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ParaZero Technologies Ltd.

ParaZero Technologies Ltd.PRZO決算レポート

Nasdaq

ParaZero Technologies Ltd. designs, manufactures and sells advanced safety systems for unmanned aerial vehicles (drones). Its core products include autonomous parachute recovery systems and flight safety modules, serving commercial, industrial, public safety and consumer drone markets across North America, Europe and the Asia-Pacific region.

What changed in ParaZero Technologies Ltd.'s 20-F — 2023 vs 2024

Top changes in ParaZero Technologies Ltd.'s 2024 20-F

432 paragraphs added · 444 removed · 282 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 1 ITEM 3. KEY INFORMATION 1 A. [Reserved] 1 B. Capitalization and Indebtedness 1 C. Reasons for the Offer and Use of Proceeds 1 D. Risk Factors 1 ITEM 4. INFORMATION ON THE COMPANY 30 A. History and Development of the Company 30 B. Business Overview 30 C. Organizational Structure 45 D.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 1 ITEM 3. KEY INFORMATION 1 A. [Reserved] 1 B. Capitalization and Indebtedness 1 C. Reasons for the Offer and Use of Proceeds 1 D. Risk Factors 1 ITEM 4. INFORMATION ON THE COMPANY 31 A. History and Development of the Company 31 B. Business Overview 31 C. Organizational Structure 44 D.
Property, Plants and Equipment 45 ITEM 4A. UNRESOLVED STAFF COMMENTS 45 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 45 A. Operating Results 47 B. Liquidity and Capital Resources 50 C. Research and Development, Patents and Licenses 53 D. Trend Information 53 E. Critical Accounting Estimates 53 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 54 A.
Property, Plants and Equipment 44 ITEM 4A. UNRESOLVED STAFF COMMENTS 44 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 45 A. Operating Results 46 B. Liquidity and Capital Resources 50 C. Research and Development, Patents and Licenses 52 D. Trend Information 52 E. Critical Accounting Estimates 52 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 53 A.
Directors and Senior Management 54 B. Compensation 57 C. Board Practices 58 D. Employees E. Share Ownership ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 72 A. Major Shareholders 72 B. Related Party Transactions 73 C. Interests of Experts and Counsel 74 ITEM 8. FINANCIAL INFORMATION 75 A. Consolidated Statements and Other Financial Information 75 B. Significant Changes 75
Directors and Senior Management 53 B. Compensation 56 C. Board Practices 58 D. Employees 68 E. Share Ownership 68 F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation 71 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 71 A. Major Shareholders 71 B. Related Party Transactions 73 C. Interests of Experts and Counsel 73 ITEM 8.
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FINANCIAL INFORMATION 73 A. Consolidated Statements and Other Financial Information 73 B. Significant Changes 74

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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The Company will be affected by a number of operational risks and the Company may not be adequately insured for certain risks, including: labor disputes; catastrophic accidents; fires; blockades or other acts of social activism; changes in the regulatory environment; impact of non-compliance with laws and regulations; natural phenomena, such as inclement weather conditions, floods, earthquakes and ground movements.
The Company will be affected by a number of operational risks and the Company may not be adequately insured for certain risks, including labor disputes, catastrophic accidents, fires, blockades or other acts of social activism, changes in the regulatory environment, impact of non-compliance with laws and regulations and natural phenomena, such as inclement weather conditions, floods, earthquakes and ground movements.
Even if the Company is successful in marketing its products to the market, its operating results and financial condition may fluctuate from quarter to quarter and year to year and are likely to continue to vary due to several factors, many of which will not be within the Company’s control.
The Company’s operating results and financial condition may fluctuate. Even if the Company is successful in marketing its products to the market, its operating results and financial condition may fluctuate from quarter to quarter and year to year and are likely to continue to vary due to several factors, many of which will not be within the Company’s control.
Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring Arab countries, the Hamas (an Islamist terrorist militia and political group that controls the Gaza strip), the Hezbollah (an Islamist terrorist militia and political group based in Lebanon) and other terrorist organizations active in the region.
Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring Arab countries, Hamas (an Islamist terrorist militia and political group that controls the Gaza strip), Hezbollah (an Islamist terrorist militia and political group based in Lebanon) and other terrorist organizations active in the region.
The trading market for our Ordinary Shares will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage.
The trading market for our ordinary shares will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage.
Fluctuations in the Company’s operating results and financial condition may be due to several factors, including those listed below and those identified throughout this “Risk Factors” section: ● the degree of market acceptance of our products and services; ● the mix of products and services that we sell during any period; ● long sale cycles; ● changes in the amount that we spend to develop, acquire or license new products, technologies or businesses; ● changes in the amounts that we spend to promote our products and services; ● changes in the cost of satisfying our warranty obligations and servicing our installed base of systems; ● delays between our expenditures to develop and market new or enhanced systems and consumables and the generation of sales from those products; ● development of new competitive products and services by others; ● difficulty in predicting sales patterns and reorder rates that may result from a multi-tier distribution strategy associated with new product categories; ● litigation or threats of litigation, including intellectual property claims by third parties; ● changes in accounting rules and tax laws; ● changes in regulations and standards; ● the geographic distribution of our sales; ● our responses to price competition; ● general economic and industry conditions that affect end-user demand and end-user levels of product design and manufacturing; ● changes in interest rates that affect returns on our cash balances and short-term investments; ● changes in dollar-shekel exchange rates that affect the value of our net assets, future revenues and expenditures from and/or relating to our activities carried out in those currencies; and ● the level of research and development activities by our company.
Fluctuations in the Company’s operating results and financial condition may be due to several factors, including those listed below and those identified throughout this “Risk Factors” section: ● the degree of market acceptance of our products and services; 11 ● the mix of products and services that we sell during any period; ● long sale cycles; ● changes in the amount that we spend to develop, acquire or license new products, technologies or businesses; ● changes in the amounts that we spend to promote our products and services; ● changes in the cost of satisfying our warranty obligations and servicing our installed base of systems; ● delays between our expenditures to develop and market new or enhanced systems and consumables and the generation of sales from those products; ● development of new competitive products and services by others; ● difficulty in predicting sales patterns and reorder rates that may result from a multi-tier distribution strategy associated with new product categories; ● litigation or threats of litigation, including intellectual property claims by third parties; ● changes in accounting rules and tax laws; ● changes in regulations and standards; ● the geographic distribution of our sales; ● our responses to price competition; ● general economic and industry conditions that affect end-user demand and end-user levels of product design and manufacturing; ● changes in interest rates that affect returns on our cash balances and short-term investments; ● changes in dollar-shekel exchange rates that affect the value of our net assets, future revenues and expenditures from and/or relating to our activities carried out in those currencies; and ● the level of research and development activities by our company.
Accordingly, we will face significant operational risks from doing business internationally, including: ● fluctuations in foreign currency exchange rates; ● potentially longer sales and payment cycles; ● potentially greater difficulties in collecting accounts receivable; ● potentially adverse tax consequences; ● reduced protection of intellectual property rights in certain countries, particularly in Asia and South America; ● difficulties in staffing and managing foreign operations; ● laws and business practices favoring local competition; ● costs and difficulties of customizing products for foreign countries; ● compliance with a wide variety of complex foreign laws, treaties and regulations; ● an outbreak of a contagious disease, such as coronavirus, which may cause us, third party vendors and manufacturers and/or customers to temporarily suspend our or their respective operations in the affected city or country; ● tariffs, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets; and ● being subject to the laws, regulations and the court systems of many jurisdictions.
Accordingly, we will face significant operational risks from doing business internationally, including: ● fluctuations in foreign currency exchange rates; ● potentially longer sales and payment cycles; ● potentially greater difficulties in collecting accounts receivable; ● potentially adverse tax consequences; ● reduced protection of intellectual property rights in certain countries, particularly in Asia and South America; ● difficulties in staffing and managing foreign operations; ● laws and business practices favoring local competition; ● costs and difficulties of customizing products for foreign countries; ● compliance with a wide variety of complex foreign laws, treaties and regulations; 16 ● an outbreak of a contagious disease, such as coronavirus, which may cause us, third party vendors and manufacturers and/or customers to temporarily suspend our or their respective operations in the affected city or country; ● tariffs, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets; and ● being subject to the laws, regulations and the court systems of many jurisdictions.
Our ability to generate future revenue from product sales depends heavily on our success in many areas, including but not limited to: ● completing development of our products; ● establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality) products to support market demand for our products; 3 ● launching and commercializing products, either directly or with a collaborator or distributor; ● addressing any competing technological and market developments; ● identifying, assessing, acquiring and/or developing new products; ● negotiating favorable terms in any collaboration or other arrangements into which we may enter; ● maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and ● attracting, hiring and retaining qualified personnel.
Our ability to generate future revenue from product sales depends heavily on our success in many areas, including but not limited to: ● completing development of our products; ● establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality) products to support market demand for our products; ● launching and commercializing products, either directly or with a collaborator or distributor; ● addressing any competing technological and market developments; ● identifying, assessing, acquiring and/or developing new products; ● negotiating favorable terms in any collaboration or other arrangements into which we may enter; ● maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and ● attracting, hiring and retaining qualified personnel.
We anticipate that our expenses will increase substantially if and as we: ● continue the development of our products; ● establish a sales, marketing, distribution and technical support infrastructure to commercialize our products; ● seek to identify, assess, acquire, license, and/or develop other products and subsequent generations of our current products; ● seek to maintain, protect, and expand our intellectual property portfolio; ● seek to attract and retain skilled personnel; and ● create additional infrastructure to support our operations as a public company and our product development and planned future commercialization efforts.
We anticipate that our expenses will increase substantially if and as we: ● continue the development of our products; ● establish a sales, marketing, distribution and technical support infrastructure to commercialize our products; 3 ● seek to identify, assess, acquire, license, and/or develop other products and subsequent generations of our current products; ● seek to maintain, protect, and expand our intellectual property portfolio; ● seek to attract and retain skilled personnel; and ● create additional infrastructure to support our operations as a public company and our product development and planned future commercialization efforts.
Until December 31, 2023, the interest was calculated at a rate based on an annual application of the London Interbank Offered Rate, or the LIBOR, applicable to U.S. dollar deposits, however, pursuant to the latest IIA regulations, as of January 1, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the Secured Overnight Financing Rate, or SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72%.
Until December 31, 2024, the interest was calculated at a rate based on an annual application of the London Interbank Offered Rate, or the LIBOR, applicable to U.S. dollar deposits, however, pursuant to the latest IIA regulations, as of January 1, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the Secured Overnight Financing Rate, or SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72%.
The impact of these events could also make it more difficult for us to attract and retain qualified personnel to serve on our board of directors, our board committees, or as executive officers. 28 The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures.
The impact of these events could also make it more difficult for us to attract and retain qualified personnel to serve on our board of directors, our board committees, or as executive officers. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures.
Even if the Company is fully insured as it relates to a particular claim, the claim could nevertheless diminish the Company’s brand and divert management’s attention and resources, which could have a negative impact on the Company’s business, financial condition and results of operations. 12 Shortfalls in available external research and development funding could adversely affect the Company.
Even if the Company is fully insured as it relates to a particular claim, the claim could nevertheless diminish the Company’s brand and divert management’s attention and resources, which could have a negative impact on the Company’s business, financial condition and results of operations. Shortfalls in available external research and development funding could adversely affect the Company.
Executive officers and directors may have rights to indemnification from the Company, including pursuant to directors’ and officers’ liability insurance policies, that will survive termination of their agreements. 14 Our planned international operations will expose us to additional market and operational risks, and failure to manage these risks may adversely affect our business and operating results.
Executive officers and directors may have rights to indemnification from the Company, including pursuant to directors’ and officers’ liability insurance policies, that will survive termination of their agreements. Our planned international operations will expose us to additional market and operational risks, and failure to manage these risks may adversely affect our business and operating results.
Furthermore, the FAA’s clarification of existing policy stated that the rules for radio-controlled hobby aircraft do not apply to public or commercial use of small UAS. 6 On February 14, 2012, the FAA Modernization and Reform Act of 2012 was enacted, establishing various deadlines for the FAA to allow expanded use of small UAS for both public and commercial applications.
Furthermore, the FAA’s clarification of existing policy stated that the rules for radio-controlled hobby aircraft do not apply to public or commercial use of small UAS. On February 14, 2012, the FAA Modernization and Reform Act of 2012 was enacted, establishing various deadlines for the FAA to allow expanded use of small UAS for both public and commercial applications.
The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic registrant may be significantly higher. We may be a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes in the current taxable year or may become one in any subsequent taxable year.
The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic registrant may be significantly higher. 22 We may be a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes in the current taxable year or may become one in any subsequent taxable year.
Further, the Company’s research and development programs may not produce successful results, and its new products and services may not achieve market acceptance, create any additional revenue or become profitable, which could materially harm the Company’s business, prospects, financial results and liquidity. 4 The Company’s adoption of new business models could fail to produce any financial returns.
Further, the Company’s research and development programs may not produce successful results, and its new products and services may not achieve market acceptance, create any additional revenue or become profitable, which could materially harm the Company’s business, prospects, financial results and liquidity. The Company’s adoption of new business models could fail to produce any financial returns.
See “Item 10E — Taxation — Israeli Tax Considerations and Government Programs” for additional information. It may be difficult to enforce a judgment of a United States court against us and our officers and directors in Israel or the United States or to serve process on our officers and directors. We were incorporated in Israel.
See “Item 10E — Taxation — Israeli Tax Considerations and Government Programs” for additional information. 26 It may be difficult to enforce a judgment of a United States court against us and our officers and directors in Israel or the United States or to serve process on our officers and directors. We were incorporated in Israel.
This lack of insurance coverage could have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition. The Company operates in evolving markets, which makes it difficult to evaluate the Company’s business and future prospects. The Company’s products are sold in rapidly evolving markets.
This lack of insurance coverage could have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition. 5 The Company operates in evolving markets, which makes it difficult to evaluate the Company’s business and future prospects. The Company’s products are sold in rapidly evolving markets.
Additionally, product recalls may lead to increased scrutiny of the Company’s operations by regulatory agencies, requiring further management time and attention and potential legal fees, costs and other expenses. If the Company releases defective products or services, its operating results could suffer.
Additionally, product recalls may lead to increased scrutiny of the Company’s operations by regulatory agencies, requiring further management time and attention and potential legal fees, costs and other expenses. 13 If the Company releases defective products or services, its operating results could suffer.
If the Company does not successfully maintain a strong and trusted brand, its business could be materially and adversely affected. 13 The Company may be subject to electronic communication security risks. A significant potential vulnerability of electronic communications is the security of transmission of confidential information over public networks.
If the Company does not successfully maintain a strong and trusted brand, its business could be materially and adversely affected. The Company may be subject to electronic communication security risks. A significant potential vulnerability of electronic communications is the security of transmission of confidential information over public networks.
Furthermore, as a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. 20 These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.
Furthermore, 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 will reduce the frequency and scope of information and protections to which you are entitled as an investor.
For instance, in 2008, the Israeli legislature passed a law forbidding any investments in entities that transact business with Iran. 23 Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East.
For instance, in 2008, the Israeli legislature passed a law forbidding any investments in entities that transact business with Iran. Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East.
In addition, any proposed acquisitions may be subject to regulatory approval. 8 The Company’s inability to retain management and key employees could impair the future success of the Company. The Company’s future success depends substantially on the continued services of its executive officers and its key development personnel.
In addition, any proposed acquisitions may be subject to regulatory approval. The Company’s inability to retain management and key employees could impair the future success of the Company. The Company’s future success depends substantially on the continued services of its executive officers and its key development personnel.
The Company cannot predict if it will be able to obtain replacement components within the time frames that it requires at an affordable cost, if at all. 11 The Company’s products may be subject to recall or return.
The Company cannot predict if it will be able to obtain replacement components within the time frames that it requires at an affordable cost, if at all. The Company’s products may be subject to recall or return.
Any successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of any new products that we may develop. 16 Further, there is no assurance that all potentially relevant prior art relating to our patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application.
Any successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of any new products that we may develop. 17 Further, there is no assurance that all potentially relevant prior art relating to our patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application.
Further, if and where a patent is granted, there can be no guarantee that such patent will be valid or enforceable or that the patent will be granted in other jurisdictions. 18 Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.
Further, if and where a patent is granted, there can be no guarantee that such patent will be valid or enforceable or that the patent will be granted in other jurisdictions. 19 Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.
Changes to the way patent applications will be prosecuted could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business and financial condition. 17 We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful.
Changes to the way patent applications will be prosecuted could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business and financial condition. 18 We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful.
This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. 25 Political relations could limit our ability to sell or buy internationally.
This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. 27 Political relations could limit our ability to sell or buy internationally.
Ongoing and revived hostilities or other Israeli political or economic factors, such as, an interruption of operations at the Tel Aviv airport, could prevent or delay shipments of our components or products. 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.
Ongoing and revived hostilities or other Israeli political or economic factors, such as, an interruption of operations at the Tel Aviv airport or the nautical routes, could prevent or delay shipments of our components or products. 24 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.
Uncertainty and adverse changes in the economy could also increase costs associated with developing and publishing products, increase the cost and decrease the availability of sources of financing, and increase the Company’s exposure to material losses from bad debts, any of which could have a material adverse impact on the financial condition and operating results of the Company. 9 The Company’s operating results and financial condition may fluctuate.
Uncertainty and adverse changes in the economy could also increase costs associated with developing and publishing products, increase the cost and decrease the availability of sources of financing, and increase the Company’s exposure to material losses from bad debts, any of which could have a material adverse impact on the financial condition and operating results of the Company.
An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation.
An individual that is a United States shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation.
A United States investor should consult its tax advisors regarding the potential application of these rules to its investment in our Ordinary Shares. We may be subject to securities litigation, which is expensive and could divert management attention.
A United States investor should consult its advisors regarding the potential application of these rules to an investment in our ordinary shares. 23 We may be subject to securities litigation, which is expensive and could divert management attention.
The Company’s failure to manage the market and operational risks associated with its international operations effectively could limit the future growth of the Company’s business and adversely affect our operating results. Increasing scrutiny of, and evolving expectations for, sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs or otherwise adversely impact our business.
The Company’s failure to manage the market and operational risks associated with its international operations effectively could limit the future growth of the Company’s business and adversely affect our operating results. Scrutiny of sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs or otherwise adversely impact our business.
Risks Related to Our Business and Industry ● The Company expects to incur substantial research and development costs and devote significant resources to identifying and commercializing new products and services, which could significantly reduce its profitability and may never result in revenue to the Company. ● The Company’s adoption of new business models could fail to produce any financial returns. ● The Company will be affected by operational risks and may not be adequately insured for certain risks. ● The Company operates in evolving markets, which makes it difficult to evaluate the Company’s business and future prospects. 1 ● The Company operates in a competitive market. ● The markets in which the Company competes are characterized by rapid technological change. ● Failure to obtain necessary regulatory approvals from the FAA or other governmental agencies, or limitations put on the use of small UAS in response to public privacy concerns, may prevent us from expanding the sales of our drone solutions to commercial and industrial customers in the United States. ● We are subject to governmental regulation and other legal obligations in jurisdictions outside of the U.S., and our actual or perceived failure to comply with such obligations could adversely affect our business and operating results. ● Failure to make competitive technological advances will put us at a disadvantage and may lead to negative operational and financial outcome. ● If we fail to offer high-quality products or customer service, our business and reputation could suffer. ● Our products and certain projects have lengthy sales cycles that make it difficult to plan our expenses and forecast results. ● The Company’s commercial opportunity could be reduced if our competitors develop and commercialize products or services that offer better performance or are more cost-effective to use than our products or services. ● Our business, operating results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk. ● If critical components or raw materials used to manufacture the Company’s products become scarce or unavailable, then the Company may incur delays in manufacturing and delivery of its products, which could damage its business. ● Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business. ● The Company relies on its business partners, and they may be given access to sensitive and proprietary information in order to provide services and support to the Company’s teams. ● Our planned international operations will expose us to additional market and operational risks, and failure to manage these risks may adversely affect our business and operating results.
Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations. 1 Risks Related to Our Business and Industry ● The Company expects to incur substantial research and development costs and devote significant resources to identifying and commercializing new products and services, which could significantly reduce its profitability and may never result in revenue to the Company. ● The Company’s adoption of new business models could fail to produce any financial returns. ● The Company will be affected by operational risks and may not be adequately insured for certain risks. ● The Company operates in evolving markets, which makes it difficult to evaluate the Company’s business and future prospects. ● The Company operates in a competitive market. ● The markets in which the Company competes are characterized by rapid technological change. ● Failure to obtain necessary regulatory approvals from the FAA or other governmental agencies, or limitations put on the use of small UAS in response to public privacy concerns, may prevent us from expanding the sales of our drone solutions to commercial and industrial customers in the United States. ● We are subject to governmental regulation and other legal obligations in jurisdictions outside of the U.S., and our actual or perceived failure to comply with such obligations could adversely affect our business and operating results. ● Failure to make competitive technological advances will put us at a disadvantage and may lead to negative operational and financial outcome. ● If we fail to offer high-quality products or customer service, our business and reputation could suffer. ● Our products and certain projects have lengthy sales cycles that make it difficult to plan our expenses and forecast results. ● The Company’s commercial opportunity could be reduced if our competitors develop and commercialize products or services that offer better performance or are more cost-effective to use than our products or services. ● Our business, operating results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk. ● If critical components or raw materials used to manufacture the Company’s products become scarce or unavailable, then the Company may incur delays in manufacturing and delivery of its products, which could damage its business. ● Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business. ● The Company relies on its business partners, and they may be given access to sensitive and proprietary information in order to provide services and support to the Company’s teams. ● Our planned international operations will expose us to additional market and operational risks, and failure to manage these risks may adversely affect our business and operating results. 2 Risks Related to Our Intellectual Property ● If we are unable to obtain and maintain effective intellectual property rights for our products, we may not be able to compete effectively in our markets. ● Intellectual property rights of third parties could adversely affect our ability to commercialize our products, and we might be required to litigate or obtain licenses from third parties in order to develop or market our product candidates.
If the conditions in the global economies remain uncertain or continue to be volatile, or if they deteriorate, including as a result of the impact of military conflict, such as the war between Russia and Ukraine, terrorism or other geopolitical events, our business, operating results and financial condition may be materially adversely affected.
If the conditions in the global economies remain uncertain or continue to be volatile, or if they deteriorate, including as a result of the impact of military conflict, terrorism or other geopolitical events, our business, operating results and financial condition may be materially adversely affected.
If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our Ordinary Shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any).
If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to each controlled foreign corporation, or CFC, in our group (if any).
Additionally, increases in inflation, along with the uncertainties surrounding COVID-19, geopolitical developments and global supply chain disruptions, have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult, costly or dilutive for us to secure additional financing.
Additionally, increases in inflation, geopolitical developments and global supply chain disruptions, have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult, costly or dilutive for us to secure additional financing.
In addition, our authorized share capital consists of 200,000,000 ordinary shares, par value NIS 0.02 per share. As of the date of this Annual Report on Form 20-F, we had 10,806,572 ordinary shares issued and outstanding.
In addition, our authorized share capital consists of 200,000,000 ordinary shares, par value NIS 0.02 per share. As of the date of this Annual Report on Form 20-F, we had 16,679,631 ordinary shares issued and outstanding.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on December 31, 2022.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2025.
Failure to obtain necessary regulatory approvals from the FAA or other governmental agencies, or limitations put on the use of small UAS in response to public privacy concerns, may prevent us from expanding the sales of our drone solutions to commercial and industrial customers in the United States.
Failure to obtain necessary regulatory approvals from the FAA, the Israeli Defense Export Control Agency within the Israeli Ministry of Defense, or DECA, or other governmental agencies, or limitations put on the use of small UAS in response to public privacy concerns, may prevent us from expanding the sales of our drone solutions to commercial and industrial customers in the United States.
Federal Income Tax Considerations — Passive Foreign Investment Companies” for additional information. 21 If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
Federal Income Tax Considerations—Passive Foreign Investment Companies.” If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
A failure to comply with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect to your U.S. federal income tax return for the year for which reporting was due from starting.
Failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due from starting.
If we fail to offer high-quality products or customer service, our business and reputation could suffer. The Company believes global branding is critical for the long-term success of the Company’s business. We will continue to differentiate ourselves from our competitors through our commitment to a high-quality products and customer experience.
The Company believes global branding is critical for the long-term success of the Company’s business. We will continue to differentiate ourselves from our competitors through our commitment to a high-quality products and customer experience.
Our patent portfolio consists of an aggregate of fifteen (15) patents and patent applications, as described in “Item 4.B — Business Overview — Intellectual Property”.
Our patent portfolio consists of an aggregate of twenty four (24) patents and patent applications, as described in “Item 4.B — Business Overview — Intellectual Property”.
Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, claim that the consideration for the acquisition of the shares does not reflect their fair market value, and petition an Israeli court to alter the consideration for the acquisition accordingly, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisal rights, and the acquirer or the company published all required information with respect to the tender offer prior to the tender offer’s response date. 24 Israeli tax considerations also may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax.
Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, claim that the consideration for the acquisition of the shares does not reflect their fair market value, and petition an Israeli court to alter the consideration for the acquisition accordingly, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisal rights, and the acquirer or the company published all required information with respect to the tender offer prior to the tender offer’s response date.
Our patent portfolio consists of an aggregate of fifteen (15) patents and patent applications, as described in “Business — Intellectual Property.” We cannot assure investors that any of our currently pending or future patent applications will result in issued patents and we cannot predict how long it will take for such patent applications to issue as patents.
Our patent portfolio consists of an aggregate of twenty four (24) patents and patent applications, as described in “Item 4.B. — Business Overview — Intellectual Property.” We cannot assure investors that any of our currently pending or future patent applications will result in issued patents and we cannot predict how long it will take for such patent applications to issue as patents.
The JOBS Act allows us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adversely affect the market price of our Ordinary Shares.
In addition, Israeli law may limit our declaration or payment of dividends and may subject our dividends to Israeli withholding taxes. 21 The JOBS Act allows us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adversely affect the market price of our ordinary shares.
Although we have invested in measures to reduce these risks, we cannot assure you that these measures will be successful in preventing compromise and/or disruption of our information technology systems and related data.
The Company’s systems are expected to be the target of malware and other cyber-attacks. Although we have invested in measures to reduce these risks, we cannot assure you that these measures will be successful in preventing compromise and/or disruption of our information technology systems and related data.
Our future capital requirements will depend on many factors, including but not limited to: ● the scope, rate of progress, results and cost of product development, and other related activities; ● the cost of establishing commercial supplies of our products; ● the cost and timing of establishing sales, marketing, and distribution capabilities; and ● the terms and timing of any collaborative and other arrangements that we may establish.
Our future capital requirements will depend on many factors, including but not limited to: ● the scope, rate of progress, results and cost of product development, and other related activities; ● the cost of establishing commercial supplies of our products; ● the cost and timing of establishing sales, marketing, and distribution capabilities; and ● the terms and timing of any collaborative and other arrangements that we may establish. 4 Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products.
Such ESG matters may also impact our third-party contract manufacturers and other third parties on which we rely, which may augment or cause additional impacts on our business, financial condition, or results of operations. 15 Any resurgence of the COVID-19 pandemic could adversely affect our business, financial condition and results of operations.
Such ESG matters may also impact our third-party contract manufacturers and other third parties on which we rely, which may augment or cause additional impacts on our business, financial condition, or results of operations.
They will therefore be able to exert significant control over matters submitted to our shareholders for approval. 2 Risks Related to Our Incorporation, Location and Operations in Israel ● Our headquarters, research and development and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel. ● We are exposed to fluctuations in currency exchange rates.
Risks Related to Our Incorporation, Location and Operations in Israel ● Our headquarters, research and development and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel. ● We are exposed to fluctuations in currency exchange rates.
We cannot provide any assurances that we will assist any shareholder in determining whether such shareholder is treated as a United States shareholder with respect to any “controlled foreign corporation” in our group (if any) or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations.
We cannot provide any assurances that we will assist investors in determining whether we are or any of our non-U.S. subsidiaries is treated as CFC or whether any investor is treated as a United States shareholder with respect to any such CFC or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations.
A United States shareholder of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, whether or not we make any distributions, and may be subject to tax reporting obligations.
A United States shareholder of a CFC may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by CFCs, regardless of whether we make any distributions.
We are an early commercialization stage company and have incurred net losses since our inception in 2013, including net losses of $3,771,379 and $1,653,038 for the years ended December 31, 2023 and 2022, respectively. As a result, we had accumulated losses of $18,423,057 as of December 31, 2023.
We are an early commercialization stage company and have incurred net losses since our inception in 2013, including net losses of $11,054,230 and $3,771,379 for the years ended December 31, 2024 and 2023, respectively. As a result, we had accumulated losses of $29,477,287 as of December 31, 2024.
Economic weakness, inflation and increases in interest rates, limited availability of credit, liquidity shortages and constrained capital spending have at times in the past resulted, and may in the future result, in challenging and delayed sales cycles, slower adoption of new technologies and increased price competition, and could negatively affect our ability to forecast future periods, which could result in an inability to satisfy demand for our products and a loss of market share.
Economic weakness, inflation and increases in interest rates, limited availability of credit, liquidity shortages and constrained capital spending have at times in the past resulted, and may in the future result, in challenging and delayed sales cycles, slower adoption of new technologies and increased price competition, and could negatively affect our ability to forecast future periods, which could result in an inability to satisfy demand for our products and a loss of market share. 12 In addition, increases in inflation raise our costs for commodities, labor, materials and services and other costs required to grow and operate our business, and failure to secure these on reasonable terms may adversely impact our financial condition.
In addition, if any of its executive officers or key employees joins a competitor or forms a competing company, the Company may lose experience, know-how, key professionals and staff members as well as business partners. These executive officers and key employees could develop drone technologies that could compete with and take customers and market share away from the Company.
In addition, if any of its executive officers or key employees joins a competitor or forms a competing company, the Company may lose experience, know-how, key professionals and staff members as well as business partners.
The transfer of IIA-supported technology or know-how outside of Israel may involve the payment of significant amounts, depending upon the value of the transferred technology or know-how, our research and development expenses, the amount of IIA support, the time of completion of the IIA-supported research project and other factors.
Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel. 28 The transfer of IIA-supported technology or know-how outside of Israel may involve the payment of significant amounts, depending upon the value of the transferred technology or know-how, our research and development expenses, the amount of IIA support, the time of completion of the IIA-supported research project and other factors.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or Ordinary Shares, our Ordinary Shares price and trading volume could decline.
We are unable to predict the effect that sales may have on the prevailing market price of our ordinary shares. 29 If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or ordinary shares, our ordinary shares price and trading volume could decline.
Holder makes a “mark to market” election or an election to treat us as a qualified electing fund, or QEF. These elections would result in an alternative treatment (such as mark-to-market treatment) of our Ordinary Shares. It is not expected that a U.S. Holder will be able to make a QEF election because we do not intend to provide U.S.
Certain adverse consequences of PFIC status may be alleviated if a U.S. Holder (as defined below) makes a “mark to market” election or an election to treat us as a qualified electing fund, or QEF. These elections would result in an alternative treatment (such as mark-to-market treatment) of our ordinary shares. It is not expected that a U.S.
This could result in increased litigation, government or court-imposed fines, judgments or orders requiring that the Company change its practices, which could have an adverse effect on its business and reputation. Complying with these various laws could cause the Company to incur substantial costs or require it to change its business practices in a manner adverse to its business.
This could result in increased litigation, government or court-imposed fines, judgments or orders requiring that the Company change its practices, which could have an adverse effect on its business and reputation.
Consumer perception of these products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the use of UAV. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other publicity will be favorable to the UAV market.
There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other publicity will be favorable to the UAV market.
Our research and development efforts relating to our products have been financed in part through royalty-bearing grants in an aggregate amount of approximately $748,000 received from the Israel Innovation Authority, or the IIA, as of December 31, 2023. As of the same date, our contingent liabilities regarding IIA grants received by us were in an aggregate amount of $613,000.
Our research and development efforts relating to our products have been financed in part through royalty-bearing grants in an aggregate amount of approximately $748,000 received from the Israel Innovation Authority, or the IIA, as of December 31, 2024, none of which were received during the most recent fiscal year ended.
We believe that this change would not have material impact on our results or our financial position or results in operations. 26 Regardless of any royalty payment, we are further required to comply with the requirements of the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and related regulations, or the Research Law, with respect to those past grants.
Regardless of any royalty payment, we are further required to comply with the requirements of the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and related regulations, or the Research Law, with respect to those past grants.
However, the intensity and duration of Israel’s current war against Hamas is difficult to predict at this stage, as are such war’s economic implications on our business and operations and on Israel’s economy in general.
However, the intensity and duration of Israel’s current war against Hamas is difficult to predict at this stage, as are such war’s economic implications on our business and operations and on Israel’s economy in general. If the ceasefire declared collapse or a new war commences or hostilities expand to other fronts our operations may be adversely affected.
Israeli government and commercial spending levels can be impacted by a number of variables, including general economic conditions, specific companies’ financial performance and competition for Israeli government funding. Any reductions in available research and development funding could harm the Company’s business, financial condition and operating results.
Israeli government and commercial spending levels can be impacted by a number of variables, including general economic conditions, specific companies’ financial performance and competition for Israeli government funding.
Failure to obtain necessary regulatory approvals from civil aviation authorities (CAA), or limitations put on the use of small UAV in response to public privacy concerns, may prevent the Company from expanding sales of its small UAV to non-military customers in various global regions, and may prevent the Company from testing or operating its aircraft and/or expanding its sales which could have an adverse impact on the Company’s business, prospects, results of operations and financial condition.
The failure to satisfy the requirements under the Israeli Trade Control Laws, including the failure or inability to obtain necessary licenses or qualify for license exceptions, could delay or prevent the development, production, export, import, and/or in-country transfer of our products and technology, which could adversely affect our revenues and profitability 7 Failure to obtain necessary regulatory approvals from civil aviation authorities, or CAAs, or limitations put on the use of small UAV in response to public privacy concerns, may prevent the Company from expanding sales of its small UAV to non-military customers in various global regions, and may prevent the Company from testing or operating its aircraft and/or expanding its sales which could have an adverse impact on the Company’s business, prospects, results of operations and financial condition.
Such fluctuations make forecasting more difficult and could cause us to fail to meet the expectations of investors and securities analysts, which could cause the trading price of our ordinary shares to fall substantially, resulting in the loss of all or part of your investment, and subject us to costly lawsuits, including securities class action suits. 10 Our business, operating results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk.
Such fluctuations make forecasting more difficult and could cause us to fail to meet the expectations of investors and securities analysts, which could cause the trading price of our ordinary shares to fall substantially, resulting in the loss of all or part of your investment, and subject us to costly lawsuits, including securities class action suits.
If the Company is unable to devote adequate resources to develop new products or cannot otherwise successfully develop new products or enhancements that meet customer requirements on a timely basis, its products could lose market share, its revenue and profits could decline, and the Company could experience operating losses.
Delays in introducing new products and enhancements, the failure to choose correctly among technical alternatives or the failure to offer innovative products or enhancements at competitive prices may cause existing and potential customers to purchase the Company’s competitors’ products. 6 If the Company is unable to devote adequate resources to develop new products or cannot otherwise successfully develop new products or enhancements that meet customer requirements on a timely basis, its products could lose market share, its revenue and profits could decline, and the Company could experience operating losses.
The Company could also experience business interruption, information theft and/or reputational damage from cyber-attacks, which may compromise our systems and lead to data leakage either internally or at our third-party providers. The Company’s systems are expected to be the target of malware and other cyber-attacks.
A significant invasion, interruption, destruction or breakdown of the Company’s information technology systems and/or infrastructure by persons with authorized or unauthorized access could negatively impact our business and operations. The Company could also experience business interruption, information theft and/or reputational damage from cyber-attacks, which may compromise our systems and lead to data leakage either internally or at our third-party providers.
Risks Related to the Ownership of Our Ordinary Shares ● Sales of a substantial number of our Ordinary Shares in the public market, including resale of the shares issued to the selling shareholders, by our existing shareholders could cause our share price to fall. ● Our directors, officers and holders of 10% or more of our outstanding Ordinary Shares beneficially own approximately 19.92% of our outstanding Ordinary Shares.
Risks Related to the Ownership of Our Ordinary Shares ● Sales of a substantial number of our ordinary shares in the public market, including resale of the shares issued to the selling shareholders, by our existing shareholders could cause our share price to fall. ● The market price for our ordinary shares may be volatile or may decline regardless of our operating performance.
To date, these initiatives have been substantially put on hold. Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition, results of operations and growth prospects.
Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition, results of operations and growth prospects. 25 Our operations may be disrupted as a result of the obligation of management or key personnel to perform military service.
If competitors of the Company develop and market more successful products or services, offer competitive products or services at lower price points, or if the Company does not produce consistently high-quality and well-received products and services, revenues, margins, and profitability of the Company will decline. 5 The Company’s ability to compete effectively will depend on, among other things, the Company’s pricing of services and equipment, quality of customer service, development of new and enhanced products and services in response to customer demands and changing technology, reach and quality of sales and distribution channels and capital resources.
The Company’s ability to compete effectively will depend on, among other things, the Company’s pricing of services and equipment, quality of customer service, development of new and enhanced products and services in response to customer demands and changing technology, reach and quality of sales and distribution channels and capital resources.
It is possible that hostilities with Hezbollah in Lebanon will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries, such as Iran, will join the hostilities. Such clashes may escalate in the future into a greater regional conflict.
It is possible that hostilities with Iran, Hezbollah, the Houthis and terrorist groups in Syria will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank, will join the hostilities.
This, in turn, could have an adverse impact on trading prices for our Ordinary Shares and could adversely affect our ability to access the capital markets.
This, in turn, could have an adverse impact on trading prices for our ordinary shares and could adversely affect our ability to access the capital markets. 30 We have identified a material weakness in our internal control over financial reporting, and we may not be able to successfully implement remedial measures.
Negative consumer perception regarding the Company’s products could have a material adverse effect on the demand for the Company’s products and the business, results of operations, financial condition and cash flows of the Company. The Company believes the UAV industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the products used.
Any reductions in available research and development funding could harm the Company’s business, financial condition and operating results. 14 Negative consumer perception regarding the Company’s products could have a material adverse effect on the demand for the Company’s products and the business, results of operations, financial condition and cash flows of the Company.
So long as the war continues, our personnel may be called up for reserve service, whether for an extended periods or periodically for short-term periods. Military service call ups that result in absences of personnel from us for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations.
Military service call ups that result in absences of personnel from us for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations. We are exposed to fluctuations in currency exchange rates.
There is no guarantee that the Company’s research and development activities will meet the changing needs of its customer markets. At the same time, products and technologies developed by others may render the Company’s products and technology obsolete or non-competitive which could materially adversely affect the business, operating results and financial prospects of the Company.
At the same time, products and technologies developed by others may render the Company’s products and technology obsolete or non-competitive which could materially adversely affect the business, operating results and financial prospects of the Company. 9 If we fail to offer high-quality products or customer service, our business and reputation could suffer.
Once we register these shares, they will be freely tradable in the public market, subject to the volume limitations under Rule 144 of the Securities Act in the case of our affiliates and the lock-up agreements or market stand-off provisions agreed with the representative of the underwriters in connection with our IPO in July 2023. 22 Risks Related to Our Incorporation, Location and Operations in Israel Our headquarters, research and development and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel including the recent war with Hamas and other terrorist organizations from the Gaza Strip.
Once we register these shares, they will be freely tradable in the public market, subject to the volume limitations under Rule 144 of the Securities Act in the case of our affiliates and the lock-up agreements or market stand-off provisions agreed with the representative of the underwriters in connection with our initial public offering in July 2023.
Our operations may be disrupted as a result of the obligation of management or key personnel to perform military service. As of the date hereof, we currently have 14 full-time employees, including two member of senior management, and one service provider, who is a member of senior management, all of whom are located in Israel.
As of the date hereof, we currently have 22 full-time employees, including four members of senior management, one of whom is engaged as a service provider, all of whom are located in Israel.
Any inability to adequately address safety and privacy concerns, even if unfounded, or comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business and operating results. 7 Failure to make competitive technological advances will put us at a disadvantage and may lead to negative operational and financial outcome.
Any inability to adequately address safety and privacy concerns, even if unfounded, or comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business and operating results. 8 We are subject to Israeli and U.S. government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under U.S. government contracts.
Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.
In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Possessing the ability to safely and legally engage in operations over people and BVLOS operations is essential for the commercial drone services industry to realize its full potential, as many of the commercial UAS use cases, such as food delivery, medical delivery, photography and monitoring, occur in urban environments, and thus cannot be performed without these capabilities.
Possessing the ability to safely and legally engage in operations over people and BVLOS is essential for the commercial drone services industry to realize its full potential, as many of the commercial UAS use cases, such as food delivery, medical delivery, photography and monitoring, occur in urban environments, and thus cannot be performed without these capabilities.
By leveraging the experience we have accumulated over the years in designing smart autonomous solutions, we intend to build the next-generation hardware from the ground up, with cutting-edge technologies such as real-time, AI-based decision making with continuous learning capabilities and revolutionary design concepts that will potentially improve the reliability and performance of the hardware. 2.
By leveraging the experience we have accumulated over the years in designing smart autonomous solutions, we intend to build the next-generation hardware from the ground up, with cutting-edge technologies such as real-time, AI-based decision making with continuous learning capabilities and revolutionary design concepts that will potentially improve the reliability and performance of the hardware. 38 2.
By connecting the system to the cloud continuously, we believe that we will be able to provide users with analytics and data at a scope previously unavailable. 38 4. Fully integrating the system’s real-time telemetry and statuses into smart city infrastructure, providing valuable data on air traffic, hazards, air pollution, and weather conditions in real-time.
By connecting the system to the cloud continuously, we believe that we will be able to provide users with analytics and data at a scope previously unavailable. 4. Fully integrating the system’s real-time telemetry and statuses into smart city infrastructure, providing valuable data on air traffic, hazards, air pollution, and weather conditions in real-time.
Developing a solution for navigating the platform after parachute deployment to land in safe areas to further reduce the chance for hazards on the ground. Based on proprietary IP, we believe that the system will generate a continuous ground situational awareness picture and in accordance shall navigate the platform in case of an emergency to a predefined safe area.
Developing a solution for navigating the platform after parachute deployment to land in safe areas to further reduce the chance for hazards on the ground. Based on proprietary IP, we believe that the system will generate a continuous ground situational awareness picture and in accordance shall navigate the platform in case of an emergency to a predefined safe area. 7.
We sell our drone safety systems as off-the-shelf solutions, as well as perform integrations with OEMs, offering customized, bespoke safety solutions for a large variety of aerial platforms, including multi-rotor, fixed wing, vertical take-off and landing, or VTOL, heavy lift, and urban air mobility.
We sell our drone safety systems as off-the-shelf solutions, as well as perform integrations with OEMs, offering customized, bespoke safety solutions for a large variety of aerial platforms, including multi-rotor, fixed wing, vertical take-off and landing (VTOL) heavy lift, and urban air mobility.
The regulations that are most likely to have a material effect on our business are as follows: United States — Federal Aviation Administration (FAA) The drone industry is regulated in the United States by the FAA to ensure that drone related services meet safety and performance standards.
The regulations that are most likely to have a material effect on our business are as follows: 39 United States — Federal Aviation Administration (FAA) The drone industry is regulated in the United States by the FAA to ensure that drone related services meet safety and performance standards.
EASA has endorsed the Specific Operations Risk Assessment, or SORA, as an acceptable means to demonstrate compliance and assess the operational risk of proposed drone operations within the specific category. SORA allows operators to utilize certain mitigating measures to reduce ground and air risk associated with the drone operation.
EASA has endorsed the Specific Operations Risk Assessment (SORA) as an acceptable means to demonstrate compliance and assess the operational risk of proposed drone operations within the specific category. SORA allows operators to utilize certain mitigating measures to reduce ground and air risk associated with the drone operation.
If we fail to comply with the Research Law, we may be subject to criminal charges. Intellectual Property We seek patent protection as well as other effective intellectual property rights for our products and technologies in the United States and internationally.
If we fail to comply with the Research Law, we may be subject to criminal charges. 42 Intellectual Property We seek patent protection as well as other effective intellectual property rights for our products and technologies in the United States and internationally.
With these capabilities, drones can be used for remote sensing, surveying and mapping, photogrammetry, precision agriculture, etc.; also deliver lightweight packages such as medication, small e-commerce purchases and much more; and (i) construction — drones can provide valuable insight and management capabilities to contractors and architects by allowing them to efficiently check the status of the building process.
With these capabilities, drones can be used for remote sensing, surveying and mapping, photogrammetry, precision agriculture, etc.; also deliver lightweight packages such as medication, small e-commerce purchases and much more; and (h) construction — drones can provide valuable insight and management capabilities to contractors and architects by allowing them to efficiently check the status of the building process.
Since 2019, 125 FAA §107.39 waivers have been granted for operations over people using SafeAir technology, including to organizations such as Hensel Phelps, the Chicago Police Department, Verizon Media, The New York Times and State Farm Insurance. These waivers allow small UAS which do not meet the four operational categories mentioned above to be flown over human beings.
Since 2019, hundreds of FAA §107.39 waivers have been granted for operations over people using SafeAir technology, including to organizations such as Hensel Phelps, the Chicago Police Department, Verizon Media, The New York Times and State Farm Insurance. These waivers allow small UAS which do not meet the four operational categories mentioned above to be flown over human beings.
In October 2023, we announced that the Australian Civil Aviation Safety Agency authorized drones to operate over populated area and near people when using our safety systems, the first such authorization of this kind in Australia.
In October 2023, we announced that the Australian Civil Aviation Safety Agency authorized drones to operate over populated area and near people when using our safety systems, the first such authorization of its kind in Australia.
Our SafeAir parachute system was utilized throughout the LUC application process to enable a broader range of advanced flight permissions, including operations over people, considered to be a highly sought-after flight permission. In February 2024, we announced that we expanded our collaboration with Vayu Aerospace Corporation, or Vayu, a US-based drone original equipment manufacturer.
Our SafeAir parachute system was utilized throughout the LUC application process to enable a broader range of advanced flight permissions, including operations over people, considered to be a highly sought-after flight permission. 35 In February 2024, we announced that we expanded our collaboration with Vayu Aerospace Corporation, or Vayu, a US-based drone manufacturer.
In May 2023, we were selected and partnered by Jetson, an eVTOLs and commercial UAS manufacturer, to develop parachute safety systems for Jetson’s personal electric aerial vehicle, the Jetson ONE.
In May 2023, we were selected and partnered by Jetson, an eVTOL and commercial UAS manufacturer, to develop parachute safety systems for Jetson’s personal electric aerial vehicle, the Jetson ONE.
Our core marketing activities include monthly press releases, monthly blog posts, regular social media posts and re-shares on LinkedIn, Facebook, Instagram, Twitter and YouTube, attending roadshows and exhibitions on a regular basis, continuously searching for co-marketing partnerships with OEMs and distributors, video and photo content creation, marketing collateral with e-folders for distributors and website updates.
For selling our defense and commercial solutions, our core marketing activities include monthly press releases, monthly blog posts, regular social media posts and re-shares on LinkedIn, Facebook, Instagram, Twitter and YouTube, attending roadshows and exhibitions on a regular basis, continuously searching for co-marketing partnerships with OEMs and distributors, video and photo content creation, marketing collateral with e-folders for distributors and website updates.
We have a global distribution footprint and have forged partnerships all around the world, including India, South Korea, the United States, Latin America and Europe.
We have a global distribution footprint and have forged partnerships all around the world, including the United States, Europe, Canada, South Korea and Latin America.
We also market our solutions directly to clients via direct sales, resellers and an online store. Marketing Strategy Our primary efforts are in creating co-marketing partnerships and working directly with distributors and resellers.
We also market our solutions directly to clients via direct sales, resellers and an online store. 37 Marketing Strategy In the commercial market, our primary efforts are in creating co-marketing partnerships and working directly with distributors and resellers.
Drones have long seen widespread use in the military for surveillance and long-range attack purposes and have also been used for weather monitoring and search and rescue operations.
UAS have been in widespread use in the military for surveillance and long-range attack purposes and have also been used for weather monitoring and search and rescue operations.
Our policy is to pursue, maintain and defend intellectual property rights developed internally and to protect the technology, inventions and improvements that are commercially important to the development of our business. Our patent portfolio consists of an aggregate of fifteen (15) patents and patent applications, as detailed in the following table. Luzzatto ref. Country Filing Date Application No. Patent no.
Our policy is to pursue, maintain and defend intellectual property rights developed internally and to protect the technology, inventions and improvements that are commercially important to the development of our business. Our patent portfolio consists of an aggregate of twenty four (24) patents and patent applications, as detailed in the following table. Luzzatto Ref. Country Effective Date Application No.
Until December 31, 2023, the interest was calculated at a rate based on the 12 months LIBOR Rate applicable to dollar deposits that was published on the first business day of each calendar year, however, pursuant to the latest IIA regulations, as of January 1, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72% ; and, for grants approved on or following January 1, 2024, the annual interest rate shall be the higher of (i) the 12 months SOFR interest rate plus 1%, or (ii) a fixed annual interest rate of 4%.
Until December 31, 2023, the interest was calculated at a rate based on the 12 months LIBOR Rate applicable to dollar deposits that was published on the first business day of each calendar year, however, pursuant to the latest IIA regulations, as of January 1, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72%; and, for grants approved on or following January 1, 2024, the annual interest rate shall be the higher of (i) the 12 months SOFR interest rate plus 1%, or (ii) a fixed annual interest rate of 4%. 41 The terms of the Research Law also require that the manufacture of products developed with government grants be performed in Israel.
SafeAir V1EX Autonomous parachute system designed for the Airobotics V1EX drone-in-a-box platform. ASTM F3322-18 certified, pending final approval for type certificate from the FAA. SafeAir 350 Parachute system for up to 770 pounds. Installed primarily on manned platforms (air taxis, urban air mobility) such as the LIFT HEXA, an all-electric vertical takeoff and landing (eVTOL) single-passenger multicopter.
SafeAir V1EX Autonomous parachute system designed for the Airobotics V1EX drone-in-a-box platform. ASTM F3322-18 certification assisted Airobotics in securing their type certificate from the FAA. 33 SafeAir eVTOL Parachute system for up to 770 pounds. Installed primarily on manned platforms (air taxis, urban air mobility) such as the LIFT HEXA, an all-electric vertical takeoff and landing (eVTOL) single-passenger multicopter.
However, many countries, such as the United States, the United Kingdom, Germany and France, have developed regulations that prohibit the use of UAS in urban or populated environments, except in specific scenarios and/or with appropriate air and ground risk mitigation measures, including the use of parachutes.
Many countries and governments, such as the United States and the European Union, have developed regulations that prohibit the use of UAS in urban or populated environments, except in specific scenarios and/or with appropriate air and ground risk mitigation measures, including the use of parachutes.
Small, lethal drones are being utilized around the world with tremendous effectiveness and are reshaping the balance between humans and technology in war, raising demand for C-UAS countermeasures. Counter-drone technology encompasses a wide range of solutions that allow users to detect, classify, and mitigate drones and unmanned aerial vehicles.
As small, lethal drones are being utilized around the world with tremendous effectiveness and are reshaping the balance of the battlefield they are raising demand for counter-UAS systems. C-UAS technology encompasses a wide range of solutions that allow users to detect, classify, and mitigate drones and unmanned aerial vehicles.
Our technology has been sold to and used by some of the world’s top companies and organizations, including drone companies such as LIFT Aircraft, Airobotics, SpeedBird Aero and Doosan Corporation and other leading and known brands and entities such as CNN, the New York Times, Hensel Phelps, Verizon Media (Skyward), Fox Television Station, the Chicago Police Department and Fortis Construction.
Our technology has been sold to and used by some of the world’s top companies and organizations, including drone companies such as LIFT Aircraft, Airobotics, SpeedBird Aero and Doosan Corporation and other leading and known brands and entities such as CNN, the New York Times, Hensel Phelps, Verizon Media (Skyward), Fox Television Station, the Chicago Police Department and Fortis Construction. 32 Our Solutions Our unique, patented technology is divided into two segments: commercial and defense-HLS applications.
All of our employees and our service provider are located in Israel. None of our employees are represented by labor unions or covered by collective bargaining agreements. We believe that we maintain good relations with all our employees.
None of our employees are represented by labor unions or covered by collective bargaining agreements. We believe that we maintain good relations with all our employees.
Market participants such as drone manufacturers and software solution providers are constantly engaged in designing, testing, and improving solutions for various markets. Full commercial operations of drones over populated areas are not likely to materialize without a regulator-approved safety solution.
Business use cases for drones have witnessed considerable growth over the past few years. Market participants such as drone manufacturers and software solution providers are constantly engaged in designing, testing, and improving solutions for various markets. Full commercial operations of drones over populated areas are not likely to materialize without a regulator-approved safety solution.
The Drone Rules, 2021 require all drones over 2 kilograms to be equipped with emergency recovery systems, including parachutes. 41 Grants for Research and Development Under the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and the regulations promulgated thereunder, or the Research Law, research and development programs which meet certain specified criteria and are approved by the IIA’s research committee are eligible for grants which are determined as a percentage of the project’s expenditure, as determined by the IIA’s research committee, in exchange for the payment of royalties from the revenues generated from the sale of products and related services developed, in whole or in part pursuant to, or as a result of, a research and development program funded by the IIA.
Grants for Research and Development Under the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and the regulations promulgated thereunder, or the Research Law, research and development programs which meet certain specified criteria and are approved by the IIA’s research committee are eligible for grants which are determined as a percentage of the project’s expenditure, as determined by the IIA’s research committee, in exchange for the payment of royalties from the revenues generated from the sale of products and related services developed, in whole or in part pursuant to, or as a result of, a research and development program funded by the IIA.
As demand and use cases for commercial drones have increased, so too have concerns over drone safety, and we believe our safety solutions place us in a strong position to take advantage of the developing market and regulatory frameworks, which are increasingly recognizing parachute recovery systems as effective forms of risk mitigation for expanded operational approvals across an increasing number of global regions. 30 Our unique, patented technology enables parachute deployment on drones in a fraction of a second using an autonomous computer paired with a ballistic parachute launcher.
As demand and use cases for commercial UAS have increased, so too have concerns over UAS safety, and we believe our safety solutions place us in a strong position to take advantage of the developing market and regulatory frameworks, which are increasingly recognizing parachute recovery systems as effective forms of risk mitigation for expanded operational approvals across an increasing number of global regions.
ParaZero is a leader in this market with smart sensing, best-in-class low altitude deployment, and drone management capabilities, and our technology can be fitted across virtually all drones, enabling advanced safety and data retention capabilities. Consumer vs. Commercial Drones The civilian drone industry can generally be divided into two primary groups: consumer and commercial.
ParaZero is a leader in this market with smart sensing, best-in-class low altitude deployment, and drone management capabilities, and our technology can be fitted across virtually all drones, enabling advanced safety and data retention capabilities.
Drones routinely experience mid-flight emergencies, including electrical system failures, bird strikes, excessive angular breach or altitude loss, etc., and can fall out of the sky and can be part of safety incidents such as collisions with other flying objects or structures.
Drones routinely experience mid-flight emergencies, including electrical system failures, bird strikes, excessive angular breach or altitude loss, etc., and can fall out of the sky and can be part of safety incidents such as collisions with other flying objects or structures. For example, the EASA reported that in 2023 a total of 12 UAS accidents and serious incidents happened.
According to regulations promulgated following the 2011 amendment, the maximum amount payable to the IIA in case of transfer of know-how outside Israel shall not exceed 6 times the value of the grants received plus interest, and in the event that the receiver of the grants ceases to be an Israeli corporation such payment shall not exceed six times the value of the grants received plus interest, with a possibility to reduce such payment to up to three times the value of the grants received plus interest if the research and development activity remains in Israel for a period of three years after payment to the IIA. 42 Transfer of know-how within Israel is subject to an undertaking of the recipient Israeli entity to comply with the provisions of the Research Law and the regulations promulgated thereunder, including the restrictions on the transfer of know-how and the obligation to pay royalties, as further described in the Research Law and related regulations.
According to regulations promulgated following the 2011 amendment, the maximum amount payable to the IIA in case of transfer of know-how outside Israel shall not exceed 6 times the value of the grants received plus interest, and in the event that the receiver of the grants ceases to be an Israeli corporation such payment shall not exceed six times the value of the grants received plus interest, with a possibility to reduce such payment to up to three times the value of the grants received plus interest if the research and development activity remains in Israel for a period of three years after payment to the IIA.
Globally, our solutions have proven critical to enabling commercial drone operations over populated areas and beyond-visual-line-of-sight, or BVLOS, which require prior approval from aviation regulators, including the U.S., Canada, Israel, Brazil, Singapore, Australia, Ireland and the U.K., among other countries.
Globally, our solutions have proven critical to enabling commercial drone operations over populated areas and beyond-visual-line-of-sight (BVLOS), which require prior approval from CAAs, including those in the U.S., Europe, Canada, Israel, Brazil, Singapore, Australia, and more.
We expect to complete the move to our new corporate headquarters in March 2024. Our monthly aggregate rental payment is NIS 71,000 (approximately $19,575) plus VAT at the applicable rate required under Israeli law. At the end of the term, we have an option to extend the lease for an additional three years.
On February 1, 2024, we entered into a three year lease agreement that commenced on March 15, 2024. Our monthly aggregate rental payment is NIS 71,000 (approximately $19,575) plus VAT at the applicable rate required under Israeli law. At the end of the term, we have an option to extend the lease for an additional three years.
Intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive one.
Despite these measures, any of our intellectual property and proprietary rights could be challenged, invalidated, circumvented, infringed or misappropriated. Intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive one.
On October 1, 2018, we announced that the first ever Federal Aviation Administration (FAA) waiver for flight over people with a parachute safety system was granted to a UAS operator using the ParaZero SafeAir system on a DJI Phantom 4.
Below are some key technological, testing, and regulatory milestones that we have been involved in for these two market segments: On October 1, 2018, we announced that the first ever Federal Aviation Administration (FAA) waiver for flight over people with a parachute safety system was granted to a UAS operator using the ParaZero SafeAir system on a DJI Phantom 4.
For more information, see “Item 3D — Risk Factors — Risks Related to our Intellectual Property.” Employees As of the date of this report, we have three senior management positions, two of whom are engaged on a full-time basis, and one of whom is engaged as a service provider. In addition, we have twelve full-time employees.
For more information, see “Item 3D — Risk Factors — Risks Related to our Intellectual Property.” Employees As of the date hereof, we currently have 22 full-time employees, including four members of senior management, one of whom is engaged as a service provider. All of our employees and our service provider are located in Israel.
In short, the uses and potential uses for drones are rapidly increasing as is the number of drones being utilized around the world, with a corresponding increase in associated issues such as regulation, licensing and safety. 36 Drone Safety Incidents Drones offer significant value to private industry and the public sector and are flying in ever-increasing numbers in the skies.
In short, the uses and potential uses for drones are rapidly increasing as is the number of drones being utilized around the world, with a corresponding increase in associated issues such as regulation, licensing and safety.
We have incurred net losses since our inception, including net losses of $3,771,379 and $1,653,038 for the years ended December 31, 2023 and 2022, respectively. As a result, we had accumulated losses of $18,423,057 as of December 31, 2023.
We have incurred net losses since our inception, including net losses of $11,054,230 and $3,771,379 for the years ended December 31, 2024 and 2023, respectively. As a result, we had accumulated losses of $29,477,287 as of December 31, 2024.
Approximate impact energy: 56.24 Joules. Compatible with DJI Matrice 200 & 210 series (drone types). 31 SafeAir M-300 Pro Autonomous parachute system designed for the DJI Matrice 300 series, ASTM F3322-18 certified. Total weight: 900 grams. Minimum safe effective altitude: 30.39 meters. Average descent rate: 4.41 meters per second. Approximate impact energy: 87.5 joules.
SafeAir M-300 Pro Autonomous parachute system designed for the DJI Matrice 300 series Compliance and certification: ASTM F3322, CE Class C5, DVR for MoC 2511 and 2512 Total weight: 900 grams. Minimum safe effective altitude: 30.39 meters. Average descent rate: 4.41 meters per second. Approximate impact energy: 87.5 joules.
Additionally, these devices are witnessing a high demand in the real estate and construction sector owing to their ability to survey lands, provide continuous and precise project notifications, improve safety and prevent dangerous incidents on construction sites. Business use cases for drones have witnessed considerable growth over the past few years.
Drones are used for multiple applications ranging from filmmaking to emergency response. Additionally, these devices are witnessing a high demand in the real estate and construction sector owing to their ability to survey lands, provide continuous and precise project notifications, improve safety and prevent dangerous incidents on construction sites.
The arrangement permitted Paras Aerospace, to provide ASTM-certified parachute systems to the Indian market. In November of 2021, we received ASTM certification for the SafeAir system for the DJI M200 & DJI M300, two leading enterprise drone platforms, further expanding the options for operators to apply for regulatory approvals using our solutions.
In November of 2021, we completed ASTM testing and compliance for the SafeAir system for the DJI M200 & DJI M300, two leading enterprise drone platforms, further expanding the options for operators to apply for regulatory approvals using our solutions.
On September 6, 2018, our name was changed to ParaZero Israel Ltd., and on November 4, 2018, our name was changed to our current name, ParaZero Technologies Ltd. Our principal executive offices are located at 30 Dov Hoz, Kiryat Ono, 5555626, Israel. Our telephone number in Israel is +972-3-688-5252. Our website address is www.parazero.com .
On September 6, 2018, our name was changed to ParaZero Israel Ltd., and on November 4, 2018, our name was changed to our current name, ParaZero Technologies Ltd. Our principal executive offices are located at 1 Hatachana Street, Kfar Saba, 4453001, Israel. Our telephone number in Israel is +972-50-275-3666. Our website address is www.parazero.com .
Drones have become an integral workflow tool among a myriad of global industries and have a wide array of commercial applications, such as photography, agriculture, package delivery, first response/public safety, surveying, construction site monitoring, and infrastructure inspection. Drones are easy enough even for private individuals to maintain and operate and do not require expensive infrastructure, allowing for recreational use.
UAS have become an integral workflow tool among a myriad of global industries and have a wide array of commercial applications, such as photography, agriculture, package delivery, first response/public safety, surveying, construction site monitoring, and infrastructure inspection.
Various types of consumer drones can be legally purchased over the internet or in retail stores in a range of prices. Consumer drones are mostly used for fun and recreational hobbyist photography and have seen major widespread growth globally. Commercial or enterprise drones are generally more expensive, heavier and are designed to carry costly payloads such as high-end cameras.
Commercial Drones The civilian drone industry can generally be divided into two primary groups: consumer and commercial. Various types of consumer drones can be legally purchased over the internet or in retail stores in a range of prices. Consumer drones are mostly used for fun and recreational hobbyist photography and have seen major widespread growth globally.
If any one of the proceeding conditions is not met, the operations are considered advanced and stricter licensing, certification and operational restrictions are imposed. 40 When operations fall outside the basic or advanced categories, such as flights beyond visual line-of-sight or drones that weigh more than 25 kilograms, an application for a special flight operations certificate (SFOC) must be submitted to the Minister of Transport.
When operations fall outside the basic or advanced categories, such as flights beyond visual line-of-sight or drones that weigh more than 25 kilograms, an application for a special flight operations certificate (SFOC) must be submitted to the Minister of Transport. Once granted, the operations are limited to the specific purpose approved in the SFOC.
These authorizations facilitate new business opportunities and applications for expanded drone operations worldwide, thus enhancing the value proposition of our solutions for our global customers.
These authorizations facilitate new business opportunities and applications for expanded UAS operations worldwide, thus enhancing the value proposition of our solutions for our global customers. The rapid adoption of UAS technologies in recent years has also introduced significant security challenges.
Parachute systems effectively address SORA’s ground risk mitigation element, known as M2 mitigation, due to the safety provided in the event of a critical in-flight failure.
Parachute systems effectively address SORA’s ground risk mitigation element, known as M2 mitigation, due to the safety provided in the event of a critical in-flight failure. EASA has defined certain Standard Scenarios, or STSs, for drone operations to simplify approvals for specific types of flights.
The approval was obtained by our Australian regional partner, OVRL, whose tailored safety case and Specific Operations Risk Assessment application helped facilitate the landmark approval, now paving the way for all organizations throughout Australia to benefit from similar operational approvals In October 2023, we announced that we expanded our collaboration into the drones defense market with Maris-Tech Ltd, or Maris.
The approval was obtained by our Australian regional partner, OVRL, whose tailored safety case and Specific Operations Risk Assessment application helped facilitate the landmark approval, now paving the way for all organizations throughout Australia to benefit from similar operational approvals In January 2024, we announced that we facilitated one of our customers in obtaining the first-ever light uncrewed aircraft system operator certificate, or LUC, in Denmark.
Our success depends, in part, on an intellectual property portfolio that supports future revenue streams and erects barriers to our competitors.
Our success depends, in part, on an intellectual property portfolio that supports future revenue streams and erects barriers to our competitors. We are maintaining and building our patent portfolio through filing new patent applications, prosecuting existing applications, and licensing and acquiring new patents and patent applications.
On February 1, 2024, we entered into a three year lease agreement commencing on March 15, 2024 to move our corporate headquarters, including our offices and research and development facility, to 1 HaTahana Street, Menivim Tower, Kfar Saba 4453001 Israel where we will occupy approximately 6,340 square feet, plus an additional storage space of approximately 260 square feet and 12 parking spaces.
Property, Plant and Equipment Our corporate headquarters, which includes our offices and research and development facility, is located at 1 HaTahana Street, Menivim Tower, Kfar Saba 4453001 Israel, where we occupy approximately 6,340 square feet, plus an additional storage space of approximately 260 square feet and 12 parking spaces.
Once granted, the operations are limited to the specific purpose approved in the SFOC. Parachute recovery systems with specific characteristics, such as autonomous and manual triggering capabilities, are approved by Transport Canada as a means for drone operators to obtain authorizations for operations over people.
Parachute recovery systems with specific characteristics, such as autonomous and manual triggering capabilities, are approved by Transport Canada as a means for drone operators to obtain authorizations for operations over people. The framework developed by Transport Canada also allows manufacturers or modifiers of RPAS to submit declarations that the RPAS can safely conduct certain advanced operations.
The certified category addresses drone operations with the highest level of risk and requires the certification of the UAS, a licensed remote pilot and an operator approved by the competent authority. The EASA’s approach to the certified category is similar to the approach used for manned aviation operations.
The C5 marking ensures that a drone is equipped with necessary safety features for conducting standard scenario operations without additional mitigations. The certified category addresses drone operations with the highest level of risk and requires the certification of the UAS, a licensed remote pilot and an operator approved by the competent authority.
We believe that we have created a new benchmark in drone safety with low altitude parachute deployment capabilities and high levels of reliability.
Our unique, patented technology enables parachute deployment on UAS in a fraction of a second using an autonomous computer paired with a ballistic parachute launcher. We believe that we have created a new benchmark in UAS safety with low altitude parachute deployment capabilities and high levels of reliability.
This represented an important milestone in making our solutions in particular, and certified parachute systems in general, a future requirement for drone manufacturers and operators. 33 On July 11, 2019, we announced that four additional waivers for operations over people were granted by the FAA to operators using the ParaZero SafeAir and ASTM Professional Kit on their Phantom 4s or Mavic 2s.
On July 11, 2019, we announced that four additional waivers for operations over people were granted by the FAA to operators using the ParaZero SafeAir for the Phantom 4s and Mavic 2s.
The industry is also characterized by rapidly advancing technologies and new systems introduced to the market. We face competition mainly from, but not limited to, Drone Rescue Systems, Indemnis, Fruity Chutes, Opale Paramodels, Dronavia, AVSS, and Galaxy GRS.
In the commercial parachute market for commercial drones as well as for the precise airdrop market, we face competition mainly from, but not limited to, Drone Rescue Systems, Fruity Chutes, Opale Paramodels, Dronavia, AVSS, and Galaxy GRS.
Our company was founded by a group of aviation professionals, together with veteran drone operators, to address the drone industry’s safety challenges. Our goal is to enable the drone industry to realize its greatest potential through increasing safety and mitigating operational risk.
Our company was founded by a group of aviation professionals and veteran drone operators, to address the drone industry’s challenges and needs.
As the global utilization of drones grows at an increasing rate, we expect the number of safety incidents to increase as well.
Drone Safety Incidents and Threats Commercial drones offer significant value to private industry and the public sector and are flying in ever-increasing numbers in the skies. As the global utilization of drones grows at an increasing rate, we expect the number of safety incidents to increase as well.
Our Solutions Our unique, patented technology for drones, the SafeAir system, is designed to protect hardware, people, and payload in the event of an in-flight failure. The SafeAir system is a smart parachute system that monitors UAS flight in real time, identifies critical failures and autonomously triggers a parachute in the event of an emergency.
The SafeAir system is a smart parachute system that monitors UAS flight in real time, identifies critical failures and autonomously triggers a parachute in the event of an emergency. The system contains a flight termination system, a black-box to enable post-flight analysis, and a warning buzzer to alert people of a falling drone.
Once more regulation is introduced, we are sure that our marketing efforts will focus on differentiating ourselves from our competition. 37 Competition The markets in which we operate are particularly competitive due to the lucrative nature of the contracts and contacts available within the commercial and industrial drone industries.
Competition The markets in which we operate are particularly competitive due to the lucrative nature of the contracts and contacts available within the commercial and industrial drone industries. The industry is also characterized by rapidly advancing technologies and new systems introduced to the market.
Average descent rate: 3.93 meters per second. Approximate impact energy: 8.2 Joules. Compatible with DJI Mavic Pro and Mavic 2 series (drone types, excluding Enterprise add-ons). SafeAir M-200 Pro Autonomous parachute system designed for the DJI Matrice 200 series, ASTM F3322-18 certified. Total weight: 790 grams. Minimum safe effective altitude: 30.47 meters. Average descent rate: 4.28 meters per second.
Minimum safe altitude: 19.11 meters. Average descent rate: 3.93 meters per second. Approximate impact energy: 8.2 Joules. SafeAir Mavic 3 Autonomous parachute system designed for the DJI Mavic 3 Series Compliance and certification: ASTM F3322, CE Class C5, EASA MoC 2511/2512 Total weight: 185 grams. Minimum safe altitude: 40.96 meters Average descent rate: 4.11 meters per second.
Future Applications We intend to develop additional applications for drones utilizing our technological capabilities and deep familiarity and expertise in the drone market. These future applications include: 1. Introducing next-generation electronics that fully support urban air mobility and manned UAS applications (such as air taxis and other personal transportation and delivery solutions).
Introducing next-generation electronics that fully support urban air mobility and manned UAS applications (such as air taxis and other personal transportation and delivery solutions).
We sell ready-to-use systems directly to OEMs, which usually are characterized by long sales cycles and in the commercial drone market are also original design manufacturers, or ODMs. Our direct interaction with OEMs enables us to work with them from the design stage, providing for seamless integration of our solutions into their products.
A portion of our defense and commercial solutions are sold directly to OEMs, which usually are characterized by long sales cycles and in the commercial drone market are also original design manufacturers, or ODMs. Defense OEMs are usually the solution provider for the end users.
Compatible with DJI Matrice 300 RTK (drone type). SafeAir M-600 Pro Autonomous parachute system designed for the DJI Matrice 600 series. Total weight: 845 grams. Minimum safe effective altitude: 29 meters. Average descent rate: 5.27 meters per second. Approximate impact energy: 215 joules. Compatible with DJI Matrice 600 Series (drone type).
SafeAir 350 Pro Autonomous parachute system designed for the DJI Matrice 350 series Compliance and certification: ASTM F3322, CE Class C5, DVR for MoC 2511 and 2512 Total weight: 900 grams. Minimum safe effective altitude: 30.39 meters. Average descent rate: 4.41 meters per second. Approximate impact energy: 87.5 joules.
Milestones The market for safety systems for commercial drones is rapidly evolving and subject to regulatory frameworks around the world that are in various stages of development and sophistication. We have played a key role, as a leader in parachute safety systems, in the development of both the technology behind and regulations around safe UAS operations.
We have played a key role, as a leader in parachute safety systems, in the development of both the technology and regulations around safe UAS operations. The global C-UAS market has been evolving rapidly. In the past two years and we invested in research and development of our C-UAS technology and solutions to answer these needs.
Total weight: 160 grams Minimum safe altitude: 19.02 meters Average descent rate: 5.12 meters per second Approximate impact energy: 21 Joules *Compatible with all Phantom 4 (drone type) series configurations, excluding RTK model SafeAir Mavic Autonomous parachute system designed for the DJI Mavic 2 series, ASTM F3322-18 certified. Total weight: 165 grams. Minimum safe altitude: 19.11 meters.
Approximate impact energy: 9.1 Joules. SafeAir Anzu Raptor Autonomous parachute system designed for the Anzu Raptor series (a DJI alternative for the US market) Compliance and certification: ASTM F3322 Total weight: 185 grams. Minimum safe altitude: 40.96 meters Average descent rate: 4.11 meters per second. Approximate impact energy: 9.1 Joules.
Status Title Type 31225/US/13-CIP USA 2014/10/22 16/576,882 Allowed DAMAGE MITIGATING APPARATUS OPERABLE BY PRESSURIZED DEPLOYMENT OF A FABRIC Patent 34686/US/16 USA 2018/03/15 16/492,327 Pending METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/EP/16 European Patent Office 2018/03/15 18771183.3 Pending METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/CN/16 China 2018/03/15 201880020223.0 Awaiting 1 st examination report METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/CA/16 Canada 2018/03/15 3,057,273 Awaiting 1 st examination report METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/JP/16 Japan 2018/03/15 2019-551441 Pending METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/SG/16 Singapore 2018/03/15 11201908488W Awaiting 1 st examination report METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/IN/16 India 2018/03/15 201937038229 Awaiting 1 st examination report METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent We have certain registered trademarks, tradenames and service marks, including “ParaZero,” “SafeAir,” “SmartAir,” “SmartAir Pro” and “TerminateAir.” We also rely on trade secrets, know-how, and continuous innovation to develop and maintain our competitive position.
Status Title Type 31225/CA/13-CIP Canada 2020/09/16 3,151,165 Await DAMAGE MITIGATING FOR AN AERIAL VEHICLE HAVING A DEPLOYABLE PARACHUTE Patent 31225/CN/13 China 2014/10/22 201480058600.1 ZL 201480058600.1 Granted APPARATUS AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/DE/13-EP Germany 2014/10/22 14855086.6 60 2014 083 159.1 Granted OBJECT TO BE PARACHUTED AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/EP/13 European Patent Office 2014/10/22 14855086.6 3060477 Granted OBJECT TO BE PARACHUTED AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/EP/13-CIP European Patent Office 2020/09/16 20865241.2 Pend DAMAGE MITIGATING FOR AN AERIAL VEHICLE HAVING A DEPLOYABLE PARACHUTE Patent 31225/EP/13-CIP2 European Patent Office 2023/03/19 23774147.5 Await DAMAGE MITIGATING APPARATUS AND METHOD Patent 31225/FR/13-EP France 2014/10/22 14855086.6 EP3060477 Granted OBJECT TO BE PARACHUTED AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/GB/13-EP Great Britain 2014/10/22 14855086.6 EP3060477 Granted OBJECT TO BE PARACHUTED AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/HK/13 Hong Kong 2014/10/22 16113519.7 HK1225359 Granted APPARATUS AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/IL/13-CIP-np2 Israel 2020/09/16 291438 Pend DAMAGE MITIGATING FOR AN AERIAL VEHICLE HAVING A DEPLOYABLE PARACHUTE Patent 31225/IN/13-CIP India 2020/09/16 202227020577 Await DAMAGE MITIGATING FOR AN AERIAL VEHICLE HAVING A DEPLOYABLE PARACHUTE Patent 31225/IN/13-CIP2 India 2023/03/19 202417078495 Await DAMAGE MITIGATING APPARATUS AND METHOD Patent 31225/mis/13 Israel 2013/10/24 229068 Granted APPARATUS AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/SG/13-CIP2 Singapore 2023/03/19 11202406524W Await DAMAGE MITIGATING APPARATUS AND METHOD Patent 31225/SG/13-CIP-DIV1 Singapore 2020/09/16 10202402312Y Await DAMAGE MITIGATING FOR AN AERIAL VEHICLE HAVING A DEPLOYABLE PARACHUTE Patent 31225/US/13 USA 2014/10/22 15/030,533 10,421,552 Granted APPARATUS AND METHOD FOR RAPID DEPLOYMENT OF A PARACHUTE Patent 31225/US/13-CIP USA 2014/10/22 16/576,882 11,286,053 Granted DAMAGE MITIGATING APPARATUS OPERABLE BY PRESSURIZED DEPLOYMENT OF A FABRIC Patent 31225/US/13-CIP2 USA 22/10/2014 17/700,335 Allowed AERIAL VEHICLE BASED DAMAGE AVOIDANCE SYSTEM INCLUDING SAFETY APPARATUS FOR MITIGATING DAMAGE TO NEARBY BYSTANDERS OR VEHICLES Patent 31225/US/13-CIP2-CON USA 2014/10/22 19/056,111 Await AERIAL VEHICLE BASED DAMAGE AVOIDANCE SYSTEM INCLUDING SAFETY APPARATUS FOR MITIGATING DAMAGE TO NEARBY BYSTANDERS OR VEHICLES Patent 34686/IL/16-ORP Israel 2017/03/22 251342 Granted METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/JP/16 Japan 2018/03/15 2019-551441 7097905 Granted METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/SG/16 Singapore 2018/03/15 11201908488W Granted METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/US/16-CIP USA 2018/03/15 18/527,975 Await METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 34686/WO/16-CIP WO 2023/12/04 PCT/IL2024/051150 Pend METHOD AND SYSTEM FOR DECELERATING AND REDIRECTING AN AIRBORNE PLATFORM Patent 43 We have certain registered trademarks, tradenames and service marks, including “ParaZero,” “SafeAir,” “SmartAir,” “SmartAir Pro” and “TerminateAir.” We also rely on trade secrets, know-how, and continuous innovation to develop and maintain our competitive position.
Our company was founded by a group of aviation professionals, together with veteran drone operators, to address the drone industry’s safety challenges. Our goal is to enable the drone industry to realize its greatest potential through increasing safety and mitigating operational risk. Drones are either navigated manually with a remote control or operated autonomously by software.
Our goals are to enable the commercial drone industry to realize its greatest potential through increasing safety, mitigating operational risk, and enabling regulatory compliance and to develop high-end, cutting-edge solutions based on our proprietary technology for defense end users. 31 Commercial UAS are either navigated manually with a remote control or operated automatically by software.
We and Vayu also have performance-based regulatory compliance testing and validation planned for the near future to unlock a range of use cases for Vayu’s global customers. Industry Overview and Market Challenges According to Contrive Datum Insights, the global commercial drone market size was valued at $13.4 billion in 2022.
We and Vayu also have performance-based regulatory compliance testing and validation planned for the near future to unlock a range of use cases for Vayu’s global customers. In November 2024 we announced that we received a Design Verification Report (DVR) approval from EASA, for the SafeAir M-300 Pro and SafeAir M-350 Pro parachute safety kits.
This includes everything from camera systems and specialist drone detection radars to net guns and cyber takeover systems.
This includes everything from camera systems and specialist drone detection radars to net guns and cyber takeover systems. Our DefendAir technology can be added as a modular component to different C-UAS System layouts, including: ● DefendAir Drone/FPV: a drone-mounted net interception system providing last-mile defense.
Business Overview Overview We are an aerospace company that is focused on drone safety systems and engaged in the business of designing, developing, and providing what we believe are best-in-class autonomous parachute safety systems for commercial drones, also known as unmanned aerial systems or UAS.
Business Overview Overview We are an aerospace company specializing in safety systems for commercial UAS and C-UAS solutions for the Defense and Homeland Security, or HLS, markets. Our expertise lies in designing, developing, and delivering what we believe to be best-in-class autonomous parachute safety systems for commercial UAS, along with cutting-edge proprietary technologies tailored for defense and HLS applications.
TC’s RPAS operations over people segment is currently supported by the entire portfolio of ParaZero SafeAir off-the-shelf solutions: Mavic, Phantom, M200, M300, and M600. Europe — European Aviation Safety Agency (EASA) EU Regulations 2019/947 and 2019/945 set out EASA’s regulatory framework for the operation of civil drones in Europe.
These declarations offer a streamlined approach to receiving the requisite approvals from Transport Canada for advanced RPAS operations. TC’s RPAS operations over people segment is currently supported by the entire portfolio of ParaZero SafeAir off-the-shelf solutions: Mavic, M200, M300 and M350.
The system contains a flight termination system, a black box to enable post-deployment analysis, and a warning buzzer to alert people of a falling drone. In addition to being fully autonomous, the SafeAir system includes a separate remote control for manual parachute deployment capability.
In addition to being fully autonomous, the SafeAir system includes a separate remote control for manual parachute deployment capability. The SafeAir System meets the requirements of the most stringent standards related to UAS parachutes. SafeAir Solution Portfolio SafeAir Mavic 2 Autonomous parachute system designed for the DJI Mavic 2 series, Compliance and certification: ASTM F3322 Total weight: 165 grams.
Installed on various OEM platforms, such as Doosan Mobility Innovation (South Korea) and Speedbird Aero (Brazil) SafeAir M350 Pro Designed for DJI’s newest enterprise drone, DJI M350. ParaZero’s SafeAir M350 Pro is a drone parachute recovery system that mitigates flight risks autonomously.
Installed on various OEM platforms, such as Doosan Mobility Innovation (South Korea) and Speedbird Aero (Brazil) Defense and Homeland Security : For the defense-HLS markets we offer the DefendAir technology and the DropAir Precision Airdrop System.
These types of drones typically require pilot training and certification.
Commercial or enterprise drones are generally more expensive, heavier and are designed to carry costly payloads such as high-end cameras. These types of drones typically require pilot training and certification.
Removed
We are an aerospace company that is focused on drone safety systems and engaged in the business of designing, developing, and providing what we believe are best-in-class autonomous parachute safety systems for commercial drones, also known as unmanned aerial systems, or UAS.
Added
UAS technology is now easily accessible not only to militaries around the world but also to non-state entities, criminal organizations, and individuals with malicious intent. After years of saving numerous unmanned and manned aerial systems, we applied our innovative, patent-protected technology in order to lead the battle against hostile drones.
Removed
The Company does not rely on licensing partners and licensees but instead relies on sale, collaboration and other arrangements with third-party service providers, vendors and development partners that purchase the Company’s products and then seek regulatory approval for the combined use of their drones with the Company’s products.
Added
We believe that our technology solutions leverage a distinct technology portfolio protected by global patents that were developed over the course of more than a decade. We believe that this technology portfolio enables us to effectively counteract various threats posed by drones by rapidly developing bespoke C-UAS solutions for key clientele.
Removed
The Company has no licensing agreements or arrangements with, and does not receive any royalty payments from, any parties, except for one license agreement for the out-license of software previously developed by the Company for the production of its hardware, which has generated an immaterial amount of revenue.
Added
Recent international conflicts have highlighted the extensive use of drones in various attacks and the critical necessity to counteract these strikes promptly with minimal damage as well as deliver critical supplies in high-risk operational zones. We have commenced development of dedicated solutions based on our technology.
Removed
SafeAir Solutions Portfolio SafeAir Phantom Autonomous parachute system designed for the DJI Phantom 4 series, ASTM F3322-18 certified.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

45 edited+16 added−6 removed39 unchanged
Financing Activities Net cash provided by financing activities of $10,302,656 for the year ended December 31, 2023, consisted of funds received from the IPO and the PIPE completed in the period, in an aggregate amount net of issuance costs of $10,802,656 and the receipt of a loan from a related party in the amount of $245,000 and the repayment of a loan to a related party in the amount of $745,000.
Net cash provided by financing activities of $10,302,656 for the year ended December 31, 2023, consisted of funds received from the IPO and the PIPE completed in the period, in an aggregate amount net of issuance costs of $10,802,656 and the receipt of a loan from a related party in the amount of $245,000 and the repayment of a loan to a related party in the amount of $745,000.
Our future capital requirements will depend on many factors, including: ● our ability to market and sell our products and to generate revenues; ● the progress and costs of our research and development activities; ● the costs of manufacturing our products; 50 ● the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; ● the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and ● the magnitude of our general and administrative expenses.
Our future capital requirements will depend on many factors, including: ● our ability to market and sell our products and to generate revenues; ● the progress and costs of our research and development activities; ● the costs of manufacturing our products; ● the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; ● the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and ● the magnitude of our general and administrative expenses.
Until December 31, 2023, the interest was calculated at a rate based on an annual application of the LIBOR, applicable to U.S. dollar deposits, however, pursuant to the latest IIA regulations, as of January 1, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72%.
Until December 31, 2023, the interest was calculated at a rate based on an annual application of the LIBOR, applicable to U.S. dollar deposits, however, pursuant to the latest IIA regulations, as of January 31, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72%.
The consideration available to our shareholders in a future transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA. 52 C. Research and development, patents and licenses, etc.
The consideration available to our shareholders in a future transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA. C. Research and development, patents and licenses, etc.
Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses. Results of Operations Our results of operations have varied in the past and can be expected to vary in the future due to numerous factors.
Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses. 47 Results of Operations Our results of operations have varied in the past and can be expected to vary in the future due to numerous factors.
The key assumptions used in the models are the expected future volatility in the price of the Company's shares, the expected life of the warrants and the probability of a future down-round adjustment event. Stock Based Compensation General and administrative, sales and marketing, and research and development expenses include stock-based compensation to the Company’s employees and directors.
The key assumptions used in the models are the expected future volatility in the price of the Company’s shares, the expected life of the warrants and the probability of a future down-round adjustment event. 52 Stock Based Compensation General and administrative, sales and marketing, and research and development expenses include stock-based compensation to the Company’s employees and directors.
The expected share option term is calculated for share options granted to employees and directors using the “simplified” method. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. 53
The expected share option term is calculated for share options granted to employees and directors using the “simplified” method. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term.
We anticipate that our research and development expenses will increase in the future as we increase our development headcount and infrastructure to support our continued research and development programs and the potential commercialization of our products. 47 Sales and marketing expenses Sales and marketing expenses consist primarily of labor costs and consultants.
We anticipate that our research and development expenses will increase in the future as we increase our development headcount and infrastructure to support our continued research and development programs and the potential commercialization of our products. Sales and marketing expenses Sales and marketing expenses consist primarily of labor costs and consultants.
Operating and Financial Review and Prospectus—Components of Operating Results ” and elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material effect on our total revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Operating and Financial Review and Prospectus—Components of Operating Results ” and elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2024 to December 31, 2024 that are reasonably likely to have a material effect on our total revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
See Note 2 to the audited consolidated financial statements for the year ended December 31, 2023 for additional information regarding these and our other significant accounting policies. Derivative Warrant Liabilities The Company analyses warrants issued to determine whether they meet the classification as liabilities or equity under US GAAP.
See Note 2 to the audited consolidated financial statements for the year ended December 31, 2024 for additional information regarding these and our other significant accounting policies. Derivative Warrant Liabilities The Company analyses warrants issued to determine whether they meet the classification as liabilities or equity under US GAAP.
Recent Offerings Initial Public Offering – July 2023 On July 31, 2023, we closed our initial public offering of 1,950,000 ordinary shares at a public offering price of $4.00 per ordinary share, for aggregate gross proceeds of $7,800,000 prior to deducting underwriting discounts and other offering expenses.
Initial Public Offering – July 2023 On July 31, 2023, we closed our initial public offering of 1,950,000 ordinary shares at a public offering price of $4.00 per ordinary share, for aggregate gross proceeds of $7,800,000 prior to deducting underwriting discounts and other offering expenses.
The convertible notes of $1,514,928 were converted upon the consummation of the IPO at a discount of 25% on the IPO share price. The change in fair value of the convertible notes is a non-cash expense to reflect the discount and record the convertible notes at fair value prior to their conversion into 504,976 ordinary shares.
The convertible notes of $1,514,928 were converted upon the consummation of the IPO at a discount of 25% on the IPO share price and is non-cash expense to reflect the discount and record the convertible notes at fair value prior to their conversion into 504,976 ordinary shares.
Our ordinary shares began trading on the Nasdaq Capital Market under the ticker symbol “PRZO” on July 27, 2023.
Our ordinary shares began trading on the Nasdaq Capital Market under the ticker symbol “PRZO” on July 27, 2023. A.
This increase was mainly attributed to that fact, that the company shifted towards sales to OEMs integrations that contributed to a higher volume of sales rather than to the aftermarket segment. This shift is accompanied with recuring revenues.
This increase was mainly attributed to that fact, that the company shifted towards sales to OEM integrations that contributed to a higher volume of sales rather than to the aftermarket segment. This shift is accompanied with recuring revenues.
In December 2023, we issued an aggregate of 2,885,174 ordinary shares upon the cashless exercise of pre-funded warrants and series B warrants by certain warrant holders. 46 A.
In December 2023, we issued an aggregate of 2,885,174 ordinary shares upon the cashless exercise of pre-funded warrants and series B warrants by certain warrant holders.
Operating Results- Comparison of the year ended December 31, 2023 to the year ended December 31, 2022- Research and Development Expenses.” D. Trend Information Other than as disclosed in “ Item 5.
Operating Results- Comparison of the year ended December 31, 2024 to the year ended December 31, 2023- Research and Development Expenses.” D. Trend Information Other than as disclosed in “ Item 5.
Considering the above, management expects that it will require additional financing in the future to fund its operations until it has generated significant revenues. As of December 31, 2023, we had approximately $7.2 million in cash and cash equivalents.
Considering the above, management expects that it will require additional financing in the future to fund its operations until it has generated significant revenues. As of December 31, 2024, we had approximately $4.2 million in cash and cash equivalents.
Income Taxes We have yet to generate taxable income in Israel. As of December 31, 2023, our net operating loss carryforwards for tax purposes were approximately $15.7 million. We anticipate that we will continue to generate losses for the foreseeable future and that we will be able to carry forward these losses for tax purposes indefinitely to future taxable years.
Income Taxes We have yet to generate taxable income in Israel. As of December 31, 2024, our net operating loss carryforwards for tax purposes were approximately $27.9 million. We anticipate that we will continue to generate losses for the foreseeable future and that we will be able to carry forward these losses for tax purposes indefinitely to future taxable years.
We expect that our existing cash and cash equivalents as of December 31, 2023, together with anticipated revenue from existing customers pursuant to existing purchase orders, as well as projected revenue from new customers, will be sufficient to fund our current operations and satisfy our obligations through the end of 2025.
We expect that our existing cash and cash equivalents as of December 31, 2024, together with anticipated revenue from existing customers pursuant to existing purchase orders, as well as projected revenue from new customers, will be sufficient to fund our current operations and satisfy our obligations through the end of the first quarter of 2026.
In connection with the PIPE, the Company issued warrants that are classified as liabilities and were measured at fair value upon issuance and revalued as of December 31, 2023.
Changes of fair value of derivative warrant liability In connection with the PIPE, the Company issued warrants that are classified as liabilities and were measured at fair value upon issuance and revalued as of December 31, 2024.
The number of ordinary shares issuable under the series B warrant was subject to an adjustment determined by the trading price of the Ordinary Shares following the effectiveness of a resale registration statement, or the Resale Registration Statement, that we undertook to file on behalf the Purchasers, subject to a pricing floor of $0.50 per ordinary share, such that the maximum number of ordinary shares underlying the series B warrants would be an aggregate of 5,563,638 ordinary shares.
The number of ordinary shares issuable under the series B warrant was subject to an adjustment determined by the trading price of the ordinary shares following the effectiveness of a resale registration statement, or the Resale Registration Statement, that we undertook to file on behalf the Purchasers, subject to a pricing floor of $0.50 per ordinary share, such that the maximum number of ordinary shares underlying the series B warrants would be an aggregate of 5,563,638 ordinary shares. 45 Following the effectiveness of the Resale Registration Statement, on December 14, 2023, the number of ordinary shares underlying the series B warrants was adjusted to an aggregate amount of 140,373 ordinary shares, exercisable at an exercise price of $0.005 per ordinary shares.
The Government of Israel, through the IIA, encourages research and development projects by providing grants. We may receive grants from the IIA at the rates that range from 20% to 50% of the research and development expenses, as prescribed by the research committee of the IIA.
We may receive grants from the IIA at the rates that range from 20% to 50% of the research and development expenses, as prescribed by the research committee of the IIA.
The increase was the result of increase with non-cash items such as changes in fair value of convertible note, changes in fair value of derivative warrant liabilities, along with increase in operating expenses, as described above. B. Liquidity and Capital Resources We are in our commercialization stage and do not generate significant revenue in this stage.
The increase was the result of an increase of mainly a non-cash item, changes in fair value of derivative warrant liabilities, along with an increase in operating expenses, as described above. 49 B. Liquidity and Capital Resources We are in our early commercialization stage and do not generate significant revenue in this stage.
Change of Control Any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or more of our share capital or voting rights, (ii) is entitled to appoint our directors or our chief executive officer or (iii) serves as one of our directors or as our chief executive officer (including holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if applicable) is required to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer described above.
Approval of transfer of IIA funded know-how to another Israeli company may be granted only if the recipient abides by the provisions of the Research Law and related regulations, including the restrictions on the transfer of know-how and manufacturing rights outside of Israel. 51 Change of Control Any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or more of our share capital or voting rights, (ii) is entitled to appoint our directors or our chief executive officer or (iii) serves as one of our directors or as our chief executive officer (including holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if applicable) is required to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer described above.
With respect to the royalty-bearing grants we are committed to pay royalties at a rate of 3% to 3.5% on sales proceeds from our products that were developed in whole or in part using these IIA grants.
As of the same date, our contingent liabilities regarding IIA grants received by us were in an aggregate amount of approximately $602,000. With respect to the royalty-bearing grants we are committed to pay royalties at a rate of 3% to 3.5% on sales proceeds from our products that were developed in whole or in part using these IIA grants.
Other finance income, net, primarily includes income from interest on deposits and exchange rate differences. Net loss and comprehensive loss Net loss and comprehensive loss increased by $2,118,341, or 128.1%, to $3,771,379 for the year ended December 31, 2023, compared to a net loss of $1,653,038 for the year ended December 31, 2022.
Other finance income, net, primarily includes income from interest on deposits and exchange rate differences. Net loss and comprehensive loss Net loss and comprehensive loss increased by $7,282,851, or 193%, to $11,054,230 for the year ended December 31, 2024, compared to a net loss of $3,771,379 for the year ended December 31, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Below is a summary of our results of operations for the periods indicated: Year Ended December 31, (in USD, except share and per share data) 2023 2022 Statements of Operations Data: Sales 620,508 560,118 Cost of sales (476,610 ) (337,565 ) Gross profit 143,898 222,553 Research and development expenses (636,801 ) (640,328 ) Sales and marketing expenses (487,904 ) (264,728 ) General and administrative expenses (1,472,872 ) (766,711 ) Initial public offering expenses (345,925 ) (389,396 ) Operating loss (2,799,604 ) (1,838,610 ) Change in fair value of convertible note (504,976 ) - Change in fair value of derivative warrant liabilities (277,600 ) - Issuance expenses attributable to derivative warrant liability (247,129 ) - Interest expenses on related party loan (152,745 ) (17,386 ) Other finance income, net 210,675 202,958 Net loss and comprehensive loss (3,771,379 ) (1,653,038 ) Basic and diluted loss per share (0.77 ) (0.49 ) Weighted average number of shares outstanding used in computing basic and diluted loss per share 4,891,071 3,349,071 48 Sales Sales increased by $60,390, or 10.8% to $620,508 for the year ended December 31, 2023, compared to $560,118 for the year ended December 31, 2022.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Below is a summary of our results of operations for the periods indicated: Year Ended December 31, (in USD, except share and per share data) 2024 2023 Statements of Operations Data: Sales 932,154 620,508 Cost of sales (873,861 ) (476,610 ) Gross profit 58,293 143,898 Research and development expenses (2,143,353 ) (636,801 ) Sales and marketing expenses (1,081,003 ) (487,904 ) General and administrative expenses (2,400,000 ) (1,472,872 ) Initial public offering expenses - (345,925 ) Operating loss (5,566,063 ) (2,799,604 ) Change in fair value of convertible note - (504,976 ) Change in fair value of derivative warrant liabilities (5,688,891 ) (277,600 ) Issuance expenses attributable to derivative warrant liability - (247,129 ) Interest expenses on related party loan - (152,745 ) Other finance income, net 200,724 210,675 Net loss and comprehensive loss (11,054,230 ) (3,771,379 ) Basic and diluted loss per share (0.99 ) (0.77 ) Weighted average number of shares outstanding used in computing basic and diluted loss per share 11,129,978 4,891,071 Sales Sales increased by $311,646, or 50.2%, to $932,154 for the year ended December 31, 2024, compared to $620,508 for the year ended December 31, 2023.
The table below presents our cash flows for the periods indicated: Year Ended December 31, (in USD, except share data) 2023 2022 Operating activities: (2,938,300 ) (1,971,635 ) Investing activities (25,757 ) (9,725 ) Financing activities 10,302,656 2,038,142 Net increase in cash and cash equivalents 7,338,599 56,782 Operating Activities Net cash used in operating activities of $2,938,300 for the year ended December 31, 2023.
The table below presents our cash flows for the periods indicated: Year Ended December 31, (in USD, except share data) 2024 2023 Operating activities: (4,889,222 ) (2,938,300 ) Investing activities (148,739 ) (25,757 ) Financing activities 1,820,001 10,302,656 Net increase (decrease) in cash and cash equivalents (3,249,539 ) 7,338,599 Operating Activities Net cash used in operating activities of $4,889,222 for the year ended December 31, 2024.
Change in fair value of convertible notes Fair value of SAFEs’ discounted conversion upon completion of the IPO was a non-cash amount of $ 504,976, for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2022.
Change in fair value of convertible notes Fair value of SAFEs’ discounted conversion upon completion of the IPO was a non-cash amount of $504,796 for the year ended December 31, 2023 and the Company did not incur such expense for the year ended December 31, 2024.
Our research and development efforts relating to our product have been financed in part through royalty-bearing grants in an aggregate amount of approximately $748,000 received from the IIA, as of December 31, 2023. As of the same date, our contingent liabilities regarding IIA grants received by us were in an aggregate amount of approximately $613,000.
Our research and development efforts relating to our product have been financed in part through royalty-bearing grants in an aggregate amount of approximately $748,000 received from the IIA, as of December 31, 2024, none of which were received during the most recent fiscal year ended.
Initial public offering expenses Initial public offering expenses sum-up to a total of $389,396 and $345,925 for the year ended December 31, 2022 and December 31, 2023 respectively. Fees attributable to the resale of existing securities that were offered together with newly issued shares in the IPO were recognized as initial public offering expenses within the statement of comprehensive loss.
Fees attributable to the resale of existing securities that were offered together with newly issued shares in the IPO were recognized as initial public offering expenses within the statement of comprehensive loss.
Net cash used in operating activities for the year ended December 31, 2022, was $1,971,635.
Net cash used in operating activities for the year ended December 31, 2023, was $2,938,300.
The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” elsewhere in the annual report.
Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Item 3.D Risk Factors” elsewhere in this Annual Report.
Each transaction of a product sale (including a warranty) consists of one performance obligation. Cost of Sales Cost of sales consists primarily of expenses related to the purchase of materials of products sold, salary and related. It also consists of write down charges of obsolete inventory items, warranty on product sold and royalties to the IIA on sales.
Cost of Sales Cost of sales consists primarily of expenses related to the purchase of materials of products sold, salary and related. It also consists of write down charges of obsolete inventory items, warranty on product sold and royalties to the IIA on sales. 46 The Government of Israel, through the IIA, encourages research and development projects by providing grants.
Interest expenses on related party loan Interest expenses with respect to funding from a related party was $152,745 for the year ended December 31, 2023, compared to interest expenses with respect to funding from related party of $17,386 for the year ended December 31, 2022.
For the year ended December 31, 2023, interest expenses with respect to funding from a related party was $152,745 as the loan was repaid during 2023. Other finance income, net Other finance income, net was $200,724 for the year ended December 31, 2024, compared to finance income, net of $210,675 for the year ended December 31, 2023.
Our discussion and analysis for the two years ended December 31, 2022 can be found in our F-1 dated November 6, 2023 (Registration No. 333-275351). Overview For more information regarding our business and operations, see the section entitled “Business Overview” above.
Our discussion and analysis for the two years ended December 31, 2023 can be found in our annual report on Form 20-F as filed with the SEC on March 21, 2024 (File No. 001-41760). Overview For more information regarding our business and operations, see the section entitled “Business Overview” above.
The increase resulted mainly from expansion in labor and professional services rendered after the IPO and costs associated with becoming a public company, including an increase in D&O insurance and certain filing services.
The increase resulted mainly from professional services rendered after the IPO and costs associated with becoming a public company, including an increase in D&O insurance and certain filing services. Initial public offering expenses Initial public offering expenses sum-up to a total of $nil and $345,925 for the years ended December 31, 2024 and December 31, 2023 respectively.
The increase was mainly due to the increase in and the volume of sales during the year ended December 31, 2023 and an inventory write off increase of approximately $21,000 and partly due to the increase in sales.
Cost of sales Cost of sales increased by $397,251, or 83.3%, to $873,861 for the year ended December 31, 2024, compared to $476,610 for the year ended December 31, 2023. The increase was mainly due to the increase in the volume of sales during the year ended December 31, 2024 and an inventory write off of approximately $114,680.
The Company allocated the issuance expenses incurred in the PIPE on a proportionate basis between the liability and equity instruments issued. The issuance expenses attributable to the derivate warranty liability for the year December 31, 2023 Company was $247,129.
The Company allocated the issuance expenses incurred in the PIPE on a proportionate basis between the liability and equity instruments issued. Interest expenses on related party loan The Company did not incur any interest expenses with respect to funding from a related party for the year ended December 31, 2024.
Net cash provided by financing activities of $2,038,142 for the year ended December 31, 2022, consisted mainly of a loan received from a related party in amount of $500,000 and the entry into certain SAFEs in the amount of $1,514,928. 51 Government Grants and Related Royalties We have developed drone safety systems, at least in part, with funds from IIA grants, and, accordingly, we would be obligated to pay these royalties on sales of the aforementioned products.
Government Grants and Related Royalties We have developed drone safety systems, at least in part, with funds from IIA grants, and, accordingly, we would be obligated to pay these royalties on sales of the aforementioned products.
Non-cash expenses of $277,600 were recorded as the change in fair value for the year ended December 31, 2023. 49 Issuance expenses attributable to derivate warrant liability The relative portion of the PIPE issuance expenses attributed to the derivate warrant liability was $247,129 for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2022.
Issuance expenses attributable to derivate warrant liability The relative portion of the PIPE issuance expenses attributed to the derivate warrant liability was $247,129 for the year ended December 31, 2023 and the Company did not incur such expense for the year ended December 31, 2024.
Sales and marketing expenses Sales and marketing expenses increased by $223,176, or 84.3%, to $487,904 for the year ended December 31, 2023, compared to $264,728 for the year ended December 31, 2022. The increase resulted mainly from labor and more subcontractors’ costs of $131,000 accompanied an increase in by travel and conferences participation costs of $28,000.
The increase resulted mainly from labor, professional services and more subcontractors’ costs of $449,788 accompanied an increase in by travel and conferences participation costs of $122,288. 48 General and administrative expenses General and administrative expenses increased by $927,128, or 62.9%, to $2,400,000 for the year ended December 31, 2024, compared to $1,472,872 for the year ended December 31, 2023.
Investing Activities Net cash used in investing activities increased by $16,032 to $25,757 for the year ended December 31, 2023, compared to $9,725 for the year ended December 31, 2022, which is due to the purchase of computers and office equipment.
The increase in the negative cash flow is mainly due to an increase in current operating losses during the period. 50 Investing Activities Net cash used in investing activities increased by $122,982 to $148,739 for the year ended December 31, 2024, compared to $25,757 for the year ended December 31, 2023, which is due to placing a restricted deposit and the purchase of computers and office equipment as a result of migrating into a new office space.
General and administrative expenses General and administrative expenses increased by $706,161, or 92.1%, to $1,472,872 for the year ended December 31, 2023, compared to $766,711 for the year ended December 31, 2022.
Sales and marketing expenses Sales and marketing expenses increased by $593,099, or 121.6%, to $1,081,003 for the year ended December 31, 2024, compared to $487,904 for the year ended December 31, 2023.
Research and development expenses Research and development expenses decreased by $3,527, or 0.6%, to $636,801 for the year ended December 31, 2023, compared to $640,328 for the year ended December 31, 2022. Research and development expenses mainly consist of labor and subcontractors’ cost.
Research and development expenses Research and development expenses increased by $1,506,552, or 237%, to $2,143,353 for the year ended December 31, 2024, compared to $636,801 for the year ended December 31, 2023. The increase resulted mainly from labor costs of $843,881 accompanied an increase in by materials and experiments costs of $386,839.
Removed
Following the effectiveness of the Resale Registration Statement, on December 14, 2023, the number of ordinary shares underlying the series B warrants was adjusted to an aggregate amount of 140,373 ordinary shares, exercisable at an exercise price of $0.005 per ordinary shares.
Added
The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances.
Removed
Cost of sales Cost of sales increased by $139,045, or 41.2%, to $476,610 for the year ended December 31, 2023, compared to $337,565 for the year ended December 31, 2022.
Added
Recent Offerings Registered Direct Offering – February 2025 On February 13, 2025, we closed a registered direct offering, or the RDO, with investors for the purchase and sale of (i) 2,518,182 of our ordinary shares and (ii) pre-funded warrants to purchase up to 300,000 ordinary shares at a purchase price of $1.10 per ordinary share and $1.09999 per pre-funded warrant.
Removed
Changes of fair value of derivative warrant liability The change in fair value of the initial measurement of the derivative issued as part of the PIPE was a non-cash amount of $277,600, for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2022.
Added
The pre-funded warrants were immediately exercisable at an exercise price of $0.00001 per ordinary shares, subject to adjustment as set forth therein, and will not expire until exercised in full. The aggregate gross proceeds to us from the RDO were approximately $3.1 million. As of the date hereof, 200,000 pre-funded warrants have been exercised into 200,000 ordinary shares.
Removed
The main difference was the amount of time that the loans were outstanding during the year ended December 31, 2023 and the additional loan received during the year. Other finance income, net Other finance income, net was $210,675 for the year ended December 31, 2023, compared to finance income, net of $202,958 for the year ended December 31, 2022.
Added
We paid an aggregate of $232,500 in placement agent fees and reimbursed the placement agent’s actual out-of-pocket expenses up to $55,000.
Removed
The increase in the negative cash flow is mainly due to an increase in current operating losses during the period offset by non-cash expenses such as the change in fair value of convertible notes, change in fair value of derivative warrant liabilities, stock-based compensation, and issuance expenses attributable to the derivative warrant liabilities.
Added
As of the date hereof, 3,500,000 pre-funded warrants, 2,798,903 series A warrants and 140,373 series B warrants have been exercised into an aggregate of 6,416,693 ordinary shares for aggregate gross proceeds of approximately $3.0 million.
Removed
Approval of transfer of IIA funded know-how to another Israeli company may be granted only if the recipient abides by the provisions of the Research Law and related regulations, including the restrictions on the transfer of know-how and manufacturing rights outside of Israel.
Added
Each transaction of a product sale (including a warranty) consists of one performance obligation.
Added
The Company recognizes revenue from customization agreements at a point in time for agreements that consist of single combined performance obligation of design of services and supply of a customized product that is satisfied at a point in time once the prototype is delivered to the customer and can be integrated into its equipment.
Added
With the commencement of development and customization contracts during year ended December 31, 2024, in which the performance obligation is satisfied over time, the Company measures the progress of the project using the input method based on the company’s efforts to satisfy the performance obligation.
Added
Non-cash expenses of $5,688,891 were recorded as the change in fair value for the year ended December 31, 2024 reflecting the change in the fair value of the outstanding warrants and warrants that were exercised during 2024.
Added
Financing Activities Net cash provided by financing activities of $1,820,001 for the year ended December 31, 2024, consisted of exercise of warrants A series.
Added
Internal Control Over Financial Reporting In connection with the audit of our consolidated financial statements as of December 31, 2024, we identified control deficiencies in our financial reporting process that constitute a material weakness. The material weakness related to lack segregation of duties.
Added
As defined in the standards established by the Public Company Accounting Oversight Board of the United States, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Added
Management has implemented corrective actions to address this issue, including improving the segregation of duties and enhancing our controls to ensure the accuracy of our financial reporting within account processes, and systems, documentation to evidence the operation of controls, procedures and approvals, periodic user access reviews, assessment of controls of financially significant vendors, written policies and procedures for accounting, IT and financial reporting and record keeping.
Added
We continue to improve its internal controls over financing, and has engaged outside consultants, experts in the controls and procedures over financial reporting, and internally, we have reviewed and improved these processes. In light of the remediation occurring, our internal controls are expected to be effective in the 2025.
Added
Except for additional personnel costs and the costs of our third-party service providers, we do not expect to incur any material costs related to our remediation plan.
Added
See “Item 5.E—Operating and Financial Review and Prospects—Critical Account Estimates—Internal Control Over Financial Reporting” and “Item 3.D—Risk Factors—Risks Related to Ownership of our Ordinary Shares— We have identified a material weakness in our internal control over financial reporting, and we may not be able to successfully implement remedial measures” for additional information.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

55 edited+33 added−39 removed118 unchanged
Ms. Falach Avrahamy is a senior financial professional with more than 17 years of experience. Ms. Falach Avrahamy has served as a member of the board of directors of Maris-Tech Ltd. (Nasdaq: MTEK) since February 2022, of Argaman Industries (TASE: Argaman) since June 2021 and of Crow Technologies 1977 Ltd. (OTC: CRWTF) since May 2018.
Falach Avrahamy is a senior financial professional with more than 17 years of experience. Ms. Falach Avrahamy has served as a member of the board of directors of Maris-Tech Ltd. (Nasdaq: MTEK) since February 2022, of Argaman Industries (TASE: Argaman) since June 2021 and of Crow Technologies 1977 Ltd. (OTC: CRWTF) since May 2018.
Under the Companies Law, our audit committee is responsible for: (i) determining whether there are deficiencies in the business management practices of our company, inter alia by consulting with the company’s internal or external auditors, and making recommendations to the board of directors to improve such practices; (ii) determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see “Item 6C — Directors, Senior Management and Employees — Board Practices — Approval of Related Party Transactions under Israeli Law”); (iii) determining the approval process for transactions that are “non-negligible” (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee; (iv) examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities; (v) examining the scope of work and fees of our auditor and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is determining the fees of our auditor; (vi) establishing “whistleblower” procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and (vii) where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto.
Under the Companies Law, our audit committee is responsible for: (i) determining whether there are deficiencies in the business management practices of our company, inter alia by consulting with the company’s internal or external auditors, and making recommendations to the board of directors to improve such practices; (ii) determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see “Item 6C — Directors, Senior Management and Employees — Board Practices — Approval of Related Party Transactions under Israeli Law”); 60 (iii) determining the approval process for transactions that are “non-negligible” (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee; (iv) examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities; (v) examining the scope of work and fees of our auditor and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is determining the fees of our auditor; (vi) establishing “whistleblower” procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and (vii) where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto.
The compensation policy must furthermore consider the following additional factors: ● the education, skills, expertise and accomplishments of the relevant director or executive; ● the director’s or executive’s roles and responsibilities and prior compensation agreements with him or her; ● the relationship between the cost of the terms of service of an office holder and the average and median compensation of the other employees of the company (including those employed through manpower companies), including the impact of disparities in salary upon work relationships in the company; ● the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a cap to the exercise value of non-cash variable compensation; and ● as to retirement benefits, the period of service of the director or executive, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.
The compensation policy must furthermore consider the following additional factors: ● the education, skills, expertise and accomplishments of the relevant director or executive; ● the director’s or executive’s roles and responsibilities and prior compensation agreements with him or her; 62 ● the relationship between the cost of the terms of service of an office holder and the average and median compensation of the other employees of the company (including those employed through manpower companies), including the impact of disparities in salary upon work relationships in the company; ● the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a cap to the exercise value of non-cash variable compensation; and ● as to retirement benefits, the period of service of the director or executive, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.
Our board of directors adopted an audit committee charter setting forth, among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq Listing Rules (in addition to the requirements for such committee under the Companies Law), including, among others, the following: ● oversight of our independent registered public accounting firm and recommending the fees, engagement, or termination of engagement of our independent registered public accounting firm to the shareholders or board of directors in accordance with Israeli law; ● recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting; 63 ● recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and ● reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities’ findings, receive reports regarding irregularities and legal compliance, acting according to “whistleblower policy” and recommend to our board of directors if so required.
Our board of directors adopted an audit committee charter setting forth, among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq Listing Rules (in addition to the requirements for such committee under the Companies Law), including, among others, the following: ● oversight of our independent registered public accounting firm and recommending the fees, engagement, or termination of engagement of our independent registered public accounting firm to the shareholders or board of directors in accordance with Israeli law; ● recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting; ● recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and ● reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities’ findings, receive reports regarding irregularities and legal compliance, acting according to “whistleblower policy” and recommend to our board of directors if so required.
In the event that the successor corporation or any affiliate thereof does not provide for such an assumption, and/or substitution of outstanding Awards and/or the provision of consideration for outstanding Awards, then unless determined otherwise with respect to a specific outstanding Award, the administrator shall have sole and absolute discretion to determine the effect of the Transaction on the portion of Awards outstanding immediately prior to the effective time of the Transaction, which may include any one or more of the following, whether in a manner equitable or not among individual participants or groups of participants: (i) all or a portion of the outstanding Awards shall become exercisable in full prior to the date of consummation of the Transaction, or on another date and/or dates or at an event and/or events as the administrator shall determine at its sole and absolute discretion; and/or (ii) that all or a portion or certain categories of the outstanding Awards shall be cancelled upon the actual consummation of the Transaction, and instead the holders thereof will receive consideration, or no consideration, in the amount and under the terms determined by the administrator at it sole and absolute discretion; and/or (iii) with respect to option awards, make a payment, in such form as may be determined by the administrator in respect of each vested share underlying the Award equal to the excess, if any, of (A) the per share amount payable to holders of Shares in connection with the Transaction, over (B) the per share exercise price payable by such holder in connection with such exercise.
In the event that the successor corporation or any affiliate thereof does not provide for such an assumption, and/or substitution of outstanding Awards and/or the provision of consideration for outstanding Awards, then unless determined otherwise with respect to a specific outstanding Award, the administrator shall have sole and absolute discretion to determine the effect of the Transaction on the portion of Awards outstanding immediately prior to the effective time of the Transaction, which may include any one or more of the following, whether in a manner equitable or not among individual participants or groups of participants: (i) all or a portion of the outstanding Awards shall become exercisable in full prior to the date of consummation of the Transaction, or on another date and/or dates or at an event and/or events as the administrator shall determine at its sole and absolute discretion; and/or (ii) that all or a portion or certain categories of the outstanding Awards shall be cancelled upon the actual consummation of the Transaction, and instead the holders thereof will receive consideration, or no consideration, in the amount and under the terms determined by the administrator at it sole and absolute discretion; and/or (iii) with respect to option awards, make a payment, in such form as may be determined by the administrator in respect of each vested share underlying the Award equal to the excess, if any, of (A) the per share amount payable to holders of Shares in connection with the Transaction, over (B) the per share exercise price payable by such holder in connection with such exercise. 70 F.
Dinar also currently serves as a member of the board of directors of Jeffs’ Brands, beginning September 30, 2021, a director in Charging Robotics Ltd. since November 2021 and as a director in Fuel Doctor Holding Inc. since April 4, 2023. Prior to these positions, Ms. Dinar served as CFO of Techcare Corp.
Dinar also currently serves as a member of the board of directors of Jeffs’ Brands, beginning September 30, 2021, a director in Charging Robotics Inc. since November 2021 and as a director in Fuel Doctor Holding Inc. since April 4, 2023. Prior to these positions, Ms. Dinar served as CFO of Techcare Corp.
The executive chairman of our board is entitled to the following compensation, as long as he serves in such position: (i) a monthly fee of NIS 30,000 + VAT (the “Monthly Fee”, which equals approximately $8,250) effective as of August 2, 2023, the date in which our executive chairman was elected; (ii) an annual bonus of up to six times the Monthly Fee, commencing in 2024; (iii) a grant of options to purchase 60,524 ordinary shares under our Global Share Incentive Plan (2022), where such options may be exercised until the lapse of 5 years from the date of their grant, (x) are subject to vesting over a period of four (4) years commencing on September 20, 2023, with 50% of such options vesting at the end of two years from the such date and afterwards 6.25% of the number of granted options shall vest each subsequent three-month period following the grant; (y) the exercise price per share of the options is $1.275 per share; and (z) the options grant will be in accordance and pursuant to Section 102 of the Tax Ordinance; and (iv) in the event that Mr.
The chairman of our board is entitled to the following compensation, as long as he serves in such position: (i) a monthly fee of NIS 30,000 + VAT (the “Monthly Fee”, which equals approximately $8,250) effective as of August 2, 2023, the date in which our executive chairman was elected; (ii) an annual bonus of up to six times the Monthly Fee, commencing in 2024; (iii) a grant of options to purchase 60,524 ordinary shares under our Plan, where such options may be exercised until the lapse of 5 years from the date of their grant, (x) are subject to vesting over a period of four (4) years commencing on September 20, 2023, with 50% of such options vesting at the end of two years from the such date and afterwards 6.25% of the number of granted options shall vest each subsequent three-month period following the grant; (y) the exercise price per share of the options is $1.275 per share; and (z) the options grant will be in accordance and pursuant to Section 102 of the Tax Ordinance; and (iv) in the event that Mr.
Borochov has served as a director of Peas of Bean Ltd between 2021-2024, Venda Robotics between 2021-2022, Plantify foods between August 2022 and August 2023, Safe Foods (Nasdaq: SVFD) between April 2023 and December 2023 and Polyrizon Ltd since 2021. Dr. Borochov has a Ph.D. from the Hebrew University of Jerusalem. We selected Dr.
Borochov has served as a director of Peas of Bean Ltd between 2021-2024, Venda Robotics between 2021-2022, Plantify foods between August 2022 and August 2023, Safe Foods (Nasdaq: SVFD) between April 2023 and December 2023 and Polyrizon Ltd between 2021 and 2024. Dr. Borochov has a Ph.D. from the Hebrew University of Jerusalem. We selected Dr.
Currently, we have a separate chairman and chief executive officer. 59 The board of directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the board, and it may, from time to time, revoke such delegation or alter the composition of any such committees, subject to certain limitations.
Currently, we have a separate chairman and chief executive officer. The board of directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the board, and it may, from time to time, revoke such delegation or alter the composition of any such committees, subject to certain limitations.
However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision. Chief executive officer.
However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision. 67 Chief executive officer.
Falach Avrahamy is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by the Nasdaq Stock Market rules. Compensation Committee Under the Companies Law, the board of directors of any public company must establish a compensation committee.
Falach Avrahamy is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by the Nasdaq Stock Market rules. 61 Compensation Committee Under the Companies Law, the board of directors of any public company must establish a compensation committee.
Under the Companies Law, we are required to adopt an office holder compensation policy no later than 9 months from the consummation of our initial public offering. We adopted our compensation policy at the shareholders on November 2, 2023.
Under the Companies Law, we are required to adopt an office holder compensation policy no later than 9 months from the consummation of our initial public offering. We adopted our compensation policy at the meeting of our shareholders on November 2, 2023.
The Plan provides for granting Awards in compliance with Section 102 of the Israeli Income Tax Ordinance (New Version), 5721-1961, or the Ordinance, or, for Awards granted to our consultants, advisors, service providers or controlling shareholders, under Section 3(i) of the Ordinance.
Eligibility. The Plan provides for granting Awards in compliance with Section 102 of the Israeli Income Tax Ordinance (New Version), 5721-1961, or the Ordinance, or, for Awards granted to our consultants, advisors, service providers or controlling shareholders, under Section 3(i) of the Ordinance.
Additionally, if a majority of members of the board of directors or the audit committee, as the case may be, has a personal interest, such directors who have a personal interest in a transaction may be present, and a shareholder approval would also be required. 68 Disclosure of Personal Interests of a Controlling Shareholder Under the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company.
Additionally, if a majority of members of the board of directors or the audit committee, as the case may be, has a personal interest, such directors who have a personal interest in a transaction may be present, and a shareholder approval would also be required. 66 Disclosure of Personal Interests of a Controlling Shareholder Under the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company.
Their terms of employment are subject to the approval of the compensation committee, the board of directors, and may also require shareholder approval, and are subject to the terms of any applicable employment agreements that we may enter into with them. 58 With the exception of our external directors, our board is split into three classes with staggered three-year terms.
Their terms of employment are subject to the approval of the compensation committee, the board of directors, and may also require shareholder approval, and are subject to the terms of any applicable employment agreements that we may enter into with them. 58 Our board is split into three classes with staggered three-year terms.
Shetzer served as our Head of Product from August 2018 to January 2020. Before joining the company, Mr. Shetzer co-founded and served as the CEO of TypeIV, a startup in the digital health arena, from January 2017 to July 2018. Prior to that, Mr.
Prior to this role, Mr. Shetzer served as our Head of Product from August 2018 to January 2020. Before joining the company, Mr. Shetzer co-founded and served as the CEO of TypeIV, a startup in the digital health arena, from January 2017 to July 2018. Prior to that, Mr.
Compensation The following table presents information regarding compensation accrued in our financial statements for our five most highly compensated office holders (within the meaning of the Companies Law), during or with respect to the year ended December 31, 2023.
Compensation The following table presents information regarding compensation accrued in our financial statements for our five most highly compensated office holders (within the meaning of the Companies Law), during or with respect to the year ended December 31, 2024.
We currently have directors’ and officers’ liability insurance, providing total coverage of $5 million for the benefit of all of our directors and officers, in respect of which we paid a twelve-month premium of approximately $250,000.
We currently have directors’ and officers’ liability insurance, providing total coverage of $5 million for the benefit of all of our directors and officers, in respect of which we paid a eighteen-month premium of approximately $250,000.
Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply. 65 Fiduciary Duties of Office Holders The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company.
Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply. 63 Fiduciary Duties of Office Holders The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company.
Under the Plan, the administrator has the authority, subject to applicable law, to determine (i) eligible participants, (ii) the number of options, shares, restricted share units or other equity based awards to be covered by each Award, (iii) the time or times at which an Award shall be granted, (iv) the vesting schedule and other terms and conditions applying to Awards, including acceleration, early exercise or deferment provisions, (v) the forms of written agreements applying to Awards and (vi) any other matter which is necessary or desirable for, or incidental to, the administration of the Plan and the granting of Awards. 70 Eligibility.
Under the Plan, the administrator has the authority, subject to applicable law, to determine (i) eligible participants, (ii) the number of options, shares, RSUs or other equity based awards to be covered by each Award, (iii) the time or times at which an Award shall be granted, (iv) the vesting schedule and other terms and conditions applying to Awards, including acceleration, early exercise or deferment provisions, (v) the forms of written agreements applying to Awards and (vi) any other matter which is necessary or desirable for, or incidental to, the administration of the Plan and the granting of Awards.
However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; 66 ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction; and ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder or imposed on him or her by a court: (1) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent.
However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction; and ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder or imposed on him or her by a court: (1) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent. 64 Pursuant to the Securities Law, an Israeli Company may also indemnify an office holder for expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees.
For a description of the terms of our options and option plan, see “Item 6C — Directors, Senior Management and Employees — Board Practices — Global Share Incentive Plan (2022).” 57 Directors’ Service Contracts Other than with respect to the chairman of our board of directors, we do not have written agreements with any director providing for benefits upon the termination of his employment with our company.
For a description of the terms of our options and option plan, see “Item 6E — Directors, Senior Management and Employees — Share Ownership — Global Share Incentive Plan (2022).” Directors’ Service Contracts Other than with respect to the chairman of our board of directors, we do not have written agreements with any director providing for benefits upon the termination of his employment with our company.
As of the date of this Annual Report, 243,984 Ordinary Shares remain available for future awards under the Plan. Ordinary Shares subject to Awards granted under the Plan that expire, are forfeited or otherwise terminated without having been exercised in full will become available again for future grant under the Plan. Administration.
As of the date of this Annual Report, 946,937 ordinary shares remain available for future awards under the Plan. ordinary shares subject to Awards granted under the Plan that expire, are forfeited or otherwise terminated without having been exercised in full will become available again for future grant under the Plan. Administration.
At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on the third annual general meeting following such election or re-election, such that from the annual general meeting of 2024 and after, each year the term of office of only one class of directors will expire.
At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on the third annual general meeting following such election or re-election, such that, each year the term of office of only one class of directors will expire.
Shtief is qualified to serve on our board of directors due to his extensive experience in a variety of management positions in the public sector and as a director of Israeli public companies. Naama Falach Avrahamy, External Director Ms. Naama Falach Avrahamy has served as a director since August 2023 and as one of our external directors since September 2023.
Shtief is qualified to serve on our board of directors due to his extensive experience in a variety of management positions in the public sector and as a director of Israeli public companies. Naama Falach Avrahamy, Class II Director Ms. Naama Falach Avrahamy has served as a director since August 2023. Ms.
Except as expressly provided therein, no issuance by us of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to an award. 71 In the event of (i) a merger or consolidation of us with or into another corporation resulting in such other corporation being the surviving entity or the direct or indirect parent of us or resulting in us being the surviving entity and there is a change in the ownership of our shares of, such that another person or entity owns fifty percent (50%) or more of the outstanding voting power of our securities by virtue of the transaction; or (ii) an acquisition of all or substantially all of our by any person (including an existing non-majority shareholder or its affiliate of shares not held by any affiliate of such shareholder); or (iii) the sale and/or transfer (including by way of an exclusive license) of all or substantially all of our assets; or (iv) such other transaction with a similar effect, as shall be determined by the administrator, the outstanding (including the unexercised, vested, unvested or restricted) portion of each outstanding Award shall be assumed or substituted with an equivalent Award or the right to receive consideration by the acquiring or successor corporation or an affiliate thereof, as shall be determined by such entity and/or the administrator, subject to the terms of the Plan.
In the event of (i) a merger or consolidation of us with or into another corporation resulting in such other corporation being the surviving entity or the direct or indirect parent of us or resulting in us being the surviving entity and there is a change in the ownership of our shares of, such that another person or entity owns fifty percent (50%) or more of the outstanding voting power of our securities by virtue of the transaction; or (ii) an acquisition of all or substantially all of our by any person (including an existing non-majority shareholder or its affiliate of shares not held by any affiliate of such shareholder); or (iii) the sale and/or transfer (including by way of an exclusive license) of all or substantially all of our assets; or (iv) such other transaction with a similar effect, as shall be determined by the administrator, the outstanding (including the unexercised, vested, unvested or restricted) portion of each outstanding Award shall be assumed or substituted with an equivalent Award or the right to receive consideration by the acquiring or successor corporation or an affiliate thereof, as shall be determined by such entity and/or the administrator, subject to the terms of the Plan.
Arrangements for Election of Directors and Members of Management There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or our directors were selected. See “I tem 7B — Major Shareholders and Related Party Transactions — Related Party Transactions ” for additional information. 56 B.
Arrangements for Election of Directors and Members of Management There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or our directors were selected. See “Item 7B — Major Shareholders and Related Party Transactions — Related Party Transactions” for additional information. B.
Such benefits may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds, education funds (referred to in Hebrew as “Keren Hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and payments for social security (2) Moshe Hukaylo served as the Company’s chief financial officer until May 28, 2023.
Such benefits may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds, education funds (referred to in Hebrew as “Keren Hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and payments for social security (2) Yuval Tovias served as the Company’s chief financial officer until December 2024.
The Plan provides for the grant of options, restricted share units and shares, or Awards, to our employees, offices, directors, advisors and consultants in order to promote a close identity of interests between those individuals and us. Shares Available for Grant. The total number of shares reserved for issuance under the Plan is 610,156.
The Plan provides for the grant of options, RSUs and shares, or Awards, to our employees, offices, directors, advisors and consultants in order to promote a close identity of interests between those individuals and us. Shares Available for Grant. The total number of shares reserved for issuance under the Plan is 3,110,156.
Shetzer holds a BSc., magna cum laude, in electrical and computer Engineering from the Ben-Gurion University, an M.B.A. from the Reichman University (IDC Herzliya) and is an honorary graduate of the Israeli Air Force Flight Academy. Yuval Tovias, Chief Financial Officer Yuval Tovias has served as our Chief Financial Officer since June 2023. Mr.
Shetzer holds a BSc., magna cum laude, in electrical and computer Engineering from the Ben-Gurion University, an M.B.A. from the Reichman University (IDC Herzliya) and is an honorary graduate of the Israeli Air Force Flight Academy. Regev Livne, Chief Financial Officer Mr. Livne has served as our Chief Financial Officer since December 2024. Mr.
The foregoing descriptions summarize the material aspects and practices of our board of directors. For additional details, we also refer you to the full text of the Companies Law, as well as of our amended and restated articles of association, which are exhibits to this registration statement of which this prospectus forms a part, and are incorporated herein by reference.
For additional details, we also refer you to the full text of the Companies Law, as well as of our amended and restated articles of association, which are exhibits to this registration statement of which this prospectus forms a part, and are incorporated herein by reference.
Global Share Incentive Plan (2022) The Global Share Incentive Plan (2022), or the Plan, was adopted by our board of directors on March 28, 2022.
Major Shareholders” below. 68 Global Share Incentive Plan (2022) The Global Share Incentive Plan (2022), or the Plan, was adopted by our board of directors on March 28, 2022.
Roy Borochov are “independent” for purposes of the Nasdaq Stock Market rules.
Roy Borochov and Natan Israeli are “independent” for purposes of the Nasdaq Stock Market rules.
Approval of Related Party Transactions under Israeli Law General Under the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if: ● the office holder acts in good faith and the act or its approval does not cause harm to the company; and ● the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company’s approval of such matter.
There are no service contracts between us and our directors in their capacity as directors, providing for benefits upon termination of service. 65 Approval of Related Party Transactions under Israeli Law General Under the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if: ● the office holder acts in good faith and the act or its approval does not cause harm to the company; and ● the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company’s approval of such matter.
In the event of termination of a participant’s employment or service with us or any of our affiliates due to such participant’s death, all vested options held by such participant as of the date of termination may be exercised by the participant’s estate, personal representative or beneficiaries at any time but not later than the earlier of: (i) the twelve-month anniversary of the participant’s death or (ii) the end of the term of the options.
In the event of termination of a participant’s employment or service with us or any of our affiliates for cause, all unexercised options held by such participant, whether vested or unvested on the date of termination will expire on the date of such termination and any unvested option shares shall terminate and expire on the day the Participant’s effective date of termination. 69 In the event of termination of a participant’s employment or service with us or any of our affiliates due to such participant’s death, all vested options held by such participant as of the date of termination may be exercised by the participant’s estate, personal representative or beneficiaries at any time but not later than the earlier of: (i) the twelve-month anniversary of the participant’s death or (ii) the end of the term of the options.
From 2012 to 2020, Mr. Shtief served as an Independent Director of Netz Group (TLV:NETZ). Mr. Shtief holds a Diploma from The Institute of Local Government (Israel). Mr. Shtief has a B.A. in criminology and political science from Bar-Ilan University, and an MBA from the University of Latvia. We believe that Mr.
Shtief holds a Diploma from The Institute of Local Government (Israel). Mr. Shtief has a B.A. in criminology and political science from Bar-Ilan University, and an MBA from the University of Latvia. We believe that Mr.
The compensation committee is also responsible for: (1) from time to time, recommending the board of directors any updates required to the compensation policy and examine the implementation thereof; (2) determining whether to approve the terms of compensation of office holders that require the committee’s approval; and (3) in certain situations described in the Companies Law, to determine whether to exempt employment terms of a candidate for the position of CEO of the company from the requirement to obtain shareholder approval. 64 The compensation policy must serve as the basis for decisions concerning the terms of employment or engagement of executive officers and directors, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement.
The compensation committee is also responsible for: (1) from time to time, recommending the board of directors any updates required to the compensation policy and examine the implementation thereof; (2) determining whether to approve the terms of compensation of office holders that require the committee’s approval; and (3) in certain situations described in the Companies Law, to determine whether to exempt employment terms of a candidate for the position of CEO of the company from the requirement to obtain shareholder approval.
Boaz Shetzer, Chief Executive Officer Mr. Shetzer has served as our Chief Executive Officer since January 2022. Prior to that, Mr. Shetzer served as our General Manager from January 2021 to December 2021. Prior to that, Mr. Shetzer served as our Chief Operations Officer from January 2020 to December 2020. Prior to this role, Mr.
(3) Member of the compensation committee. 53 Boaz Shetzer, Chief Executive Officer Mr. Shetzer has served as our Chief Executive Officer since January 2022. Prior to that, Mr. Shetzer served as our General Manager from January 2021 to December 2021. Prior to that, Mr. Shetzer served as our Chief Operations Officer from January 2020 to December 2020.
Under the Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders. 67 Our amended and restated articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Companies Law.
Under the Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders.
The audit committee must be comprised of at least three directors, including all of the external directors, and must be comprised of a majority of directors meeting certain independence criteria of the Companies Law. The chair of the committee must be an external director.
Audit Committee Under the Companies Law, as a public company, we are required to appoint an audit committee. The audit committee must be comprised of at least three directors, including all of the external directors, and must be comprised of a majority of directors meeting certain independence criteria of the Companies Law.
The remedies generally available upon a breach of contract will also apply to a breach of any of the duties mentioned above, and in the event of discrimination against other shareholders, additional remedies are available to the injured shareholder.
The remedies generally available upon a breach of contract will also apply to a breach of any of the duties mentioned above, and in the event of discrimination against other shareholders, additional remedies are available to the injured shareholder. D. Employees See “Item 4.B. Business Overview—Employees.” E. Share Ownership See “Item 7.A.
Roy Borochov (1) 49 Director Tali Dinar 52 Director Yigal Shtief (1)(2)(3)(4) 71 External Director Naama Falach Avrahamy (1)(2)(3)(4) 44 External Director (1) Independent director under applicable Nasdaq Capital Market and SEC rules, as affirmatively determined by our Board. (2) Member of the audit committee. (3) Member of the compensation committee. (4) An external director.
Roy Borochov (1) 50 Class II Director Tali Dinar 54 Class II Director Moshe Revach (1)(2)(3) 49 Class III Director Yigal Shtief (1)(2)(3) 72 Class III Director Naama Falach Avrahamy (1)(2)(3) 45 Class II Director (1) Independent director under applicable Nasdaq Capital Market and SEC rules, as affirmatively determined by our Board. (2) Member of the audit committee.
In addition, at the meeting of our shareholders on November 2, 2023, our shareholders approved the Long Term Non-Executive Directors Options Grant Scheme whereby each non-executive director (including our external directors) shall be entitled to a one-time grant of options to purchase 15,131 Ordinary Shares under our Global Share Incentive Plan (2022).
For further information see “Item 6C — Directors, Senior Management and Employees — Board Practices — Exculpation.” In addition, at the meeting of our shareholders on November 2, 2023, our shareholders approved the Long Term Non-Executive Directors Options Grant Scheme whereby each non-executive director (including our external directors) shall be entitled to a one-time grant of options to purchase 15,131 ordinary shares under our Plan (as defined below)).
Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes until the appointing director ceases to be a director or terminates the appointment.
Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes until the appointing director ceases to be a director or terminates the appointment. Committees of the Board of Directors Our board of directors has established two standing committees: the audit committee and the compensation committee.
In addition, the compensation committee may exempt the engagement terms of a candidate to serve as the chief executive officer from shareholders’ approval, if the compensation committee determines that the compensation arrangement is consistent with the company’s stated compensation policy, that the chief executive officer did not have a prior business relationship with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would impede the company’s ability to attain the candidate to serve as the company’s chief executive officer (and provide detailed reasons for the latter). 69 The approval of each of the compensation committee and the board of directors, with regard to the office holders and directors above, must be in accordance with the company’s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors may approve compensation terms of a chief executive officer that are inconsistent with the company’s stated compensation policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained by a special majority requirement.
In addition, the compensation committee may exempt the engagement terms of a candidate to serve as the chief executive officer from shareholders’ approval, if the compensation committee determines that the compensation arrangement is consistent with the company’s stated compensation policy, that the chief executive officer did not have a prior business relationship with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would impede the company’s ability to attain the candidate to serve as the company’s chief executive officer (and provide detailed reasons for the latter).
Revach to serve as a director due to his extensive government and corporate experience. 55 Tali Dinar, Director Ms. Dinar has served as our director since February 2022. She also serves as Chief Financial Officer of Medigus Ltd. (Nasdaq: MDGS) since June 2021. Ms.
Borochov to serve as a director because of his strong business background. Tali Dinar, Class II Director Ms. Dinar has served as our director since February 2022. She also serves as Chief Financial Officer of Xylo Technologies Ltd. (Nasdaq: XYLO) since June 2021. Ms.
Gilad was a senior product manager at mPrest systems, leading a multi-disciplinary air defense C4I project from 2014 to 2017. Prior to that, Mr. Gilad was a system engineer at System Design Solutions in 2013. Mr. Gilad was also a ground station and C2 system engineer for LEO imaging satellites from 2008 to 2012. Mr.
Prior to that he served as our R&D director from 2017 to 2020. Before joining ParaZero, Mr. Gilad was a senior product manager at mPrest systems, leading a multi-disciplinary air defense C4I project from 2014 to 2017. Prior to that, Mr. Gilad was a system engineer at System Design Solutions in 2013. Mr.
Directors and Senior Management Executive Officers and Directors The following table sets forth information regarding our executive officers and directors, including their ages as of December 31, 2023: Name Age Position Boaz Shetzer 44 Chief Executive Officer Yuval Tovias 62 Chief Financial Officer Yuval Gilad 38 Chief Product Officer Amitay Weiss 62 Chairman of the Board of Directors Moshe Revach (1)(2)(3) 47 Director Dr.
Directors and Senior Management Executive Officers and Directors The following table sets forth information regarding our executive officers and directors, including their ages as of March 21, 2025: Name Age Position Boaz Shetzer 45 Chief Executive Officer Regev Livne 44 Chief Financial Officer Yuval Gilad 39 Chief Product Officer Oren Aviram 52 Vice President of Sales Amitay Weiss 63 Chairman of the Board of Directors, Class I Director Natan Israeli (1) 53 Class I Director Dr.
Director Compensation Each external director is only entitled to receive an annual cash payment of $30,000 plus VAT per annum.
Director Compensation Each director, other than the chairman, is entitled to receive an annual cash payment of $30,000 plus VAT per annum. Each director is also entitled to reimbursements or coverage of expenses (including travel expenses), insurance and indemnification letters.
Dinar to serve as a director due to her long track record of leading public and private companies. Yigal Shtief, External Director Mr. Shtief has served as a director since August 2023 and as one of our external directors since September 2023. Mr. Shtief has served as an external director of Globe Exploration Inc (TLV:GLEX) since 2015.
Dinar to serve as a director due to her long track record of leading public and private companies. 55 Moshe Revach, Class III Director Mr. Revach has served as our director since February 2022.
Gilad is currently an MBA candidate at Reichman University (IDC Herzliya) and holds a BSc. degree in electrical and computer engineering from Ben-Gurion University. Amitay Weiss, Chairman of the Board of Directors Mr. Weiss has served as the Chairman of our board of directors since August 2023 and as a member of our Board since February 2022.
Aviram is an Israeli Air Force veteran and holds a B.A. in Political Science from the University of Haifa 54 Amitay Weiss, Chairman of the Board of Directors, Class I Director Mr. Weiss has served as the Chairman of our board of directors since August 2023 and as a member of our Board since February 2022.
Weiss to serve as a director because of his substantial business and management experience. Dr. Roy Borochov, Director Dr. Borochov has served as our director since February 2022 and until August 2023 served as our Chairman of the board of directors.
Israeli holds a B.S. in biology and psychology from Bar-Ilan University in Israel and a Master’s Degree in Political Science and Government from the University of Haifa in Israel. Dr. Roy Borochov, Class II Director Dr. Borochov has served as our director since February 2022 and until August 2023 served as our Chairman of the board of directors.
Weiss shall cease to serve as the executive chairman of our board, then he will be entitled to cash remuneration as the other non-executive directors of our Company. C. Board Practices Introduction Our board of directors consists of six (6) members. We believe that Yigal Shtief, Naama Falach Avrahamy, and Moshe Revach and Dr.
Weiss shall cease to serve as the executive chairman of our board, then he will be entitled to cash remuneration as the other non-executive directors of our Company. On February 19, 2025, the Board of Directors approved the increase of executive chairman chairman’s monthly fee to $10,000, which is subject to the approval of our shareholders.
Tovias holds a Master’s degree in Business Administration from Tel Aviv University and a Bachelor’s degree in economics and marketing from Haifa University. 54 Yuval Gilad, Chief Product Officer Mr. Gilad has served as our Chief Product Officer since November 2020. Prior to that he served as our R&D director from 2017 to 2020. Before joining ParaZero, Mr.
Livne is a Certified Public Accountant (CPA) in Israel and holds a Master’s Degree in Finance and Management “as well as” a B.A. in Business Administration and Accounting, from the Israeli College of Management. Yuval Gilad, Chief Product Officer Mr. Gilad has served as our Chief Product Officer since November 2020.
For a description of our option plan, see “Item 6C — Directors, Senior Management and Employees — Board Practices — Global Share Incentive Plan (2022).” Employment Agreements with Executive Officers We have entered into written employment or consulting agreements with each of our executive officers.
For a description of our option plan, see “Item 6E — Directors, Senior Management and Employees — Share Ownership — Global Share Incentive Plan (2022).” On July 30, 2024, the Board of Directors approved the grant of an aggregate of 112,807 options to purchase ordinary shares to certain employees and consultants of the Company.
Removed
Tovias brings more than three decades of global experience in finance across industries. Prior to joining us, between December 2021 and March 2023, Mr. Tovias served as Chief Financial Officer at Laminera Flow Optimization Ltd., a deep-tech company, optimizing fluid transport. Prior to that between November 2014 and June 2020, Mr.
Added
Livne has over 15 years of experience in executive finance roles across diverse industries ranging from early-stage startups to established international businesses. Prior to joining the Company, Mr.
Removed
Tovias served as Chief Financial Officer at TechFinancials, Inc., a software FinTech company (traded on AIM London stock exchange until February 2020 (AIM: TECH)), providing online trading and development platforms for blockchain technologies. Prior to that, Mr. Tovias held several positions as a chief financial officer, including at a software company located in Boston, MA. Mr.
Added
Livne served as the chief financial officer and chief operating officer of Innovpro, an Israel-based food technology company, since 2021, where he led the company’s expansion into North America and managed relationships with strategic investors. From 2017 to 2021, Mr.
Removed
Borochov to serve as a director because of his strong business background. Moshe Revach, Director Mr. Revach has served as our director since February 2022.
Added
Livne served as the chief financial officer of Votiro, a cyber security company, where he raised capital and supported the growth of the company into North America and Asia. From 2016 to 2017, Mr. Livne served as the chief financial officer of SCR Engineers Ltd. Prior to these roles, Mr.
Removed
Amounts paid in NIS are translated into U.S. dollars at the rate of NIS 3.6868 = U.S. $1.00, based on the average representative rate of exchange between the NIS and the U.S. dollar as reported by the Bank of Israel during such period of time.
Added
Livne held various positions in the finance departments of other companies, including “3M Attenti”, where he supported the integration into 3M, and Dmatek Ltd., which was previously listed on the London Stock Exchange. He also served as a senior accountant at PricewaterhouseCoopers in Israel, where he audited a wide range of companies, including publicly traded and privately held companies. Mr.
Removed
Executive Officer Salary and Related Benefits (1) Bonus Payments, Benefits and Perquisites Stock-Based Compensation Total Boaz Shetzer $ 234,289 $ 26,961 $ 2,472 $ 263,722 Yuval Gilad 187,167 25,021 1,483 213,671 Yuval Tovias 80,157 27,571 1,483 109,211 Roy Borochov 61,691 - 362 62,053 Moshe Hukaylo (2) 101,456 - - 101,456 (1) Represents the directors’ and senior management’s gross salary plus payment of mandatory social benefits made by the company on behalf of such persons.
Added
Gilad was also a ground station and C2 system engineer for LEO imaging satellites from 2008 to 2012. Mr. Gilad is currently an MBA candidate at Reichman University (IDC Herzliya) and holds a BSc. degree in electrical and computer engineering from Ben-Gurion University. Oren Aviram, Vice President of Sales Mr.
Removed
Such amounts comply with the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director), 5760-2000, or the Compensation Regulations, for companies with equity size and value similar to ours, subject to certain reliefs included in the Companies Regulations (Relief for Public Companies with Shares Listed for Trading on a Stock Market Outside of Israel), 5760-2000, and further subject to adjustments.
Added
Aviram has served as our Vice President of Sales since 2016.. Mr.
Removed
Each external director is also entitled to reimbursements or coverage of expenses (including travel expenses), insurance and indemnification letters.
Added
Aviram has over 15 years of experience in international sales and led sales and marketing for IAI - Israel Aerospace Industries, one of the world’s largest manufacturers of aerial and astronautic systems from 2005 to 2016, where he was responsible for finalizing large contracts while leading both legal and financial negotiations around the globe. Mr.
Removed
For further information see “Item 6C — Directors, Senior Management and Employees — Board Practices — Exculpation.” Compensation of an external director is determined prior to his or her appointment and may not be changed during his or her term subject to certain exceptions.
Added
Weiss to serve as a director because of his substantial business and management experience. Natan Israeli, Class I Director Mr. Israeli has served as our director since December 2024. Mr. Israeli has served as the Chief Customer Officer of Kaltura, Inc. (Nasdaq: KLTR) since November 2020 and as an executive officer since January 2024.
Removed
The terms of engagement of our non-external directors, other than the chairman, are identical to the terms of engagement of our external directors as set forth above.
Added
Prior to joining Kaltura, throughout 2020, Mr. Israeli was the chief executive officer of Ambar A.M. Enterprise Ltd., that was active in the Israeli energy and infrastructure industries. Prior to that Mr. Israeli, a Brig. Gen. (Res.), served for three decades in the Israeli Air Force (IAF) as an officer and helicopter pilot.
Removed
External directors may be elected for up to two additional three-year terms after their initial three-year term in the manner and under the circumstances described below, with certain exceptions as described in “External Directors” below. External directors may be removed from office only under the limited circumstances set forth in the Companies Law.
Added
His last position was Head of the Personnel Directorate of the IAF from 2016 to 2020, in which capacity he was responsible for tens of thousands of people. Prior to that Mr. Israeli held various senior positions, including the IAF’s CIO and head of its information systems from 2012 to 2014. Mr.
Removed
The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to our audit committee.
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Revach to serve as a director due to his extensive government and corporate experience. Yigal Shtief, Class III Director Mr. Shtief has served as a director since August 2023. Mr. Shtief has served as an external director of Globe Exploration Inc (TLV:GLEX) since 2015. From 2012 to 2020, Mr. Shtief served as an Independent Director of Netz Group (TLV:NETZ). Mr.
Removed
DIVERSITY OF THE BOARD OF DIRECTORS Board Diversity Matrix (As of March 21, 2024) Country of Principal Executive Offices Israel Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 6 Part I: Gender Identity Female Male Non- Binary Did Not Disclose Gender Directors 2 4 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 External Directors Under the Companies Law, companies incorporated under the laws of the State of Israel that are publicly traded, including Israeli companies with shares listed on the Nasdaq, are generally required to appoint at least two external directors who meet the qualification requirements set forth in the Companies Law.
Added
Amounts paid in NIS are translated into U.S. dollars at the rate of NIS 3.699= U.S. $1.00, based on the average representative rate of exchange between the NIS and the U.S. dollar as reported by the Bank of Israel during such period of time. 56 Executive Officer Salary and Related Benefits (1) Bonus Payments, Benefits and Perquisites Stock-Based Compensation Total Boaz Shetzer, Chief Executive Officer $ 188,851 $ 75,341 $ 14,299 $ 278,491 Oren Aviram, Vice President of Sales 81,103 146,645 5,019 232,767 Yuval Gilad, Chief Product Officer 164,746 35,043 8,580 208,368 Yuval Tovias, Former Chief Financial Officer (2) 155,124 - - 155,124 Amitay Weiss, Chairman of the Board of Directors 97,323 - 14,299 111,622 (1) Represents the directors’ and senior management’s gross salary plus payment of mandatory social benefits made by the company on behalf of such persons.
Removed
Pursuant to regulations under the Companies Law, the board of directors of a company such as ours is not required to have external directors if: (i) the company does not have a controlling shareholder (as such term is defined in the Companies Law); (ii) a majority of the directors serving on the board of directors are “independent,” as defined under Nasdaq Rule 5605(a)(2); and (iii) the company follows Nasdaq Rule 5605(e)(1), which requires that the nomination of directors be made, or recommended to the board of directors, by a Nominating Committee of the board of directors consisting solely of independent directors, or by a majority of independent directors.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

12 edited+11 added−14 removed9 unchanged
For a description of our option plan, see “Item 6C — Directors, Senior Management and Employees — Board Practices — Global Share Incentive Plan (2022).” The shares are subject to transfer restrictions and “lock up” provisions upon the occurrence of certain conditions. C. Interests of Experts and Counsel Not applicable. 74
For a description of our option plan, see “Item 6E — Directors, Senior Management and Employees — Board Practices — Global Share Incentive Plan (2022).” The shares are subject to transfer restrictions and “lock up” provisions upon the occurrence of certain conditions. C. Interests of Experts and Counsel Not applicable.
The number of record holders is not representative of the number of beneficial holders of our Ordinary Shares, as 99.809% of our outstanding ordinary shares are recorded in the name of Cede & Co. as nominee for the Depository Trust Company, in whose name all shares held in “street name” are held in the United States.
The number of record holders is not representative of the number of beneficial holders of our ordinary shares, as 100% of our outstanding ordinary shares are recorded in the name of Cede & Co. as nominee for the Depository Trust Company, in whose name all shares held in “street name” are held in the United States.
Major Shareholders The following table sets forth information with respect to the beneficial ownership of our Ordinary shares as of March 11, 2024 by: ● each person or entity known by us to own beneficially 5% or more of our outstanding Ordinary shares; ● each of our directors and executive officers individually; and ● all of our directors and executive officers as a group.
Major Shareholders The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 21, 2025 by: ● each person or entity known by us to own beneficially 5% or more of our outstanding ordinary shares; ● each of our directors and executive officers individually; and ● all of our directors and executive officers as a group.
For purposes of the table below, we deem Common RSU reserve pursuant to options that are currently exercisable or exercisable within 60 days of December 31, 2023 to be outstanding and to be beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
For purposes of the table below, we deem ordinary shares issuable pursuant to options that are currently exercisable or exercisable within 60 days of December 31, 2024 to be outstanding and to be beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
Percentage of shares beneficially owned is based on 10,806,572 Ordinary Shares issued and outstanding as of March 11, 2024. 72 As of March 11, 2024, based on information provided to us by our transfer agent in the United States and other information reasonably available to us, we had no holders of record of our ordinary shares in the United States.
Percentage of shares beneficially owned is based on 16,679,631 ordinary shares issued and outstanding as of March 21, 2025. As of March 21, 2025, based on information provided to us by our transfer agent in the United States and other information reasonably available to us, we had no holders of record of our ordinary shares in the United States.
Changes in Ownership of Major Shareholders To our knowledge, other than as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant change in the percentage ownership held by any major shareholder since January 1, 2021.
(12) See footnotes (1)-(10) for certain information regarding beneficial ownership. 72 Changes in Ownership of Major Shareholders To our knowledge, other than as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant change in the percentage ownership held by any major shareholder since January 1, 2022.
A description of any material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the past three years is included under “Certain Relationships and Related Party Transactions.” Unless otherwise noted below, the address of each shareholder, director and executive officer is c/o ParaZero Technologies Ltd., 30 Dov Hoz, Kiryat Ono, 5555626 Israel.
A description of any material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the past three years is included under “Item 7B — Major Shareholders and Related Party Transactions — Related Party Transactions”. 71 Unless otherwise noted below, the address of each shareholder, director and executive officer is c/o ParaZero Technologies Ltd., 1 Hatachana Street, Kfar Saba, 4453001, Israel.
For further information, see “Item 6C — Directors, Senior Management and Employees — Board Practices — Exculpation.” Options As of the date of this prospectus, we have issued an aggregate of 366,172 options to purchase Ordinary Shares to any of our directors or executive officers.
For further information, see “Item 6C — Directors, Senior Management and Employees — Board Practices — Exculpation.” Options As of the date of this Annual Report, we have issued an aggregate of 587,923 options to purchase ordinary shares and an aggregate of 1,560,165 RSUs to our directors or executive officers, of which the grants of an aggregate of 972,879 RSUs to certain directors and officers require the approval of our shareholders.
These agreements contain customary provisions and representations, including confidentiality, noncompetition, non-solicitation and inventions assignment undertakings by the executive officers.
Agreements and Arrangements With, and Compensation of, Directors and Executive Officers Certain of our executive officers have employment or services agreements with us. These agreements contain customary provisions and representations, including confidentiality, noncompetition, non-solicitation and inventions assignment undertakings by the executive officers.
The major shareholders listed above do not have voting rights with respect to their ordinary shares that are different from the voting rights of other holders of our ordinary shares. B.
The major shareholders listed above do not have voting rights with respect to their ordinary shares that are different from the voting rights of other holders of our ordinary shares. B. Related Party Transactions The following is a description of the material terms of those transactions with related parties to which we are party since January 1, 2024.
Roy Borochov — — Boaz Shetzer (2) 48,651 * Yuval Tovias (3) 2,500 * Yuval Gilad — — Tali Dinar — — Moshe Revach — — Amitay Weiss (4) 79,866 0.74 % Naama Falach Avrahamy (5) 2,500 * Yigal Shtief — — All directors and executive officers as a group (9 persons) 133,517 1.24 % * Indicates beneficial ownership of less than 1% of the total Ordinary Shares outstanding.
Roy Borochov (7) - - % Tali Dinar (8) - - % Yigal Shtief (9) - - % Naama Falach Avrahamy (10) 2,500 * % Natan Israeli (11) - - % All directors and executive officers as a group (11 persons) (12) 51,151 * % * Indicates beneficial ownership of less than 1% of the total ordinary shares outstanding.
Name of beneficial owner Ordinary shares beneficially owned Percentage owned 5% or Greater Shareholders Medigus Ltd. (1) 2,019,153 18.68 % Directors and Executive Officers Dr.
Name of beneficial owner Ordinary shares beneficially owned Percentage owned 5% or Greater Shareholders None Directors and Executive Officers Amitay Weiss (1) - - % Boaz Shetzer (2) 48,651 * % Regev Livne (3) 6,972 * % Yuval Gilad (4) 6,972 * % Oren Aviram (5) 4,648 * % Moshe Revach (6) - - % Dr.
Removed
(1) Based solely on a Schedule 13G filed with the SEC on February 14, 2024. Consists of 2,019,153 Ordinary Shares. The address of Medigus Ltd. is 10 HaNechoshet Street, Tel Aviv, Israel, 6971072. Medigus is a publicly traded company. To the best of our knowledge, no person has sole voting and sole investment power with respect to the shares.
Added
(1) Does not include (i) options to purchase 60,524 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in September 2028 that vest in more than 60 days from the date of this annual report and (ii) 167,796 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
(2) Consists of 48,651 Ordinary Shares. (3) Consists of 2,500 Ordinary Shares. (4) Consists of 79,866 Ordinary Shares. (5) Consists of 2,500 Ordinary Shares.
Added
Does not include (i) options to purchase 60,524 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in November 2028 that vest in more than 60 days from the date of this annual report and (ii) 167,796 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
Related Party Transactions The following is a description of the material terms of those transactions with related parties to which we are party since January 1, 2023. 73 Medigus Loan, Credit Facility and Consulting Agreement On August 4, 2022, we entered into a loan agreement, or the Medigus Loan, with Medigus Ltd., or Medigus,, pursuant to which Medigus loaned us $250,000 to be used for working capital and the operation of our business activities, including preparation for this offering.
Added
Does not include (i) options to purchase 36,315 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in December 2029 that vest in more than 60 days from the date of this annual report and (ii) 48,960 RSUs that vest in more than 60 days from the date of this annual report.
Removed
The Medigus Loan had an interest rate of 8% per annum and such interest accrues daily.
Added
Does not include (i) options to purchase 36,315 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in November 2028 that vest in more than 60 days from the date of this annual report and (ii) 48,960 RSUs that vest in more than 60 days from the date of this annual report.
Removed
Repayment of the Medigus Loan was due upon the earlier of (i) August 4, 2024, (ii) the date we close an equity financing round, which would include the IPO, (iii) the date on which we receive a bank financing or (iv) the occurrence of certain events of default.
Added
Does not include (i) options to purchase 36,315 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in September 2028 that vest in more than 60 days from the date of this annual report and (ii) 51,284 RSUs that vest in more than 60 days from the date of this annual report.
Removed
On October 30, 2022, we repaid the balance of the loan provided by Medigus to us on August 4, 2022 in the amount of $250,000 plus the accrued interest ($4,876), in accordance with the loan agreement.
Added
(6) Does not include (i) options to purchase 15,131 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in November 2028 that vest in more than 60 days from the date of this annual report and (ii) 41,949 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
On October 30, 2022, we terminated the Medigus Loan and entered into a credit facility agreement, or the Credit Facility Agreement, with Medigus Ltd., or Medigus, to borrow from time to time amounts from Medigus for the purposes of financing our ongoing activities and the payment of certain expenses in connection with the IPO.
Added
(7) Does not include (i) options to purchase 15,131 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in November 2028 that vest in more than 60 days from the date of this annual report and (ii) 41,949 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
Pursuant to the Credit Facility Agreement, as of October 30, 2022, and until the closing of the IPO, Medigus made available to us a credit facility, or the Credit Facility, with an aggregate initial amount of up to $625,000.
Added
(8) Does not include (i) options to purchase 15,131 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in November 2028 that vest in more than 60 days from the date of this annual report and (ii) 41,949 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
On June 26, 2023, we amended the Credit Facility Agreement to increase the amount of the Credit Facility to up to $745,000. The Credit Facility Agreement further provided that Medigus shall be entitled to a one-time payment of $40,000 in the event that the Credit Facility is repaid in connection with the closing of the IPO.
Added
(9) Does not include (i) options to purchase 15,131 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in November 2028 that vest in more than 60 days from the date of this annual report and (ii) 41,949 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
The Credit Facility was fully repaid in the amount of $785,000 on August 1, 2023, following the closing of the IPO.
Added
Does not include (i) options to purchase 15,131 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in November 2028 that vest in more than 60 days from the date of this annual report and (ii) 41,949 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
Additionally, on October 30, 2022, we entered into a consulting agreement with Medigus, pursuant to which Medigus shall serve as our independent consultant for a monthly fee of $10,000, effective upon the closing of our IPO and terminating on the three-year anniversary of the closing of our IPO.
Added
(11) Does not include (i) options to purchase 15,131 ordinary shares exercisable at an exercise price of $1.275 per share and expiring in March 2030 that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders and (ii) 41,949 RSUs that vest in more than 60 days from the date of this annual report and are subject to the approval of the Company’s shareholders.
Removed
We may terminate the consulting agreement anytime after the closing of the IPO upon providing a three months advance notice. Maris-Tech Consulting Agreement On July 31, 2023, we entered into a consulting agreement with Maris pursuant to which Maris will serve as an independent consultant for a monthly fee of $10,000.
Removed
Either party may terminate the consulting agreement entirely with a 90-day prior written notice provided to the other party. In October 2023, we announced that we expanded our collaboration into the drones defense market with Maris. Pursuant to a letter for intent, we and Maris will collaborate to develop a unified product, integrating safety technology and predictive maintenance.
Removed
In addition, we will explore the possibility of enhancing the capabilities of our failure prediction and emergency safety system, utilizing the AI acceleration capabilities in Maris’s OEM products. Agreements and Arrangements With, and Compensation of, Directors and Executive Officers Certain of our executive officers have employment or services agreements with us.

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