adverse Quality System inspection could result in, among other things, a shut-down of our manufacturing operations, significant fines, suspension of marketing clearances and approvals, seizures or recalls of our device, operating restrictions and criminal prosecutions, any of which would cause our business to suffer. Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with applicable regulatory requirements, which may result in manufacturing delays for our INVU platform and cause our revenue to decline. We have registered with the FDA as a medical device manufacturer. We anticipate that we and certain of our third-party component suppliers will be subject to FDA and local regulatory inspections.

 

We or our suppliers may not be able to continue to remain in compliance with QSR. If any manufacturer’s facilities in the United States were found to be in noncompliance or fail to take satisfactory corrective action in response to adverse QSR inspectional findings, the FDA could take legal or regulatory enforcement actions against us and/or our products, including, but not limited to, the cessation of sales or the recall of our products, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands. We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits. Taking corrective action may be expensive, time-consuming and a distraction for management, and if we experience a shutdown or delay at our manufacturing facilities, we may be unable to produce our products, which would harm our business.

 

Current regulations depend heavily on administrative interpretation. If the FDA does not believe that we are in compliance with applicable FDA regulations, the agency could take legal or regulatory enforcement actions against us and/or our products. We are also subject to periodic inspections and audits by the FDA and other governmental regulatory agencies, as well as certain third-party regulatory groups. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical study or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business. Future interpretations made by the FDA or other regulatory bodies made during the course of these inspections or audits may vary from current interpretations and may adversely affect our business and prospects. The FDA’s and other comparable non-U.S. regulatory agencies’ statutes, regulations, policies or interpretations may change, and additional government regulation or statutes may be enacted, which could increase post-approval regulatory requirements, or delay, suspend or prevent marketing of any cleared or approved products or necessitate the recall of distributed products. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.

 

The medical device industry has been under heightened FDA scrutiny as the subject of government investigations and enforcement actions. If our operations and activities are found to be in violation of any FDA laws or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and other legal and/or agency enforcement actions. Any penalties, damages, fines or curtailment or restructuring of our operations or activities could harm our ability to operate our business and our financial results. The risk of us being found in violation of FDA law or regulations is increased by the fact that many of these laws and regulations are broad and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend ourselves against that action and its underlying allegations, could cause us to incur significant legal expenses and divert management’s attention from the operation of our business. Where there is a dispute with a federal or state governmental agency that cannot be resolved to the mutual satisfaction of all relevant parties, we may determine that the costs, both real and contingent, are not justified by the commercial returns to us from maintaining the dispute or the product.

 

Various claims, design features or performance characteristics of our medical device that we may regard as permitted by the FDA without marketing clearance or approval may be challenged by the FDA or state or foreign regulators. The FDA or state or foreign regulatory authorities may find that certain claims, design features or performance characteristics, in order to be made or included in the product, may have to be supported by further studies and marketing clearances or approvals, which could be lengthy, costly and possibly unobtainable.

 

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Our INVU platform and wearable wireless sensor band may cause or contribute to adverse medical events or be subject to failures or malfunctions that we are required to report to the FDA, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations. The discovery of serious safety issues with our wearable wireless sensor band, or a recall of our wearable wireless sensor band either voluntarily or at the direction of the FDA or another governmental authority could have a negative impact on us.

 

We are subject to the FDA’s medical device reporting regulations and similar foreign regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the product. If we fail to comply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearance or approval, seizure of our products or delay in clearance or approval of future products.

 

The FDA and foreign regulatory bodies have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health. The FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found. A government-mandated or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects, labeling or design deficiencies, packaging defects or other deficiencies or failures to comply with applicable regulations. Product defects or other errors may occur in the future.

 

Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new clearances or approvals for the device before we may market or distribute the corrected device. Seeking such clearances or approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.

 

Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, it could require us to report those actions as recalls and we may be subject to enforcement action. A future recall announcement could harm our reputation with customers, potentially lead to product liability claims against us and negatively affect our sales. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, will distract management from operating our business and may harm our reputation and financial results.

 

Our products may in the future be subject to product recalls that could harm our reputation, business and financial results.

 

Medical devices can experience performance problems in the field that require review and possible corrective action. The occurrence of component failures, manufacturing errors, software errors, design defects or labeling inadequacies affecting a medical device could lead to a government-mandated or voluntary recall by the device manufacturer, in particular when such deficiencies may endanger health. The FDA requires that certain classifications of recalls be reported to the FDA within 10 working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls in the future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls. Product recalls may divert management attention and financial resources, expose us to product liability or other claims, harm our reputation with customers and adversely impact our business, financial condition and results of operations.

 

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Legislative or regulatory reforms may make it more difficult and costly for us to obtain regulatory clearance or approval of any future products and to manufacture, market and distribute our products after clearance or approval is obtained.

 

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay approval or clearance of our future products under development or impact our ability to modify our currently cleared products on a timely basis. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of planned or future products. It is impossible to predict whether legislative changes will be enacted or FDA regulations, guidance or interpretations changed, and what the impact of such changes, if any, may be.

 

FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more difficult to obtain clearance or approval for, manufacture, market or distribute our products. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require: additional testing prior to obtaining clearance or approval; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record keeping.

 

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be promulgated that could prevent, limit or delay regulatory clearance or approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. For example, a change in administration may impact our business and industry.

 

Any change in the laws or regulations that govern the clearance and approval processes relating to our current, planned and future products could make it more difficult and costly to obtain clearance or approval for new products or to produce, market and distribute existing products. Significant delays in receiving clearance or approval or the failure to receive clearance or approval for any new products would have an adverse effect on our ability to expand our business. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing clearance that we may have obtained and we may not achieve or sustain profitability.

 

From time to time, we engage outside parties to perform services related to certain of our clinical studies and trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to complete our clinical studies and may incur significant additional costs.

 

From time to time, we engage consultants to help design, monitor and analyze the results of certain of our clinical studies and trials. The consultants we engage interact with clinical investigators to enroll patients in our clinical trials. We depend on these consultants and clinical investigators to conduct clinical studies and trials and monitor and analyze data from these studies and trials under the investigational plan and protocol for the study or trial and in compliance with applicable regulations and standards, such as the FDA’s Good Clinical Practice, or GCP, guidelines and FDA human subject protection regulations. We may face delays in completing our clinical studies if these parties do not perform their obligations in a timely, compliant or competent manner. If these third parties do not successfully carry out their duties or meet expected deadlines, or if the quality, completeness or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical trial protocols or for other reasons, our clinical studies or trials may be extended, delayed or terminated or may otherwise prove to be unsuccessful, and we may have to conduct additional studies, which would significantly increase our costs.

 

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Healthcare reform initiatives and other administrative and legislative proposals may harm our business, financial condition, results of operations and cash flows in our key markets.

 

There have been and continue to be proposals by the federal government, state and local governments, regulators and third-party payers to control or manage the increased costs of healthcare and, more generally, to reform the U.S. healthcare system. Certain of these proposals could limit the prices we are able to charge for our INVU platform or the coverage and reimbursement available for our products and could limit the acceptance and availability of our products. The adoption of proposals to control costs could harm our business, financial condition and results of operations.

 

There likely will continue to be legislative and regulatory proposals at the federal, state and local levels directed at containing or lowering the cost of healthcare, particularly in light of recent elections. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of federal, state and local governments, insurance companies, managed care organizations and other payers of healthcare services to contain or reduce costs of healthcare may harm:

 

our ability to set a price that we believe is fair for our product;

 

our ability to generate revenue and achieve or maintain profitability; and

 

the availability of capital.

 

Further, heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, has resulted in several U.S. Congressional inquiries and proposed and enacted federal legislation designed to bring transparency to product pricing and reduce the cost of products and services under government healthcare programs. Additionally, individual states in the United States have also increasingly passed legislation and implemented regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures. Moreover, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what products to purchase and which suppliers will be included in their healthcare programs. Adoption of price controls and other cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures may prevent or limit our ability to generate revenue and attain profitability.

 

Various new healthcare reform proposals are emerging at the federal and state level. Any new federal, state or local healthcare initiatives that may be adopted could limit the amounts that federal, state or local governments will pay for healthcare products and services, and could harm our business, financial condition and results of operations.

 

Clinical trials may be delayed, suspended or terminated for many reasons, which will increase our expenses and delay the time it takes to expand our evidence base for our products.

 

We plan to continue to develop and execute clinical studies for our INVU platform. We may experience delays in ongoing or future clinical studies, and we do not know whether future clinical studies will begin on time, need to be redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all. The commencement and completion of clinical trials for future products or indications may be delayed, suspended or terminated as a result of many factors, including:

 

the delay or refusal of regulators or Institutional Review Boards, or IRBs, to authorize us to commence a clinical trial at a prospective trial site;

 

changes in regulatory requirements, policies and guidelines;

 

delays or failure to reach agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

 

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delays in patient enrollment and variability in the number and types of patients available for clinical trials;

 

the inability to enroll a sufficient number of patients in trials to observe statistically significant treatment effects in the trial;

 

having clinical sites deviate from the trial protocol or dropping out of a trial;

 

safety or tolerability concerns that could cause us to suspend or terminate a trial if we find that participants are being exposed to unacceptable health risks;

 

regulators or IRBs require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or safety concerns, among others;

 

lower than anticipated retention rates of patients and volunteers in clinical trials;

 

our CROs or clinical trial sites failing to comply with regulatory requirements or meet their contractual obligations to use in a timely manner, or at all, deviating from the protocol or dropping out of a trial;

 

delays relating to adding new clinical trial sites; and

 

exceeding budgeted costs due to difficulty in accurately predicting costs associated with clinical trials.

 

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or the ethics committees of institutions at which such trials are being conducted, by the Data Safety Monitoring Board for such trial or by the FDA or other regulatory authorities. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements, including GCP regulations, or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues, failure to demonstrate safety and effectiveness, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

 

In addition, we may encounter delays if the FDA concludes that our financial relationships with investigators result in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical trial site or the utility of the clinical trial itself. Principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time. If these relationships and any related compensation to or ownership interest by the clinical investigator carrying out the study result in perceived or actual conflicts of interest, or if the FDA concludes that the financial relationship may have affected interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA. Any such delay or rejection could prevent us from expanding the evidence base for our INVU platform and may harm future sales growth of our products.

 

The results of our clinical trials may not support our INVU platform claims or may result in the discovery of adverse side effects.

 

The results of our future clinical trials may not support our development plans for our INVU platform and the FDA may not agree with our conclusions regarding the results of our trials. Success in pre-clinical studies and early clinical trials does not ensure that later clinical trials will be successful, and later trials may not replicate the results of prior trials and pre-clinical studies. The clinical trial process may fail to demonstrate that our INVU platform is safe and effective for the proposed indicated uses, which could cause us to abandon development of our INVU platform and may delay development of other product candidates. Any delay or termination of our clinical trials will delay the filing of our product submissions and, ultimately, our ability to commercialize our INVU platform and generate revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the future product’s profile.

 

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Risks Related to Israeli Law and Our Operations in Israel

 

Conditions in Israel, including the ongoing war between Israel and Hamas, and other conflicts in the region, may adversely affect our business, our results of operations and our ability to raise additional funds.

 

We are incorporated under the laws of the State of Israel, and many of our employees, including certain management members, operate from our offices that are located in Tel Aviv, Israel. In addition, a number of our officers and directors are residents of Israel. Accordingly, our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.

 

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks.

 

The intensity and duration of Israel’s current war against Hamas is difficult to predict, as are such war’s economic implications on the Company’s business and operations and on Israel’s economy in general. These events may be intertwined with wider macroeconomic indications of a deterioration of Israel’s economic standing, which may have a material adverse effect on the Company and its ability to effectively conduct its operations, for instance, a downgrade in Israel’s credit rating by rating agencies (such as a recent downgrade by Moody’s of its credit rating of Israel from A1 to A2, as well as the downgrade of its outlook rating from “stable” to “negative” and the S&P Global lowered its long-term credit rating from AA- to A+, as well as a downgrade of its short-term credit ratings from A-1+ to A-1, with an outlook on the long-term ratings “negative”).

 

In connection with the Israeli security cabinet’s declaration of war against Hamas and possible hostilities with other organizations, several hundred thousand Israeli military reservists were drafted to perform immediate military service. Certain of our employees and consultants in Israel, in addition to employees of our service providers located in Israel, have been called, and additional employees may be called, for service in the current or future wars or other armed conflicts with Hamas and others, and such persons may be absent for an extended period of time. As a result, our operations may be disrupted by such absences, which disruption may materially and adversely affect our business and results of operations. Additionally, the absence of employees of our Israeli suppliers and contract manufacturers due to their military service in the current or future wars or other armed conflicts may disrupt their operations, which in turn may materially and adversely affect our ability to deliver or provide products and services to customers.

 

Following the attack by Hamas on Israel’s southern border, Hezbollah in Lebanon also launched missile, rocket, drone and shooting attacks against Israeli military sites, troops and Israeli towns in northern Israel. In response to these attacked, the Israeli army has carried out a number of targeted strikes on sites belonging to Hezbollah in Lebanon and Syria. Recently, Iran has directly joined the hostilities against Israel by firing hundreds of drones, ballistic missiles and guided missiles to Israel, causing further uncertainty in the region. While currently no damages were registered in Israel from such attack, the situation is developing and could lead to additional wars in the Middle East. It is possible that other terrorist organizations, including Palestinian military organizations in the West Bank, as well as other hostile countries, will join the hostilities. Such hostilities may include terror and missile attacks. In the event that our facilities are damaged as a result of hostile actions, or hostilities otherwise disrupt our ongoing operations, our ability to deliver or provide products and services in a timely manner to meet our contractual obligations towards customers and vendors could be materially and adversely affected. Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of certain direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that such government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.

 

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In addition, some countries around the world restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the region continue or increase. These restrictions may limit materially our ability to sell our products and provide our services to companies and customers in these countries. In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods and services. Such efforts, particularly if they become more widespread, may materially and adversely impact our ability to sell and provide our products and services outside of Israel.

 

Furthermore, following Hamas’ attack on Israel and Israel’s security cabinet declaration of war against Hamas, the Houthi movement, which controls parts of Yemen, launched a number of attacks on marine vessels traversing the Red Sea, which marine vessels were thought to either be in route towards Israel or to be partly owned by Israeli businessmen. The Red Sea is a vital maritime route for international trade traveling to or from Israel. As a result of such disruptions, we may experience in the future delays in supplier deliveries, extended lead times, and increased cost of freight, increased insurance costs, purchased materials and manufacturing labor costs. The risk of ongoing supply disruptions may further result in delayed deliveries of our products.

 

Prior to the Hamas attack in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest. In response to such initiative, many individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or transact business in Israel, as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in security markets and other changes in macroeconomic conditions. The risk of such negative developments has increased in light of the recent Hamas attacks and the war against Hamas declared by Israel, regardless of the proposed changes to the judicial system and the related debate. To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors

 

It may be difficult to enforce a U.S. judgment against us, and our officers and directors, in Israel or the United States, or to assert U.S. securities law claims in Israel or serve process on our officers and directors.

 

Not all of our directors or officers are residents of the United States and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S. directors and executive officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities law in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities law. Israeli courts may refuse to hear a claim based on a violation of U.S. securities law against us or our non-U.S. officers and directors because Israel may not be the most appropriate forum 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 proved as a fact, 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 addressing the matters described above. Under certain circumstances, Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.

 

Moreover, an Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought.

 

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We have received Israeli government grants for certain research and development activities. The terms of those grants require us to satisfy specified conditions as defined in Israel’s Encouragement of Research, Development and Technological Innovation in Industry Law, 5744-1984, or Innovation Law. Such grants will restrict the transfer or license of know-how, and may restrict the transfer of manufacturing or manufacturing rights of certain products, technologies or know-how outside of Israel, without the prior approval of the IIA.

 

Our research and development efforts were financed, in part, through grants from the Israel Innovation Authority, or IIA. From our inception, we conducted projects with the IIA’s support and received from the IIA grants totaling, as of December 31, 2023, approximately $1.164 million. The grants received from the IIA before June 30, 2017, in the amount of approximately $1,030,00 bear an annual interest rate that applied at the time of the approval of the applicable file and such interest will apply to all the funding received under that approval. The grant received from the IIA after June 30, 2017, in the amount of approximately $81,417 bear an annual interest rate based on the 12-month London Interbank Offered Rate, or LIBOR until December 31, 2023, and as of January 1, 2024, bear an annual interest rate based on the 12-month Secured Overnight Financing Rate, or the SOFR, or in an alternative publication by the Bank of Israel, with the addition of 0.71%.

 

Pursuant to the Innovation Law and the regulations thereunder, we will be required to return the grants by a payment of royalties at a rate of 3% to 5% on sales proceeds from our products that we developed under IIA programs up to the total amount of grants received, linked to the U.S. dollar and bearing interest rate at SOFR, applicable to U.S. dollar deposits, as published on the first Business Day of each calendar year.

 

Even after full repayment of the grants received, the Innovation Law requires, inter alia, that the products developed as part of the programs under which the grants were given be manufactured in Israel and restricts the ability to transfer know-how funded by the IIA outside of Israel. Transfer of IIA-funded know-how outside of Israel requires prior approval and is subject to payment of a redemption fee to the IIA calculated according to a formula provided under the Innovation Law. A transfer for the purpose of the Innovation Law is generally interpreted very broadly and includes, inter alia, any actual sale of the IIA-funded know-how, any license to manufacture or develop the IIA-funded know-how or the products resulting from such IIA-funded know-how or any other transaction, which, in essence, constitutes a transfer of IIA-funded know-how. We cannot be certain that any approval of the IIA will be obtained on terms that are acceptable to us, or at all. We may not receive the required approvals should we wish to transfer IIA-funded know-how and/or development outside of Israel in the future.

 

Subject to prior approval of the IIA, we may transfer the IIA-funded know-how to another Israeli company. If the IIA-funded know-how is transferred to another Israeli entity, the transfer would still require IIA approval but will not be subject to the payment of the redemption fee. In such case, the Israeli acquiring company would have to assume all of the applicable restrictions and obligations towards the IIA (including the restrictions on the transfer of know-how and manufacturing capacity, to the extent applicable, outside of Israel) as a condition to IIA approval.

 

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.

 

A significant portion of our intellectual property has been developed by our employees in the course of their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee in the course and as a result of or arising from his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights. The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties Committee (the “Committee”), a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for his or her inventions. 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. Further, the Committee has not yet determined one specific formula for calculating this remuneration, but rather uses the criteria specified in the Patent Law. Although we generally enter into assignment-of-invention agreements with our employees pursuant to which such individuals waive their right to remuneration for service inventions, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, 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.

 

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Exchange rate fluctuations between the U.S. dollar, Euro and the New Israeli Shekel currencies may negatively affect our earnings.

 

Our functional currency is the U.S. dollar. We incur expenses in U.S. dollars, Euros and NIS. As a result, we are exposed to the risks that the Euro and the NIS may depreciate relative to the U.S. dollar, or, if either the Euro and the NIS devalue relative to the U.S. dollar, that the inflation rate in the EU and in Israel may exceed such rate of devaluation of the Euro and the NIS, or that the timing of such devaluation may lag behind inflation in the EU and in Israel. In any such event, the Euro-denominated cost of our operations in the EU and our NIS denominated costs of our operations in Israel would increase and our U.S. dollar-denominated results of operations would be adversely affected. The average exchange rate for the year ended December 31, 2023 was $1.00 = Euro 0.924 and $1.00 = NIS 3.687. We cannot predict any future trends in the rate of inflation in the EU and in the United States or the rate of devaluation, if any, of either the Euro or the U.S. dollar against the NIS.

 

If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition and results of operations could be adversely affected. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure, which could adversely affect our financial condition and results of operations.

 

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 canceled and we could be required to refund any benefits we might already have enjoyed, including interest and linkage difference, 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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Risks Related to Our Intellectual Property

 

If we are unable to obtain and maintain patent or other intellectual property protection for any product we develop or for our technology, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize any product we may develop, and our technology, may be harmed.

 

As with other medical device companies, our success depends in large part on our ability to obtain, maintain and solidify a proprietary position for our product, which will depend upon our success in obtaining effective patent protection in the United States and other countries that cover, and other intellectual property with respect to, such product, its manufacturing processes and its intended methods of use and enforcing those patent claims once granted, as well as our other intellectual property. In some cases, we may not be able to obtain issued claims covering our technologies which are sufficient to prevent third parties, such as our competitors, from utilizing our technology. Any failure to obtain or maintain patent and other intellectual property protection with respect to our products or other aspects of our business could harm our business, financial condition and results of operations.

 

Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our patents. Additionally, we cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

 

The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, suppliers, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.

 

The strength of patent rights generally, and particularly the patent position of medical device companies, involves complex legal and scientific questions and can be uncertain, and has been the subject of much litigation in recent years. This uncertainty includes changes to the patent laws through either legislative action to change statutory patent law or court action that may reinterpret existing law or rules in ways affecting the scope or validity of issued patents. Our current or future patent applications may fail to result in issued patents in the United States or foreign countries with claims that cover our product. Even if patents do successfully issue from our patent applications, third parties may challenge the validity, enforceability or scope of such patents, which may result in such patents being narrowed, invalidated or held unenforceable. Any successful challenge to our patents could deprive us of exclusive rights necessary for the successful commercialization of our product. Furthermore, even if they are unchallenged, our patents may not adequately protect our product, provide exclusivity for our products or prevent others from designing around our claims. If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical technology and products would be adversely affected. If the breadth or strength of protection provided by the patents we hold or pursue with respect to our products is challenged, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize, our product.

 

Patent terms may be inadequate to protect our competitive position on our future products for an adequate amount of time.

 

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our future products are obtained, once the patent life has expired, we may be open to competition from competitive products.

 

Given the amount of time required for the development, testing and regulatory review of new products, patents protecting our future products might expire before or shortly after we or our future partners commercialize those products. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours for a sufficient amount of time, and, as a result, we may not be able to obtain adequate protection from our patent portfolio against competition, in spite of the time and effort invested in the commercialization of our future products.

 

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We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time-consuming and unsuccessful, and which could additionally result in the diversion of management’s time and efforts, require us to pay damages or prevent us from marketing our existing or future products.

 

Competitors may infringe our patents, or the patents of any future licensing partners, or we may be required to defend against claims of infringement. In addition, our patents or the patents of any such licensing partners also may become involved in inventorship, priority or validity disputes. Patent litigation is prevalent in the medical device and diagnostic sectors. Our commercial success depends in part upon our ability and that of our contract manufacturers and suppliers to manufacture, market, sell our planned product, and use our proprietary technologies without infringing, misappropriating or otherwise violating the proprietary rights or intellectual property of third parties. To prosecute, counter or defend against patent infringement claims can be expensive and time-consuming. In an infringement proceeding, a court may decide that our patent is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover such technology. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. 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 litigation.

 

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our management and other personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial negative impact on the price of Ordinary Shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could harm our ability to compete in the marketplace. Any of the foregoing could harm our business, financial condition and results of operations.

 

We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology. Additional third parties may assert infringement claims against us based on existing or future intellectual property rights, regardless of merit. If we are found to infringe a third-party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products and technology. We may also elect to enter into such a license in order to settle pending or threatened litigation. However, we may not be able to obtain any required license on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us, and could require us to pay significant royalties and other fees. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages, which may be significant. If we are found to have willfully infringed a third-party patent, we could be required to pay treble damages and attorneys’ fees. A finding of infringement could prevent us from commercializing our planned products in commercially important territories, or force us to cease some of our business operations, which could harm our business. Although we try to ensure that our employees, advisors and consultants do not use the proprietary information or know-how of others in their work for us, including requiring that our employees, advisors and consultants do not breach any contractual obligations with other third parties related to proprietary information or know-how in connection with their work for us, we may be subject to claims that we, or these employees, have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. These and other claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business to the infringement claims discussed above.

 

Even if we are successful in prosecuting or defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial negative impact on the price of Ordinary Shares. Such litigation or proceedings could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can. Uncertainties resulting from the initiation and continuation of litigation or other intellectual property related proceedings could harm our business, financial condition and results of operations.

 

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We have foreign intellectual property rights and may not be able to protect our intellectual property and proprietary rights throughout the world, which could harm our business, financial condition and results of operations.

 

Currently, our technology is protected by an extensive global patent portfolio consisting of 44 issued foreign utility patents, 13 pending foreign utility patent applications and one PCT patent application. Filing, prosecuting and defending patents on our products in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, from selling or importing products made using our inventions in and into the United States or other jurisdictions, or from using our trademarks or trademarks confusingly similar to our trademarks for similar goods and services in any jurisdiction. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product, and our 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 infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

 

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition and results of operations may be harmed.

 

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be harmed.

 

Our registered and unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be violating or infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners and customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement or dilution claims brought by owners of other trademarks. We have not conducted any registrability studies for possible future trademarks or current trademarks in future jurisdictions to assess whether such marks would be successfully registered. In addition, we may license our trademarks and trade names to third parties, such as distributors. Although these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names or other intellectual property may be ineffective, and we may be required, and have been required, to limit the use of our trademarks or trade names to certain classes of goods and services in certain jurisdictions. This could result in substantial costs and diversion of resources and could harm our business, financial condition and results of operations.

 

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Our use of “open source” software could subject our proprietary software to general release, adversely affect our ability to sell our products and subject us to possible litigation.

 

A portion of the products or technologies licensed, developed and/or distributed by us incorporate so-called “open source” software and we may incorporate open source software into other products and technologies in the future. Such open source software generally is licensed by its authors or other third parties under open source licenses. Some open source licenses may contain certain unfavorable conditions, such as requirements that we disclose source code for modifications or derivative works that we make to the open source software and that we license such modifications or derivative works to third parties at no cost or under the terms of the particular open source license. In some circumstances, distribution of our proprietary software in connection with open source software could require that we disclose and license some or all of our proprietary code in that software, as well as distribute our software that uses particular open source software at no cost to the user. We monitor our use of open source software in an effort to avoid uses in a manner that would require us to disclose or grant licenses under our proprietary source code; however, there can be no assurance that such efforts will be successful. In addition, third-party products that we utilize may also include certain open source software code that if used in combination with our own software may jeopardize our intellectual property rights or limit our ability to sell through certain sales channels (or otherwise subject our proprietary source code to the above-described risks). Open source license terms are often ambiguous and such use could inadvertently occur. There is little legal precedent governing the interpretation of many of the terms of these licenses, and the potential impact of these terms on our business may result in unanticipated obligations regarding our technologies. Companies that incorporate open source software into their products have, in the past, faced claims seeking enforcement of open source license provisions and claims asserting ownership of open source software incorporated into their product. If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of an open source license, we could incur significant legal costs defending ourselves against such allegations. In the event such claims were successful, we could be subject to significant damages or be enjoined from the distribution of the infringing product. In addition, if we combine our proprietary software with open source software in certain ways, under some open source licenses, we could be required to release the source code of our proprietary software, which could substantially help our competitors develop products that are similar to or better than ours and otherwise adversely affect our business. These risks could be difficult to eliminate or manage, and, if not addressed, could harm our business, financial condition and results of operations.

 

Risks Related to the Ownership of the Ordinary Shares and this Offering

 

Our management will have immediate and broad discretion over the use of the net proceeds from this offering and may not use them effectively. 

 

We currently intend to use the net proceeds from this offering to hire incremental sales and marketing personnel and focus resources on building the commercial aspects of our business, to continue to incur significant research and development expenses associated with moving our current product offering forward, including personnel related expenses and costs of conducting preclinical studies and clinical trials, to expand our accounting, finance and administrative staff and resources in connection with our transition to a public company, and for general corporate purposes. See “Use of Proceeds.” However, our management will have broad discretion in the application of any such net proceeds. Our shareholders may not agree with the manner in which our management chooses to allocate the net proceeds from this offering. The failure by our management to apply these funds effectively could have a material adverse effect on our business, financial condition and results of operation. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income. The decisions made by our management may not result in positive returns on your investment and you will not have an opportunity to evaluate the economic, financial or other information upon which our management bases its decisions.

 

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There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

 

The Ordinary Shares and Holdco Warrants on Nasdaq are currently traded on Nasdaq. If Holdco subsequently does not continue to satisfy any additional listing standards, Holdco and its shareholders could face significant material adverse consequences including:

 

a limited availability of market quotations for its securities;

 

reduced liquidity for its securities;

 

a determination that the Ordinary Shares are a “penny stock” which will require brokers trading in the Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for its securities;

 

a limited amount of news and analyst coverage; and

 

a decreased ability to issue additional securities or obtain additional financing in the future.

 

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because the Ordinary Shares are listed on Nasdaq, they are covered securities. Although the states are preempted from regulating the sale of Holdco’s securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While Holdco is not aware of a state, other than the State of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.

 

An active market for Ordinary Shares may not develop, which would adversely affect the liquidity and price of Ordinary Shares.

 

An active trading market for Ordinary Shares may never develop or, if developed, it may not be sustained. You may be unable to sell your Ordinary Shares unless an active trading market can be established and sustained.

 

Holdco Warrants will become exercisable for Ordinary Shares, which would increase the number of shares eligible for future resale in the public market and result in dilution to Holdco’s shareholders.

 

Outstanding Holdco Warrants to purchase an aggregate of 13,223,440 Ordinary Shares, which were formerly LAMF Warrants, will become exercisable in accordance with the terms of the Warrant Assignment, Assumption and Amendment Agreement governing those securities 30 days after the Closing. The exercise price of such warrants will be $11.50 per share. To the extent such warrants are exercised, additional Ordinary Shares will be issued, which will result in dilution to the holders of Ordinary Shares and increase the number of Ordinary Shares eligible for resale in the public market. Sales of substantial numbers of such Ordinary Shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of Ordinary Shares. However, there is no guarantee that such warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.

 

If you purchase securities in this offering, you will incur immediate and substantial dilution in the book value of your Ordinary Shares, including Ordinary Shares that may be issued upon the exercise of any Pre-Funded Warrants and Series Warrants.

 

The public offering price of the Ordinary Shares, including Ordinary Shares that may be issued upon the exercise of any Pre-Funded Warrants, being offered hereby, is substantially higher than the net tangible book value per share of our outstanding Ordinary Shares. Therefore, if you purchase securities in this offering, you will pay a price per Ordinary Share, including Ordinary Shares that may be issued upon the exercise of any Pre-Funded Warrants, that substantially exceeds our net tangible book value per Ordinary Share, including Ordinary Shares that may be issued upon the exercise of any Pre-Funded Warrants, after this offering. To the extent outstanding options or warrants are exercised, you will incur further dilution. Based on a public offering price of $       per Ordinary Share, and after deducting the Placement Agent fees and commissions and estimated offering expenses payable by us, you will experience immediate dilution of $       per Ordinary Share, including Ordinary Shares that may be issued upon the exercise of any Pre-Funded Warrants, representing the difference between our as adjusted net tangible book value per Ordinary Share after giving effect to this offering and the public offering price. See “Dilution” for further information.

 

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If Holdco does not meet the expectations of equity research analysts, if they do not publish research or reports about Holdco’s business or if they issue unfavorable commentary or downgrade Ordinary Shares, the price of Ordinary Shares could decline.

 

The price of Ordinary Shares and trading volume may be heavily influenced by the way analysts and investors interpret our financial information and other disclosures. If securities or industry analysts do not publish research or reports about our business, delay publishing reports about our business, or publish negative reports about our business, regardless of accuracy, the market price and trading volume of Ordinary Shares could decline.

 

If an active trading market for Ordinary Shares develops, the trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We have little to no influence over these analysts. As a newly public company, we may be slow to attract research coverage and the analysts who publish information about Ordinary Shares will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding Ordinary Shares, the price of Ordinary Shares could decline. The share prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance they have publicly announced or the expectations of analysts and investors. If our financial results fail to meet, or significantly exceed, our announced guidance or the expectations of analysts or investors, analysts could downgrade Ordinary Shares or publish unfavorable research about us. Furthermore, if one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our share price or trading volume to decline.

 

Even if Ordinary Shares are actively covered by analysts, we do not have any control over the analysts or the measures that analysts or investors may rely upon to forecast our future results. Over-reliance by analysts or investors on any particular metric to forecast our future results may lead to forecasts that differ significantly from our own.

 

The price of Ordinary Shares may be volatile.

 

The price of the Ordinary Shares may fluctuate due to a variety of factors, including:

 

changes in the industries in which Holdco and its customers operate;

 

developments involving Holdco’s competitors;

 

changes in laws and regulations affecting its business;

 

variations in its operating performance and the performance of its competitors in general;

 

actual or anticipated fluctuations in Holdco’s quarterly or annual operating results;

 

publication of research reports by securities analysts about Holdco or its competitors or its industry;

 

the public’s reaction to Holdco’s press releases, its other public announcements and its filings with the SEC;

 

actions by shareholders;

 

additions and departures of key personnel;

 

commencement of, or involvement in, litigation involving the combined company;

 

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changes in its capital structure, such as future issuances of securities or the incurrence of additional debt;

 

the volume of Ordinary Shares available for public sale; and

 

general economic and political conditions, such as the Russia – Ukraine conflict, recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism, and a resurgence of the COVID-19 outbreak.

 

These market and industry factors may materially reduce the market price of Ordinary Shares regardless of the operating performance of Holdco.

 

The Pre-Funded Warrants and Series Warrants are speculative in nature.

 

Except as otherwise set forth therein, the Pre-Funded Warrants and Series Warrants offered in this offering do not confer any rights of Ordinary Share ownership on their holders, such as voting rights, but rather merely represent the right to acquire Ordinary Shares at a fixed price for a limited period of time. In addition, commencing on the date of issuance, holders of the Pre-Funded Warrants and Series Warrants may exercise their right to acquire Ordinary Shares and pay an exercise price of $0.001 or $       per Ordinary Share, respectively, subject to adjustment upon certain events.

 

There is no established market for the Pre-Funded Warrants or Series Warrants being offered in this offering.

 

There is no established trading market for the Pre-Funded Warrants or Series Warrants offered in this offering. We do not intend to apply for listing of the Pre-Funded Warrants or Series Warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Pre-Funded Warrants and Series Warrants will be limited.

 

Holders of the Pre-Funded Warrants or Series Warrants purchased in this offering will have no rights as shareholders until such holders exercise their Pre-Funded Warrants and Series Warrants and acquire our Ordinary Shares.

 

Until holders of Pre-Funded Warrants and Series Warrants acquire Ordinary Shares upon exercise of the Pre-Funded Warrants and Series Warrants, holders of Pre-Funded Warrants and Series Warrants will have no rights with respect to the Ordinary Shares underlying such warrants. Upon exercise of the Pre-Funded Warrants and Series Warrants, the holders will be entitled to exercise the rights of a shareholder of Ordinary Shares only as to matters for which the record date occurs after the exercise date.

 

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If the Series B Warrants are exercised by way of an alternative cashless exercise, investors may suffer substantial dilution.

 

If the Series B Warrants are exercised by way of an alternate cashless exercise, such exercising holder will receive        Ordinary Shares for each Series B Warrant they exercise, without any cash payment to us. Such issuance will result in substantial dilution to shareholders.

 

We will likely not receive any additional funds upon the exercise of the Series B Warrants.

 

The Series B Warrants may be exercised by way of an alternative cashless exercise, in which case the holder would not pay a cash purchase price upon exercise, but instead would receive upon such exercise the number of shares equal to the number of Series B Warrants being exercised multiplied by        . Accordingly, we will likely not receive any additional funds upon the exercise of the Series B Warrants.

 

Certain Provisions of the Series Warrants and Pre-Funded Warrants offered by this prospectus could discourage an acquisition of us by a third party.

 

Certain provisions of the Series Warrants and Pre-Funded Warrants offered by this prospectus could make it more difficult or expensive for a third party to acquire us. Such Series Warrants and Pre-Funded Warrants prohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among other things, the surviving entity assumes our obligations under the Series Warrants and Pre-Funded Warrants. Further, the Series Warrants and Pre-Funded Warrants provide that, in the event of certain transactions constituting “fundamental transactions,” with some exception, holders of such the Series Warrants and Pre-Funded Warrants will have the right, at their option, to require us to repurchase such the Series Warrants and Pre-Funded Warrants at a price described in the Series Warrants and Pre-Funded Warrants. These and other provisions of the Series Warrants and Pre-Funded Warrants offered by this prospectus could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to you.

 

Shareholders may suffer substantial dilution if certain provisions in the Series A Warrants and Series B Warrants are utilized.

 

If the Series B Warrants are exercised by way of an alternative cashless exercise, such exercising holder will receive Ordinary Shares for each Series B Warrant they exercise, without any cash payment to us.

 

In addition, and subject to certain exemptions, if we sell, enter into an agreement to sell, or grant any option to purchase, or sell, enter into an agreement to sell, or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Ordinary Shares, at an effective price per share less than the exercise price of the Series A Warrants then in effect, the exercise price of the Series A Warrants will be reduced to the lower of such price or the lowest volume weighted average price (VWAP) during the five consecutive trading days immediately following such dilutive issuance or announcement thereof, and the number of shares issuable upon exercise will be proportionately adjusted such that the aggregate exercise price will remain unchanged.

 

If any of the above provisions in the Series A Warrants and Series B Warrants are utilized, our shareholders may suffer substantial dilution.

 

Sales of a substantial number of our securities in the public market by the investors in this offering and/or by our existing shareholders could adversely affect the trading price of our Ordinary Shares.

 

This prospectus relates to the sale and issuance of up to Ordinary Shares constituting approximately % of the total Ordinary Shares outstanding as of June   , 2024 (assuming that all Pre-Funded Warrants, Series A Warrants and Series B Warrants are exercised). The securities being offered by this prospectus represent a very high percentage of our outstanding Ordinary Shares, and the sales of such securities, or the perception that those sales might occur, could depress the market price of our Ordinary Shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Ordinary Shares but the sale of a large number of Ordinary Shares could result in a significant decline in the public trading price of our Ordinary Shares.

 

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The exercise price for Holdco Warrants is higher than the price of our Ordinary Shares, and, accordingly, the Holdco Warrants are more likely to expire worthless.

 

The exercise price of the Holdco Warrants is $11.50 per share and the closing price of our Ordinary Shares as of June 14, 2024, was $1.67. Accordingly, we believe that it is currently unlikely that Holdco Warrant holders will exercise their Holdco Warrants. We believe the likelihood that Holdco Warrant holders will exercise the Holdco Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our Ordinary Shares. If the trading price for our Ordinary Shares remains less than $11.50 per share, we believe holders of the Holdco Warrants will be unlikely to exercise their Holdco Warrants. There is no guarantee that the Holdco Warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the Holdco Warrants may expire worthless and we may receive no proceeds from the exercise of the Holdco Warrants.

 

Our shareholders may experience significant dilution as a result of any conversion of the Bridge Financing Notes.

 

The Bridge Financing Notes are convertible into our Ordinary Shares at a conversion price of $7.3087 per Ordinary Share in accordance with the terms thereof and bear interest at a rate of 15% per annum payable in cash at maturity. The Bridge Financing Notes mature on the earlier of (i) 12 months from the issuance date thereof, (ii) six months following the closing of the Business Combination, or (iii) the closing of a bona fide financing by Nuvo for the principal purpose of raising capital, through the sale of Nuvo securities in whatever form or type (whether debt or equity) that raises in excess of $25,000,000 in gross proceeds. In the event proceeds from this offering exceed $25,000,000, the Bridge Financing Notes immediately mature and the Bridge Financing Holders may choose to either (i) receive principal amount of the Bridge Financing Note in cash or (ii) convert the principal amount of the investment into Ordinary Shares in accordance with the terms thereof. If all of the Bridge Financing Holders chose to convert the principal amount of their investment into Ordinary Shares as of June 12, 2024, Holdco would have been obligated to issue 1,706,801 Ordinary Shares, or 5,120,404 if the Bridge Financing Holders chose to convert their Bridge Financing Notes and exercise the related warrants issued in connection with the Bridge Financing. As a result of any conversion of the Bridge Financing Notes, our shareholders will experience significant dilution.

 

Certain recent public offerings of companies with public floats comparable to Holdco public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. Holdco may experience similar volatility, which may make it difficult for prospective investors to assess the value of the Ordinary Shares.

 

Ordinary Shares may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. Recently, companies with comparable public floats and initial public offering sizes have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company’s underlying performance. Although the specific cause of such volatility is unclear, our public float may amplify the impact of the actions taken by a few shareholders on the price of Ordinary Shares, which may cause our share price to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. Should Ordinary Shares experience run-ups and declines that are seemingly unrelated to Holdco’s actual or expected operating performance and financial condition or prospects, prospective investors may have difficulty assessing the rapidly changing value of Ordinary Shares. In addition, investors in Ordinary Shares may experience losses, which may be material, if the price of Ordinary Shares declines after the Closing or if such investors purchase Ordinary Shares prior to any price decline.

 

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It is not expected that Holdco will pay dividends in the foreseeable future.

 

Holdco expects to retain most, if not all, of its available funds and any future earnings after the Business Combination to fund the development and growth of its business. As a result, it is not expected that Holdco will pay any cash dividends in the foreseeable future.

 

The Holdco Board will have complete discretion as to whether to distribute dividends. Even if the Holdco Board decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on the future results of operations and cash flow, capital requirements and surplus, the amount of distributions, if any, received by Holdco from subsidiaries, Holdco’s financial condition, contractual restrictions and other factors deemed relevant by the Holdco Board. There is no guarantee that the Ordinary Shares will appreciate in value or that the trading price of the Ordinary Shares will not decline.

 

We may issue additional Ordinary Shares or Preferred Shares under the Amended Articles, which would dilute the interest of Holdco’s shareholders.

 

The Amended Articles authorize the issuance of 500,000,000 Ordinary Shares and 10,000,000 Preferred Shares. Holdco may issue a substantial number of additional Ordinary Shares or Preferred Shares under the Amended Articles. The issuance of additional Holdco shares:

 

  may significantly dilute the equity interest of investors, who will not have preemption rights in respect of such an issuance;

 

  may subordinate the rights of holders of Ordinary Shares if one or more classes of preferred shares are created, and such preferred shares are issued, with rights senior to those afforded to Ordinary Shares;

 

  could cause a change in control if a substantial number of Ordinary Shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and

 

  may adversely affect prevailing market prices for Ordinary Shares and/or Holdco Warrants.

 

Holdco may not be able to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act.

 

Holdco is required to provide management’s attestation on internal controls in connection with Holdco’s second annual report on Form 20-F following consummation of the Business Combination. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly more stringent than those required of Nuvo as a privately-held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements. If Holdco is not able to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, it may not be able to assess whether its internal controls over financial reporting are effective, which may subject it to adverse regulatory consequences and could harm investor confidence and the market price of Ordinary Shares.

 

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As a foreign private issuer and a company treated as an emerging growth company for certain purposes, Holdco has different disclosure and other requirements than U.S. domestic registrants and non-emerging growth companies.

 

As a foreign private issuer and a company treated as an emerging growth company for certain purposes, Holdco is 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, Holdco is not 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 insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, Holdco is relying on exemptions from certain U.S. rules which permit Holdco to follow Israeli legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants. However, the laws and regulations of the State of Israel do not contain any provisions applicable to Holdco that are comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or 8-K or the U.S. rules relating to liability for insiders who profit from trades made in a short period of time.

 

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 issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure (“Regulation FD”), aimed at preventing issuers from making selective disclosures of material information, although Holdco is subject to Israeli laws and regulations having substantially the same effect as Regulation FD. As a result of the above, even though Holdco is required to file reports on Form 6-K disclosing the limited information which Holdco has made or is required to make public pursuant to Israeli law, or is required to distribute to shareholders generally, and that is material to Holdco, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company.

 

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for emerging growth companies. Under this Act, as a company treated as an emerging growth company for certain purposes, Holdco is not subject to the same disclosure and financial reporting requirements as non-emerging growth companies. For example, Holdco is permitted to, and intends to take advantage of, certain exemptions that allow it to comply with reduced disclosure obligations in this prospectus that are applicable to other public companies that are not emerging growth companies. As a result, its shareholders may not have access to certain information that they deem important. Accordingly, the information about Holdco available to you will not be the same as, and may be more limited than, the information available to shareholders of a non-emerging growth company.

 

Holdco is not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act.

 

Holdco cannot predict if investors will find Ordinary Shares less attractive because Holdco relies on these exemptions. If some investors find Ordinary Shares less attractive as a result, there may be a less active trading market for Ordinary Shares and the share price may be more volatile.

 

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Holdco may lose its foreign private issuer status, which would then require Holdco to comply with the Exchange Act’s domestic reporting regime and cause Holdco to incur significant legal, accounting and other expenses.

 

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. In order to maintain its current status as a foreign private issuer, either (a) more than 50% Holdco’s Ordinary Shares must be either directly or indirectly owned of record by non-residents of the United States or (b)(1) a majority of Holdco’s executive officers or directors must not be U.S. citizens or residents; (2) more than 50% of Holdco’s assets must be located outside of the United States; and (3) Holdco’s business must be administered principally outside the United States. If Holdco loses this status, Holdco would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. Holdco may also be required to make changes in its corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to Holdco under U.S. securities law if it is required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the costs Holdco will incur as a foreign private issuer.

 

Estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which Holdco competes achieves the forecasted growth, Holdco’s business could fail to grow at similar rates, if at all.

 

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of Holdco’s market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of companies covered by Holdco’s market opportunity estimates will purchase Holdco’s products at all or generate any particular level of revenue for Holdco. Any expansion in Holdco’s market depends on a number of factors, including the cost, performance, and perceived value associated with Holdco’s platform and products and those of its competitors. Even if the market in which Holdco competes meets the size estimates and growth forecasted, Holdco’s business could fail to grow at similar rates, if at all. Holdco’s growth is subject to many factors, including its success in implementing its growth strategies, which are subject to many risks and uncertainties. Accordingly, Holdco’s forecasts of market growth should not be taken as indicative of its future growth.

 

The Amended Articles provide that, unless Holdco consents 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, and the competent courts of Tel Aviv, Israel, shall be the exclusive forum for resolution of substantially all disputes between Holdco and its shareholders under the Amended Articles, the Companies Law and the Israeli Securities Law, as well as any derivative action brought on behalf of Holdco and any claim of breach of fiduciary duty owed by a director, officer or other employee of Holdco, which could limit Holdco’s shareholders’ ability to choose the judicial forum for disputes with Holdco, its directors, shareholders, or other employees and could result in increased costs to such shareholders who bring a claim.

 

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, the Amended Articles provide that, unless Holdco consents 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 Holdco’s shareholders cannot and will not be deemed to have waived Holdco’s compliance with the U.S. federal securities law and the rules and regulations thereunder as a result of the exclusive forum provision.

 

The Amended Articles further provide that, unless Holdco consents in writing to the selection of an alternative forum, the competent courts of Tel Aviv, Israel, shall be the exclusive forum for the resolution of (i) any derivative action or proceeding brought on behalf of Holdco, (ii) any action asserting a claim of breach of fiduciary duty owed by any of Holdco’s directors, officers or other employees to Holdco or its shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Amended Articles, the Companies Law or the Israeli Securities Law, 1968 (the “Israeli Securities Law”). Such exclusive forum provision is intended to apply to claims arising under Israeli law and shall not apply to claims for which the federal courts would have exclusive jurisdiction, whether by law or pursuant to the Amended Articles, as described above.

 

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Any person or entity purchasing or otherwise acquiring any interest in any of Holdco’s securities shall be deemed to have notice of and consented to the foregoing provisions of the Amended Articles. 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 the Amended Articles. If a court were to find the exclusive forum provisions contained in the Amended Articles to be inapplicable or unenforceable in an action, Holdco may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect Holdco’s business, financial condition and results of operations.

 

This choice of forum provision may increase costs, such as those related to legal fees and transportation for counsel and the plaintiff, to shareholders by requiring litigating in the courts provided by the exclusive forum provisions in lieu of a more convenient and cost effective jurisdiction for the plaintiff, which may discourage lawsuits against Holdco and its directors, officers, and employees. The exclusive forum provisions could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of U.S. federal securities law or the Companies Law or Israeli Securities Law, as applicable, in the types of lawsuits to which they apply, such exclusive forum provisions may limit the shareholders’ abilities to bring a claim in the judicial forum of their choosing for disputes with Holdco or any of its directors, shareholders, officers, or other employees, which may discourage lawsuits with respect to such claims against Holdco and its current and former directors, shareholders, officers or other employees and result in increased costs to such shareholders who bring a claim.

 

Provisions of Israeli law and the Amended Articles may delay, prevent or make undesirable an acquisition of all or a significant portion of our shares or assets.

 

Provisions of Israeli law and the Amended Articles which became effective upon the consummation of the Business Combination could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire Holdco or its shareholders to elect different individuals to the Holdco Board, even if doing so would be considered to be beneficial by some of the Holdco Shareholders, and may limit the price that investors may be willing to pay in the future for Ordinary Shares. The amendments consist of, among other things:

 

the Companies Law regulates mergers and requires that a tender offer be effected when one or more persons or entities propose to purchase shares that would result in it or them owning more than a specified percentage of shares in a company;

 

the Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions;

 

the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;

 

  the Amended Articles do not permit the Company to undertake a Deemed Liquidation Event, other than a Qualified Deemed Liquidation (each as defined in the Amended Articles) without the consent of the holders of at least a majority of the voting power represented by the then issued and outstanding Preferred Shares (the “Preferred Majority”);

 

  the Amended Articles establish a liquidation and dividend preference for the holders of Preferred Shares, such upon such an event, such holders are entitled to receive, from the assets available for distribution to the shareholders, prior and in preference to any distribution in respect of Ordinary Shares, an amount per Preferred Share equal to the greater of (i) three times the original issue price of such share (as adjusted for certain recapitalization events) or (ii) the amount that would be received if such share had converted into a Ordinary Share immediately prior to the distribution event, in each case, plus any declared but unpaid dividends thereon;

 

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  the Amended Articles divides the Holdco Board into three classes, each of which is elected once every three years with a Board of at least three and no more than 11 members;

 

  an amendment to the Amended Articles generally require, in addition to the approval of the Holdco Board of Directors, a vote of the holders of a majority of Holdco’s outstanding Ordinary Shares entitled to vote present and voting (including via proxy) on the matter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision empowering the Holdco Board to determine the size of the Holdco Board, the provision dividing Holdco’s directors into three classes, the provision that sets forth the procedures and the requirements that must be met in order for a shareholder to require Holdco to include a matter on the agenda for a general meeting of the shareholders, and the provisions relating to the election and removal of members of the Holdco Board and empowering the Holdco Board to fill vacancies on the Holdco Board, requires, in addition to the approval of the Holdco Board, a vote of the holders of 65% of Holdco’s outstanding Ordinary Shares entitled to vote at a general meeting; in other cases, such as an amendment of the provisions relating to the rights and privileges of the Preferred Shares, the amendment of a limited number of provisions also requires the approval of the Preferred Majority; and certain amendments to the Amended Articles will not be applicable against any holder of Preferred Shares that does not consent to such amendment;

 

the Amended Articles do not permit a director to be removed by a vote of the Holdco shareholders, without the approval of at least 65% of our outstanding shares entitled to vote at a general meeting of shareholders; and

 

the Amended Articles provide that director vacancies may be filled by the Holdco Board.

 

Further, Israeli tax considerations may make potential transactions undesirable to Holdco or to some of Holdco’s shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to 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 fulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. 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.

 

Holdco’s Amended Articles designate specific courts as the exclusive forum for certain litigation that may be initiated by its shareholders, which could limit such shareholders’ abilities to obtain a favorable judicial forum for disputes with Holdco or its directors, officers or employees.

 

Holdco’s Amended Articles 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 (the “Federal Forum Provision”). Investors cannot waive compliance with U.S. federal securities law and the rules and regulations thereunder. Holdco’s Amended Articles also provide that unless Holdco consents in writing to the selection of an alternative forum, the competent courts in Tel Aviv, Israel shall be the exclusive forum for any derivative action or proceeding brought on behalf of Holdco, any action asserting a breach of a fiduciary duty owed by any of its directors, officers or other employees to Holdco or its shareholders or any action asserting a claim arising pursuant to any provision of the Amended Articles, the Companies Law or the Israeli Securities Law (the “Israeli Forum Provision”).

 

The Federal Forum Provision and Israeli Forum Provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Holdco or its directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the Federal Forum Provision or the Israeli Forum Provision to be inapplicable or unenforceable in an action, Holdco may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, financial condition or results of operations.

 

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Your rights and responsibilities as a Holdco Shareholder are governed by Israeli law, which differs in some respects from the rights and responsibilities of shareholders of U.S. corporations.

 

Holdco is incorporated under Israeli law. The rights and responsibilities of holders of Ordinary Shares are governed by the Amended Articles and Israeli law, including the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law, each shareholder of an Israeli company has to act in good faith and in a customary manner in exercising his, her or its rights and fulfilling his, her or its obligations toward a company and other shareholders and to refrain from abusing his, her or its power in a company, including, among other things, in voting at the general meeting of shareholders, on amendments to a company’s articles of association, and with regard to increases in a company’s authorized share capital, mergers, and certain transactions requiring shareholders’ approval under the Companies Law. A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in a company, or has other powers toward a company has a duty of fairness toward that company. However, Israeli law does not define the substance of this duty of fairness. There is little case law available to assist in understanding the implications of these provisions that govern shareholder behavior, but these provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations.

 

There is a significant risk that Holdco will be a PFIC for its current taxable year and in the foreseeable future. Such PFIC status could result in adverse U.S. federal income tax consequences to U.S. Holders.

 

In general, a foreign (i.e., non-U.S.) corporation will be classified as a PFIC for U.S. federal income tax purposes if either (i) at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income or (ii) at least 50% of its assets in a taxable year (ordinarily determined based on fair market value and averaged quarterly over the year), including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Based on the projected composition of Holdco’s income and assets, there is a significant risk that Holdco will be classified as a PFIC for its current taxable year and in the foreseeable future.

 

If Holdco is treated as a PFIC for any taxable year, or portion thereof, that is included in the holding period of a U.S. Holder (as defined in the section entitled “Material U.S. Federal Income Tax Considerations to U.S. Holders”), such U.S. Holder may be subject to certain adverse U.S. federal income tax consequences in connection with the ownership and disposition of Ordinary Shares and Holdco Warrants and may be subject to additional tax reporting requirements. For more information concerning the application of the PFIC rules to the ownership and disposition of Ordinary Shares and Holdco Warrants, see the discussion below under “Material U.S. Federal Income Tax Considerations to U.S. Holders — Passive Foreign Investment Company Rules.”

 

This is a best efforts offering, no minimum amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business plans, including our near-term business plans.

 

The Placement Agents have agreed to use their best efforts to solicit offers to purchase the securities in this offering. The Placement Agents have no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. There is no required minimum number of securities that must be sold as a condition to completion of this offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth herein. We may sell fewer than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of securities sufficient to support our continued operations, including our near-term continued operations. Thus, we may not raise the amount of capital we believe is required for our operations in the short-term and may need to raise additional funds to complete such short-term operations. Such additional fundraises may not be available or available on terms acceptable to us. Assuming net proceeds of approximately $       million from this offering (assuming an offering with gross proceeds of $       million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs through under our current business plan. Assuming net proceeds of approximately $        million from this offering (assuming an offering with gross proceeds of $        million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs through      under our current business plan. Assuming net proceeds of $       million from this offering (assuming an offering with gross proceeds of $      million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs through       under our current business plan. Assuming net proceeds of $        million from this offering (assuming an offering with gross proceeds of $       million), we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will satisfy our capital needs through under our current business plan. Without giving effect to the receipt of any proceeds from this offering, we currently estimate that our existing cash and cash equivalents are sufficient to fund business operations into     .

 

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USE OF PROCEEDS

 

We estimate that the net proceeds from the sale of       Ordinary Shares and/or Pre-Funded Warrants and accompanying Series Warrants in this offering will be approximately $       million, after deducting placement agent fees and commissions and estimated offering expenses payable by us in connection with this offering. However, because this is a best efforts offering and there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent fees and net proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth on the cover page of this prospectus.

 

The following table presents our estimated net proceeds if 100%, 75%, 50% or 25% of the securities in this offering are sold.

 

       % of       % of       % of       % of 
   100%   Total   75%   Total   50%   Total   25%   Total 
Gross Proceeds from Offering  $20,000,000    100.00%  $15,000,000    100.00%  $10,000,000    100.00%  $5,000,000    100.00%
Offering Expenses                                        
Placement Agent Commissions  $    %  $      %  $      %  $      %
Placement Agent Expenses  $     %  $      %  $      %  $      %
Other Offering Expenses  $     %  $      %  $      %  $      %
Total  $     %  $      %  $      %  $      %
Net Proceeds  $     %  $      %  $      %  $      %

 

We intend to use the net proceeds from this offering as follows, in order of priority, assuming 100% of the securities offered hereby are sold: up to approximately $6.5 million to hire incremental sales and marketing personnel and focus resources on building the commercial aspects of our business; up to approximately $7.3 million to expand our accounting, finance and administrative staff and resources in connection with our transition to a public company and pay transaction expenses incurred in connection with the Business Combination; up to approximately $7.8 million for research and development expenses associated with moving our current product offering forward, including personnel related expenses and costs of conducting preclinical studies and clinical trials; and we will then use any leftover proceeds for general corporate purposes. The foregoing anticipated allocation of our use of proceeds we expect to be proportionally reduced depending on the amount of securities actually sold in this offering.

 

This expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our commercialization efforts, any collaborations that we may enter into with third parties, and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

 

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DIVIDEND POLICY

 

We have never declared nor paid any dividends on the Ordinary Shares or Preferred Shares. We currently intend to retain future earnings, if any, to finance operations and expand our business. We do not anticipate paying any dividends in the foreseeable future. Our board of directors may declare a dividend to be paid to the holders of the Ordinary Shares or Preferred Shares, the form, frequency and amount which will depend upon our future operations and earnings, capital requirements, and surplus, general financial condition, contractual restrictions and other factors that our Board of Directors may deem relevant. Under the Companies Law, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company unless the company’s articles of association provide otherwise. Our Amended Articles do not require shareholder approval of a dividend distribution and provide that dividend distributions may be determined by our board of directors.

 

Pursuant to the Companies Law, the distribution amount is limited to the greater of retained earnings or earnings generated over the previous two years, according to our then last reviewed or audited financial statements (less the amount of previously distributed dividends, if not reduced from the earnings), provided that the end of the period to which the financial statements relate is not more than six months prior to the date of the distribution. If we do not meet such criteria, then we may distribute dividends only with court approval. In each case, we are only permitted to distribute a dividend if our board of directors and, if applicable, the court determines that there is no reasonable concern that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due.

 

In the event of our liquidation, after satisfaction of liabilities to creditors, and also in the event of a distribution to shareholders, our assets will be distributed first to the holders of the Preferred Shares in an amount equal to the greater of (i) the sum of three times the price originally paid for each Preferred Share, which as of the date hereof would result in an aggregate amount of $36,000,000 or (ii) the amount such holder would actually receive if such Preferred Share had been converted into Ordinary Shares immediately prior to the liquidation or distribution. Thereupon, the distributable assets will be distributed to the holders of the Ordinary Shareholders on a pari passu basis. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.

 

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CAPITALIZATION

 

The following table sets forth our total capitalization, as of December 31, 2023, on:

 

on an unaudited pro forma combined basis, after giving effect to the Business Combination and the Bridge Financing as of May 23, 2024, see “Unaudited Pro Forma Condensed Combined Financial Information”; and

 

  on an unaudited pro forma combined basis, as adjusted after giving effect to the sale of the securities in this offering, assuming no sale of any Pre-Funded Warrants, at an assumed combined public offering price of $       per Ordinary Share and accompanying Series Warrants, and after deducting placement agent fees and commissions and estimated offering expenses.

 

The information in this table should be read in conjunction with the financial statements and notes thereto and other financial information included in this prospectus. Our historical results do not necessarily indicate o