CHEK 20-F Report ended Dec. 31, 2021

UNITED STATES

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

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our history of losses;

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our needs for additional capital to fund our operations and our inability to obtain additional capital on acceptable terms, or at all;

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the impact of the COVID-19 pandemic;

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the initiation, timing, progress and results of our clinical trials and other product development efforts;

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our reliance on one product;

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the clinical development, commercialization and market acceptance of C-Scan;

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our ability to receive de novo classification and other regulatory approvals for C-Scan;

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our ability to successfully complete clinical trials;

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our reliance on single-source suppliers;

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our reliance on third parties, such as for purposes of our clinical trials and clinical development and the manufacturing, marketing and distribution of C-Scan;

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our ability to establish and maintain strategic partnerships and other corporate collaborations;

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our ability to achieve reimbursement and coverage from government and private third-party payors;

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the implementation of our business model and strategic plans for our business;

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the scope of protection we are able to establish and maintain for intellectual property rights covering C-Scan and our ability to operate our business without infringing the intellectual property rights of others;

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competitive companies, technologies and our industry;

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statements as to the impact of the political and security situation in Israel or the ongoing conflict in Ukraine on our business; and

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those factors referred to in “Item 3. Key Information – D. Risk Factors,” “Item 4. Information on the Company,” and “Item 5. Operating and Financial Review and Prospects”, as well as in this Annual Report generally.

A.	Directors and Senior Management

B.

Advisers

C.

Auditors

A.	[Reserved.]

B.	Capitalization and Indebtedness

C.	Reasons for the Offer and Use of Proceeds

D.	Risk factors

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We have a history of losses, may incur future losses and may not achieve profitability;

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We will require additional funding in order to complete the development and commercialization of C-Scan, which may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to C-Scan or intellectual property. If additional capital is not available, we may have to delay, reduce or cease the development or commercialization of C-Scan;

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We may not succeed in completing the development of our product, achieve manufacturing stability and capacity, demonstrate sufficient clinical evidence or commercialize our product or generate significant revenues;

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Although we received FDA approval of our IDE (including our amended IDE application) for our U.S. pivotal study, the outcome of the study is inherently uncertain, even if the study is commenced and completed;

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Clinical failure can occur at any stage of clinical development. Our clinical experience to date does not necessarily predict future results and may not have revealed certain potential limitations of the technology and potential complications from C-Scan and may require further clinical validation. Any product version we advance through clinical trials may not have favorable results in later clinical trials or receive regulatory approval;

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We expect to derive most of our revenues from sales of one product or product line. Our inability to successfully commercialize this product, could severely harm our ability to generate revenues.

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If healthcare professionals do not recommend our product to their patients, C-Scan may not achieve market acceptance and we may not become profitable;

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We expect to face competition from large, well-established manufacturers of traditional technologies for CRC screening and detection of gastrointestinal disorders, as well as from new competitive technologies, especially within the field of biomarkers;

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We may rely on local distributors and/or strategic partners to market and distribute C-Scan in those countries where we intend to market and distribute C-Scan;

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We have limited manufacturing capabilities and we rely on single source suppliers and if we are unable to find new suppliers or scale up our manufacturing operations to meet the necessary quantities for our upcoming clinical studies or anticipated market demand, our growth could be limited and our business, financial condition and results of operations could be materially adversely affected;

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Our reliance on single source suppliers could harm our ability to conduct clinical trials and meet demand for our product in a timely manner or within budget.

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A health epidemic, pandemic or other outbreak, including the current COVID-19 pandemic, may materially and adversely affect our business, financial condition and results of operations.

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We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize C-Scan;

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If we are unable to obtain, or experience significant delays in obtaining, FDA clearances or approvals, or equivalent third country approvals for C-Scan or future products or product enhancements, our ability to commercially distribute and market our products could suffer;

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There is no guarantee that the FDA will grant de novo reclassification or PMA approval of C-Scan and failure to obtain necessary clearances or approvals for our future products would adversely affect our ability to grow our business;

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If we or our future distributors do not obtain and maintain the necessary regulatory clearances or approvals, or equivalent third country approvals in a specific country or region, we will not be able to market and sell C-Scan or future products in that country or region;

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The results of our current or future clinical trials may not support our product candidate requirements or intended use claims or may result in the discovery of adverse side effects;

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If we fail to obtain or maintain necessary regulatory clearances or CE Certificates for C-Scan or if there are regulatory changes in our existing or future target markets, our ability to sell C-Scan and generate revenues could be harmed;

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Our failure to comply with radiation safety or radio frequency regulations in a specific countries or regions could impair our ability to commercially distribute and market C-Scan in that country or region;

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Our business is subject to complex environmental and health legislation in various jurisdictions that may increase our costs and our risk of noncompliance; and

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If we are unable to achieve reimbursement and coverage from government and private third-party payors for procedures using C-Scan, or if reimbursement is insufficient to create an economic benefit for purchasing or using C-Scan when compared to alternative procedures, demand for our products may not grow at the rate we expect.

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If we are unable to protect our intellectual property rights, our competitive position could be harmed.

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Third-party claims of infringement or other claims against us could require us to redesign C-Scan, seek licenses, or engage in future costly intellectual property litigation, which could negatively affect our future business and financial performance.

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Our principal offices, research and development facilities and some of our suppliers are located in Israel and, therefore, our business, financial condition and results of operation may be adversely affected by political, economic and military instability in Israel.

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Pursuant to the terms of the Israeli government grants we received for research and development expenditures, we are obligated to pay certain royalties on our revenues to the Israeli government. In addition, the terms of Israeli government grants we have received require us to satisfy specified conditions and to make additional payments in addition to repayment of the grants upon certain events.

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Our ordinary shares could be delisted from the Nasdaq Capital Market.

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Our stock price has and may be subject to fluctuation, and purchasers of our securities could incur substantial losses.

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We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine.

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we may not have adequate financial or other resources to complete the development of our product, demonstrate adequate clinical results, attain required regulatory approvals and licensures, obtain adequate manufacturing and capacity and begin the commercialization efforts for C-Scan;

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we may fail to obtain or maintain required regulatory approvals and licensures for C-Scan in our target markets or may face adverse regulatory or legal actions relating to our system even if regulatory approval is obtained;

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we may not demonstrate adequate clinical safety and clinical effectiveness results from our current or future versions of C-Scan, to support regulatory body approval or market acceptance and adoption;

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we may face ongoing limitations imposed by the Nuclear Regulatory Commission, or NRC, or other nuclear regulatory commissions in jurisdictions in which we intend to commercialize C-Scan in relation to the disposal of our C-Scan Cap in the sanitary system, such as requiring patients to retrieve our C-Scan Cap after use, which could impact enrollment pace in our clinical studies and make C-Scan less attractive;

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we may not be able to maintain an adequate supply chain due to reliance on single or sole suppliers for critical components and scale up the manufacture of C-Scan to commercial quantities at an adequate quality or at an acceptable cost;

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we may not be able to establish adequate sales, marketing and distribution channels;

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healthcare professionals and patients may not accept C-Scan;

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we may not be aware of possible complications from the continued use of C-Scan because we have limited clinical experience with respect to the actual use of C-Scan;

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other technological breakthroughs in colorectal cancer, or CRC, screening, treatment and prevention may reduce the demand for C-Scan;

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changes in the market for CRC screening, new alliances between existing market participants and the entrance of new market participants may interfere with our market penetration efforts;

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government and private third-party payors may not agree to provide coding, coverage and payment adequate to reimburse healthcare providers and patients for any or all of the purchase price in conjunction with clinical effectiveness of C-Scan, which may adversely affect healthcare providers’ and patients’ willingness to purchase C-Scan;

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uncertainty as to market demand may result in inefficient pricing of C-Scan;

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we may not be able to adequately protect our intellectual property or may face third-party claims of intellectual property infringement; and

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we are dependent upon the results of ongoing clinical studies relating to C-Scan which may impact its perceived value as against competing products.

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market acceptance of a new product, including healthcare professionals’ and patients’ preferences;

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market acceptance of the clinical safety and performance of C-Scan;

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development of competitive or similarly cost-effective products by our competitors;

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development delays of C-Scan;

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technological innovations in CRC screening, treatment and prevention;

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adverse medical side effects suffered by patients using C-Scan, whether actually resulting from the use of C-Scan or not;

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changes in regulatory policies toward CRC screening or imaging technologies;

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changes in regulatory approval, clearance requirements and licensure for our product;

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third-party claims of intellectual property infringement;

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budget constraints and the availability of reimbursement or insurance coverage from third-party payors for C-Scan;

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increases in market acceptance of other technologies;

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adverse responses from certain of our competitors to the offering of C-Scan;

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licensure and perceived risk of manufacturing and using a product containing a radioactive source, including associated agencies refusal to authorize capsule disposal; and

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the shelf life of our C-Scan Cap.

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there is sufficient long-term clinical and health-economic evidence to convince them to alter their existing screening methods and device recommendations;

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there are recommendations from prominent physicians, educators and/or associations that C-Scan is safe and effective;

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we obtain favorable data from clinical and health-economic studies for C-Scan;

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reimbursement or insurance coverage from government and private third-party payors is available;

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healthcare professionals obtain required approvals and licensures for the handling, storage, dispensing and disposal of C-Scan; and

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healthcare professionals become familiar with the complexities of C-Scan.

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foreign certification, registration and other regulatory requirements;

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customs clearance and shipping delays;

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import and export controls;

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trade restrictions;

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multiple and possibly overlapping tax structures;

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difficulty forecasting the results of our international operations and managing our inventory due to our reliance on third-party distributors;

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differing laws and regulations, business and clinical practices, licensures, government and private third-party payor reimbursement policies and patient preferences;

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differing standards of intellectual property protection among countries;

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difficulties in staffing and managing our international operations;

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difficulties in penetrating markets in which our competitors’ products are more established and achieving a competitive sale price for our product;

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currency exchange rate fluctuations and foreign currency exchange controls and tax rates; and

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political and economic instability, war or acts of terrorism or natural disasters, emergence of a pandemic, or other widespread health emergencies (or concerns over the possibility of such an emergency, including for example, the COVID-19 pandemic).

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we may not be able to demonstrate to FDA’s satisfaction that our products are safe and effective for their intended use;

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the data from our non-clinical studies and clinical trials may be insufficient to support clearance or approval;

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in the case of a PMA submission, that the manufacturing process or facilities we use may not meet applicable requirements; and

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changes in FDA’s 510(k) clearance, de novo reclassification, or PMA approval processes and policies, or the adoption of new regulations may require additional data.

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patients do not enroll in the clinical trial at the rate we expect;

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patients do not comply with trial protocols;

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patient follow-up is not at the rate we expect;

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patients experience severe adverse side effects, including damage to the colon wall or related to excessive radiation exposure as a result of capsule malfunction or break down or retention and may require to undergo a surgical procedure;

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patient death during a clinical trial, even though their death may be unrelated to our product;

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FDA, institutional review boards, or IRBs, or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;

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IRBs, Ethics Committees and third-party clinical investigators may delay or reject our trial protocol and Informed Consent Form;

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third-party clinical investigators decline to participate in a study or trial or do not perform a study or trial on our anticipated schedule or consistent with the investigator agreements, study or trial protocol, good clinical practices, quality of clinical data or other FDA or IRBs, Ethics Committees, or any other applicable requirements;

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third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the study or trial protocol or investigational or statistical plans;

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regulatory inspections of our studies, trials or manufacturing facilities may require us to, among other things, undertake corrective action or suspend or terminate our studies or clinical trials;

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changes in governmental regulations or administrative actions;

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we may not be able to develop C-Scan at the rate or to the stage we desire;

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the interim or final results of the study or clinical trial are inconclusive or unfavorable as to safety or efficacy;

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a regulatory agency or our Notified Body concludes that our trial design is or was inadequate to demonstrate safety and efficacy; and

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the capsule disposal was not authorized by regulatory agencies or patients failed to collect the capsule following procedure completion; and

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loss of clinical data; and

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a health epidemic, pandemic or other outbreak, including the current COVID-19 pandemic.

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

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unanticipated expenditures to address or defend such actions;

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customer notifications for repair, replacement or refunds;

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recall, detention or seizure of our products;

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operating restrictions or partial suspension or total shutdown of production;

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refusing or delaying our requests for 510(k) clearance, de novo classification or premarket approval of new products or modified products;

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operating restrictions;

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withdrawing 510(k) clearances, de novo classification, or PMA approvals that have already been granted;

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suspension or withdrawal of our CE Certificates;

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refusal to grant export approval for our products; or

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criminal prosecution.

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pending and future patent applications may not result in the issuance of patents or, if issued, may not be issued in a form that will be advantageous to us;

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our issued patents may be challenged, invalidated or legally circumvented by third parties;

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our patents may not be upheld as valid and enforceable or prevent the development of competitive products;

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the eligibility of certain inventions related to diagnostic medicine, more specifically diagnostic methods and processes, for patent protection in the United States has been limited recently which may affect our ability to enforce our issued patents in the United States or may make it difficult to obtain broad patent protection going forward in the United States;

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the eligibility to protect methods for treating humans, which is available in the US, is generally not available in other countries, for example in Europe;

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for a variety of reasons, we may decide not to file for patent protection on various improvements or additional features; and

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intellectual property protection and/or enforcement may be unavailable or limited in some countries where laws or law enforcement practices may not protect our proprietary rights to the same extent as the laws of the United States, the European Union, Canada or Israel.

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the agreements may be breached, may not provide the scope of protection we believe they provide or may be determined to be unenforceable, in part or in whole;

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we may have inadequate remedies for any breach;

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proprietary information could be disclosed to our competitors; or

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others may independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technologies.

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we may not be able to develop C-Scan at the rate or to the stage we desire;

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inability to obtain the approvals necessary to commence further clinical trials;

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unsatisfactory results of clinical trials;

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announcements of regulatory approval or the failure to obtain it, or specific label indications or patient populations for its use, or changes or delays in the regulatory review process;

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any intellectual property infringement actions in which we may become involved;

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announcements concerning our competitors or the medical device industry in general;

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achievement of expected product sales and profitability or our failure to meet expectations;

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our commencement of, or involvement in, litigation;

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any major changes in our board of directors or management;

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legislation in the United States relating to the sale or pricing of medical device;

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future substantial sales of our ordinary shares;

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changes in earnings estimates or recommendations by securities analysts, if our ordinary shares are covered by analysts;

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the trading volume of our ordinary shares; or

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natural disasters and political and economic instability, including wars, terrorism, political unrest, results of certain elections and votes, emergence of a pandemic, or other widespread health emergencies (or concerns over the possibility of such an emergency, including for example, the COVID-19 pandemic), boycotts, adoption or expansion of government trade restrictions, and other business restrictions.

A.	History and Development of the Company

B.	Business Overview

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seeking to obtain regulatory approvals for the sale of C-Scan in the United States;

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enter into partnerships in the future when strategically attractive, including potentially with major medical device companies;

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obtaining government and private third-party reimbursement for our technology;

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improving and enhancing our existing technology portfolio and developing new technologies; and

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successfully marketing our product to establish a large customer base, primarily in the U.S.

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X-ray Source – Including radioactive material sealed in a cylindrical housing.

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Collimator – Radiation shield around the source, which absorbs most of the radiation. Several radial holes enable emission of radiation in defined directions.

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X-ray Sensor – Comprised of several solid state X-ray detectors for measuring the scattered radiation intensity.

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Tilt Sensor – Indication of capsule motion (3D acceleration).

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Rotation Motor – For rotating the collimator and X-ray Source.

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Compass sensor – Indication of true north (reference coordinate system).

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Pressure sensor – indicating the hydrostatic pressure inside the colon.

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Source Concealment Mechanism – Conceals the source inside the radiation shield.

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R-T – Radio frequency transceiver device to communicate with the receiver.

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Batteries – Electrical power supply for the capsule.

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Memory – Data storage. The capsule should be able to store up to an hour of measured data.

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C-Scan Track Coil – Transmits a continuous electromagnetic field utilized by an external localization system to track 3D position.

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Sticker Housings – Biocompatible and water-resistant stickers and housing integrating all functional components, attached to the patient’s back, enabling approximately five days of continuous operation.

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Recorder – Consists of receiver electronics embedded software and nonvolatile memory.

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Antennas – Radio frequency antennas are embedded into the sticker housings and used to communicate with the capsule.

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Activation/Deactivation Circuit – Used to activate/deactivate the C-Scan Track through a specialized protocol.

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UI Indicators – Provides user with vocal and vibration indication as required.

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PCB – Electronics’ printed circuit boards.

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Microcontroller – Runs embedded software, logic that manages the C-Scan Track and SCA.

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RF Transceivers – Several transceivers used to communicate with the capsule.

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TILT/Compass Sensors – To determine the patient’s body movements.

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Batteries – Electrical power supply for the C-Scan Track.

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Memory – Non-volatile data storage to store data acquired by the system.

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Load and display procedure information and data;

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Image review, enabling the user to view structural information of the colon wall;

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Produce procedure report; and

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Store procedure results on server.

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The number of photons hitting the detector per time frame.

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The angular spread of the photon beam coming out of the capsule collimator.

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our technology has been tested on a limited basis and therefore we cannot assure the product’s clinical value;

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following the receipt of CE Mark of conformity to protection standards for sale of the C-Scan system in the European Union, we may need to obtain additional regulatory approvals in certain local jurisdictions in the European Union before we can commence marketing and sale of C-Scan and will need to obtain the requisite regulatory approvals in the United States, Japan and other markets where we plan to focus our commercialization efforts;

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we need to raise an amount of capital sufficient to complete the development of our technology, obtain the requisite regulatory approvals and commercialize our current and future products;

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we need to obtain reimbursement coverage from third-party payors for procedures using C-Scan;

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we need to scale-up our manufacturing capabilities of C-Scan in commercial quantities at an adequate quality and at an acceptable cost; and

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we need to establish and expand our user base while competing against other sellers of capsule endoscopy systems as well as other current and future CRC screening technologies and methods.

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product design and development;

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product testing;

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validation and verifications;

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product manufacturing (good manufacturing practices);

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product labeling;

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product storage, shipping and handling;

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premarket clearance or approval;

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advertising and promotion;

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product marketing, sales and distribution;

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product recalls; and

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post-market surveillance reporting death or serious injuries and medical device reporting.

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Class I devices, which are subject to only general controls ( e.g. , labeling, medical devices reporting, and prohibitions against adulteration and misbranding) and, in some cases, to the 510(k) premarket clearance requirements;

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Class II devices, generally requiring 510(k) premarket clearance before they may be commercially marketed in the United States; and

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Class III devices, consisting of devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a predicate device, generally requiring the submission of a PMA approval supported by clinical trial data.

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product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;

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Quality System Regulation, or QSR, and current good manufacturing practices, or cGMP, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process;

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labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication;

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clearance of product modifications that could significantly affect safety or efficacy or that would constitute a major change in intended use of one of our cleared devices;

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medical device reporting regulations, which require that manufacturers comply with FDA requirements to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur;

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post-approval restrictions or conditions, including post-approval study commitments;

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post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device;

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FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations;

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regulations pertaining to voluntary recalls; and

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notices of corrections or removals.

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

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unanticipated expenditures to address or defend such actions;

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customer notifications for repair, replacement, refunds;

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recall, detention or seizure of our products;

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operating restrictions or partial suspension or total shutdown of production;

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refusing or delaying our requests for 510(k) clearance, de novo classification or premarket approval of new products or modified products;

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operating restrictions;

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withdrawing 510(k) clearances, de novo classification, or PMA approvals that have already been granted;

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refusal to grant export approval for our products; or

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criminal prosecution.

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The federal Anti-Kickback Statute, which prohibits, among other things, knowingly or willingly offering, paying, soliciting or receiving remuneration, directly or indirectly, in cash or in kind, to induce or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any health care items or service for which payment may be made, in whole or in part, by federal healthcare programs such as Medicare and Medicaid. This statute has been interpreted to apply to arrangements between medical device manufacturers on one hand and prescribers, purchasers and formulary managers on the other. Further, PPACA, among other things, clarified that a person or entity needs not to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it. Although there are a number of statutory exemptions and regulatory safe harbors to the federal Anti-Kickback Statute protecting certain common business arrangements and activities from prosecution or regulatory sanctions, the exemptions and safe harbors are drawn narrowly, and practices that do not fit squarely within an exemption or safe harbor may be subject to scrutiny;

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The federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly concealing or knowingly and improperly avoiding, decreasing, or concealing an obligation to pay money to the federal government. In addition, PPACA amended the Social Security Act to provide that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. Many medical device manufacturers and other healthcare companies have been investigated and have reached substantial financial settlements with the federal government under the civil False Claims Act for a variety of alleged improper marketing activities, including providing free product to customers with the expectation that the customers would bill federal programs for the product; providing consulting fees, grants, free travel, and other benefits to physicians to induce them to use the company’s products. In addition, in recent years the government has pursued civil False Claims Act cases against a number of manufacturers for causing false claims to be submitted as a result of the marketing of their products for unapproved, and thus non-reimbursable, uses. Device manufacturers also are subject to other federal false claim laws, including, among others, federal criminal healthcare fraud and false statement statutes that extend to non-government health benefit programs;

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Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to items or services reimbursed under Medicaid and other state programs or, in several states, apply regardless of the payor. Several states now require medical device manufacturers to report expenses relating to the marketing and promotion or require them to implement compliance programs or marketing codes. For example, California, Connecticut and Nevada mandate the implementation of corporate compliance programs, while Massachusetts and Vermont impose more detailed restrictions on device manufacturers’ marketing practices and tracking and reporting of gifts, compensation and other remuneration to healthcare providers;

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The federal Foreign Corrupt Practices Act of 1997 and other similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from providing money or anything of value to officials of foreign governments, foreign political parties, or international organizations with the intent to obtain or retain business or seek a business advantage. Recently, there has been a substantial increase in anti-bribery law enforcement activity by U.S. regulators, with more frequent and aggressive investigations and enforcement proceedings by both the Department of Justice and the U.S. Securities and Exchange Commission. Violations of these laws can result in the imposition of substantial fines, interruptions of business, loss of supplier, vendor or other third-party relationships, termination of necessary licenses and permits, and other legal or equitable sanctions. Other internal or government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, may also follow as a consequence; and

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The federal Physician Payment Sunshine Act, being implemented as the Open Payments Program, requires manufacturers of “covered products” (drugs, devices, biologics, or medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program) to track and publicly report payments and other transfers of value that they provide to U.S. physicians and teaching hospitals, as well as any ownership interests that U.S. physicians hold in applicable manufacturer. Applicable manufacturers must submit a report to the Centers for Medicare & Medicaid Services, or CMS, by the 90th day of each calendar year disclosing payments and transfers of value made in the preceding calendar year.

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No. 1 type license for marketing – Specially controlled medical devices (Class III, IV)

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No. 2 type license for marketing – Controlled medical devices (Class II)

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No. 3 type license for marketing – General medical devices (Class I)

C.	Organizational Structure

D.	Property, Plants and Equipment

A.	Operating Results

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employee-related expenses for research and development staff (including research and development, clinical, operations, production and Q&A staff), including salaries, benefits and related expenses, share-based compensation and travel expenses;

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payments associated with clinical activities including payments made to third-party CROs, investigative sites, patients, materials and consultants;

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payments associated with the development activities of our advanced C-Scan system and non-clinical activities, including payments made to third-party subcontractors, providers and consultants;

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manufacturing development costs and manufacturing scale up costs;

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costs associated with regulatory operations;

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facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities; and

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costs associated with obtaining and maintaining patents.

		Year Ended December 31,
		2021				2020
		(US$ in thousands, except per share data)
Research and development expenses, net		$	12,349			$	10,008
General and administrative expenses			4,972				3,924
Operating loss			17,321				13,932
Finance income, net			119				86
Net loss		$	17,202			$	13,846

		2021				2020				Change
		(US$ in thousands)
Salaries and related expenses		$	7,428			$	6,173			$	1,255
Share-based compensation			329				165				164
Materials			3,020				1,792				1,228
Subcontractors and consultants			640				807				(167	)
Depreciation			169				123				46
Cost for registration of patents			153				164				(11	)
Other research and development expenses			1,040				784				256
			12,780				10,008				2,772
Less participation of the IIA (formerly the OCS)			(431	)			-				(431	)
Total research and development expenses, net		$	12,349			$	10,008			$	2,341

		2021				2020				Change
		(US$ in thousands)
Salaries and related expenses		$	2,042			$	1,698			$	344
Share-based compensation			162				243				(81	)
Professional services			710				574				136
Office rent and maintenance			172				174				(2	)
Depreciation			36				25				11
Other general and administrative expenses			1,850				1,210				640
Total general and administrative expenses		$	4,972			$	3,924			$	1,048

		Year Ended December 31
		2020				2019
		(US$ in thousands, except per share data)
Research and development expenses, net		$	10,008			$	10,474
General and administrative expenses			3,924				3,595
Operating loss			13,932				14,069
Finance income, net			86				233
Loss before income tax			13,846				13,836
Taxes on income			-				-
Net loss		$	13,846			$	13,836

		2020				2019				Change
		(US$ in thousands)
Salaries and related expenses		$	6,173			$	5,316				857
Share-based compensation			165				421				(256	)
Materials			1,792				1,944				(152	)
Subcontractors and consultants			807				764				43
Depreciation			123				98				25
Cost for registration of patents			164				132				32
Other research and development expenses			784				1,889				(1,105	)
			10,008				10,564				(556	)
Less participation of the IIA (formerly the OCS)			(-	)			(90	)			90
Total research and development expenses, net		$	10,008			$	10,474			$	(466	)

		2020				2019				Change
		(US$ in thousands)
Salaries and related expenses		$	1,698			$	1,506			$	192
Share-based compensation			243				95				148
Professional services			574				705				(131	)
Office rent and maintenance			174				180				(6	)
Depreciation			25				17				8
Other general and administrative expenses			1,210				1,092				118
Total general and administrative expenses		$	3,924			$	3,595			$	329

B.	Liquidity and Capital Resources

•

our ability to obtain funding from third parties, including any future collaborative partners;

•

the scope, rate of progress and cost of our clinical trials and other research and development programs;

•

the time and costs required to gain regulatory approvals;

•

the terms and timing of any collaborative, licensing and other arrangements that we may establish;

•

the costs of filing, prosecuting, defending and enforcing patents, patent applications, patent claims, trademarks and other intellectual property rights;

•

any product liability or other lawsuits related to our product;

•

the expenses needed to attract and retain skilled personnel;

•

the costs and timing of future commercialization activities, including product manufacturing, marketing, sales, and distribution;

•

the revenue, if any, received from commercial sales of our product;

•

the general and administrative expenses related to being a public company;

•

the effect of competition and market developments

•

future clinical trial results; and.

•

the COVID – 19 pandemic

			Year Ended December 31,
			2021				2020				2019
			(US$ in thousands)
Net cash used in operating activities		$	(16,264	)		$	(13,113	)		$	(12,843	)
Net cash provided by (used in) investing activities		$	(16,006	)		$	(10,451	)		$	5,445
Net cash provided by financing activities		$	51,024			$	23,582			$	6,511

•

completion of the clinical development of C-Scan;

•

conducting clinical trials in the United States and other territories for purposes of regulatory approval and post-marketing validation;

•

development of advanced version and future generations of C-Scan and future products;

•

FDA and additional regulatory filing activities in countries we intend to commercialize our system;

•

Manufacturing scale up costs; and

•

Capital expenditures.

C.	Research and development, patents and licenses, etc.

D.	Trend Information

E.	Critical Accounting Estimates

A.	Directors and senior management

Name		Age		Position(s)
Alex Ovadia		60		Chief Executive Officer
Mira Rosenzweig		50		Chief Financial Officer
Yoav Kimchy		61		Chief Technology Officer
Boaz Shpigelman		50		Vice President, Research and Development
Joshua (Shuki) Belkar		53		Vice President, Operations
Hanit Brenner-Lavie(1)		50		Vice President, Clinical Affairs
Israel Hershko		56		Vice President, Quality Assurance and Regulatory Affairs
Steven Hanley (2)(3)		54		Chairman of the Board of Directors
Clara Ezed (4)(5)		52		Director
Mary Jo Gorman (2)(3)(4)(5)		62		Director
XiangQian (XQ) Lin		40		Director
Yuval Yanai (2)(3)(4)(5)		69		Director

(1)	Dr. Hanit Brenner-Lavie has served as Vice President, Clinical Affairs since September 1, 2021.  Dr. Segal, our former Vice President of Clinical Affairs, had served in such capacity from October 2019 until September 2021 (commencing February 24, 2021, in a 60% capacity).

(2)	Member of our Nominating Committee.

(3)	Member of our Financing Committee.

(4)	Member of our Compensation Committee.

(5)	Member of our Audit Committee.

B.	Compensation of Directors and Executive Officers

		Salary Cost (1)				Bonus (2)				Share-Based Compensation (3)				Total
Name and Principal Position		US$
Alex Ovadia – Chief Executive Officer		$	429,436			$	109,861			$	65,675			$	604,973
Yoav Kimchy – Chief Technology Officer		$	385,763			$	59,308			$	19,582			$	464,653
Mira Rosenzweig- Chief Financial Officer		$	291,672			$	38,979			$	25,029			$	355,679
Boaz Shpigelman -Vice President, Research and Development		$	275,901			$	32,422			$	22,249			$	330,572
Joshua (Shuki) Belkar- Vice President, Operation		$	259,122			$	32,202			$	22,848			$	314,172

(1)

“Salary Cost” includes the Covered Executive’s gross salary plus payment of social benefits made by us on behalf of such Covered Executive. Such benefits may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds, education funds, pension, severance, risk insurances, payments for social security and tax gross-up payments, vacation, a leased car and associated expenses, medical insurances and benefits, convalescence or recreation pay and other benefits and perquisites consistent with our policies.

(2)

With respect to Mr. Ovadia, represents a special bonus awarded in 2021 and a provision for the 2021 annual bonus, and with respect to each of the other Covered Executives, represents a provision for the 2021 annual bonus and adjustments to the annual bonus recorded for the year ended December 31, 2020. The 2021 annual bonuses are subject to the approval of our Compensation Committee and Board of Directors.

(3)	Represents the share-based compensation expenses recorded in our consolidated financial statements for the year ended December 31, 2021 based on the fair value of the grant date of the equity awards, in accordance with accounting guidance for equity-based compensation.

Name		Date of Grant		Security Type		Purchase Price		Number of Shares Underlying Award		Expiration Date		Total Benefit (in US$)		Benefit recognized in 2021 (in US$)
Alex Ovadia(2)		December 9, 2021		Options		$1.34		1,150,000		December 9, 2031		$749,303		$23,376
Mira Rosenzweig(1)		August 4, 2021		Options		$1.23		49,000		August 4, 2031		$45,262		$10,884
		August 4, 2021		RSU				21,000		August 4, 2031		$22,890		$5,504
Yoav Kimchy(1)		August 4, 2021		Options		$1.23		31,500		August 4, 2031		$29,097		$6,997
		August 4, 2021		RSU				13,500		August 4, 2031		$14,715		$3,538
Boaz Shpigelman(1)		August 4, 2021		Options		$1.23		38,500		August 4, 2031		$35,563		$8,551
		August 4, 2021		RSU				16,500		August 4, 2031		$17,985		$4,325
Joshua (Shuki) Belkar(1)		August 4, 2021		Options		$1.23		45,500		August 4, 2031		$42,029		$10,106
		August 4, 2021		RSU				19,500		August 4, 2031		$21,255		$5,111

(1)

All options and RSUs granted to the Covered Executives (other than Alex Ovadia, our Chief Executive Officer) in fiscal year 2021 vest over a four-year period commencing on their date of grant, such that 25% of the award shall vest on the first anniversary of the date of grant and 2.0833% will vest at the end of each month thereafter.

(2)

Options granted to Alex Ovadia, our Chief Executive Officer, in fiscal year 2021 vest as follows: (i) two-thirds of the options (options to purchase 766,667 ordinary shares) shall vest over a period of four years commencing on their date of grant, such that 25% of the options shall vest on the first anniversary of the date of grant and an additional 2.0833% will vest at the end of each month thereafter; and (ii) one third of the options (options to purchase 383,333 ordinary shares) shall fully vest upon the approval by the FDA of the use of C-Scan in humans, subject, in each case, to Mr. Ovadia’s continuing service with the company on each applicable vesting date.

C.	Board Practices

•

oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors or shareholders for their approval, as applicable, in accordance with the requirements of the Israeli Companies Law;

•

recommending the engagement or termination of the person filling the office of our internal auditor; and

•

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 or shareholders for their approval, as applicable, in accordance with the requirements of the Israeli Companies Law.

•

determining whether there are deficiencies in the business management practices of our company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices;

•

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 Israeli Companies Law (see “— Approval of Related Party Transactions under Israeli Law”);

•

determining whether a competitive process must be implemented for the approval of certain transactions with controlling shareholders or its relative or in which a controlling shareholder has a personal interest (whether or not the transaction is an extraordinary transaction), under the supervision of the audit committee or other party determined by the audit committee and in accordance with standards to be determined by the audit committee, or whether a different process determined by the audit committee should be implemented for the approval of such transactions;

•

determining the process for the approval of certain transactions with controlling shareholders or in which a controlling shareholder has a personal interest that the audit committee has determined are not extraordinary transactions but are not immaterial transactions;

•

where the board of directors approves the working plan of the internal auditor, to examine such working plan before its submission to the board of directors and proposing amendments thereto;

•

examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities;

•

examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the compensation of our auditor; and

•

establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees.

•

recommending to the board of directors for its approval (i) a compensation policy; (ii) whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); and (iii) periodic updates to the compensation policy. See “— Compensation Committee and Compensation Policy.” In addition, the compensation committee is required to periodically examine the implementation of the compensation policy;

•

the approval of the terms of employment and service of office holders (including determining whether the compensation terms of a candidate for chief executive officer of the company need not be brought to approval of the shareholders); and

•

reviewing and approving grants of options and other incentive awards to persons other than office holders to the extent such authority is delegated by our board of directors, subject to the limitations on such delegation as provided in the Israeli Companies Law.

•

the knowledge, skills, expertise, professional experience and accomplishments of the relevant office holder;

•

the office holder’s roles and responsibilities and prior compensation agreements with him or her;

•

with respect to variable compensation – the possibility of reducing variable compensation at the discretion of the board of directors, and the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and

•

with respect to severance compensation, the period of employment or service of the office holder, the terms of his or her compensation during such period, the company’s performance during such period, 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 link between variable compensation (e.g., bonuses) and long-term performance and measurable criteria (i.e., variable compensation must be determined based on long-term performance and measurable criteria). Only “non-material” portion of variable compensation may be determined based on criteria that is not measurable, taking into account office holders’ contribution to the company;

•

the ratio of variable to fixed compensation, and the ceiling for the value of variable compensation, which is determined at the time of payment, except that the ceiling for equity-based compensation is determined at the time of grant;

•

the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements;

•

the minimum holding or vesting period for variable, equity-based compensation, while taking into account long-term objectives; and

•

maximum limits for severance compensation.

•

a person (or a relative of a person) who holds more than 5% of the company’s outstanding shares or voting rights;

•

a person (or a relative of a person) who has the power to appoint a director or the general manager of the company;

•

an office holder, within the meaning of the Israeli Companies Law (including a director and the general manager) of the company (or a relative thereof); or

•

a member of the company’s independent accounting firm, or anyone on his or her behalf.

•

information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and

•

all other important information pertaining to any such action.

•

refrain from any conflict of interest between the performance of his or her duties to the company and his or her other duties or personal affairs;

•

refrain from any activity that is competitive with the company;

•

refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and

•

disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.

•

a majority of the shares held by all shareholders who do not have a personal interest in the transaction and who are present and voting on the matter approves the transaction, excluding abstentions; or

•

the shares voted against the transaction by shareholders who have no personal interest in the transaction and who are present and voting at the meeting do not exceed 2% of the voting rights in the company.

•

an amendment to the company’s articles of association;

•

an increase of the company’s authorized share capital;

•

a merger; and

•

the approval of related party transactions and acts of office holders that require shareholder approval.

•

a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. 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 foreseen events and amount or criteria;

•

reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (1) 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 (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability was imposed upon him or her as a substitute for the criminal proceeding 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; and (2) in connection with a monetary sanction;

•

reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent; and

•

expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law.

•

a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;

•

a breach of the duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder;

•

a financial liability imposed on the office holder in favor of a third party; and

•

expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder or certain compensation payments to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Securities Law.

•

a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

•

a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;

•

an act or omission committed with intent to derive illegal personal benefit; or

•

a fine, monetary sanction or forfeit levied against the office holder.

D.

Employees

E.	Share Ownership

•

To determine whether and to what extent awards are to be granted to participants under the 2015 Plan and to select the eligible recipients of awards under the 2015 Plan;

•

To approve forms of agreement for use under the 2015 Plan;

•

To determine the terms and conditions of any award under the 2015 Plan, including the exercise price, the time or times and the extent to which the awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any award or the ordinary shares relating thereto, based in each case on such factors as the Administrator, at its sole discretion, shall determine;

•

To determine the fair market value of the shares covered by each award;

•

To make an election as to the type of Section 102 Option;

•

To prescribe, amend and rescind rules and regulations relating to the 2015 Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

•

To authorize conversion or substitution under the 2015 Plan of any or all awards and to cancel or suspend awards, as necessary, provided the material interests of the participants are not harmed; and

•

To construe and interpret the terms of the 2015 Plan and awards granted pursuant to the 2015 Plan;

•

To alter, revise or otherwise adjust the terms of the 2015 Plan and the award agreement, as may be required pursuant to any applicable laws of local or foreign jurisdictions.

A.	Major shareholders

		Ordinary Shares Beneficially Owned
		Number				Percent
Directors and Executive Officers
Alex Ovadia (1)			97,685				*
Yoav Kimchy  (2)			121,837				-
Boaz Shpigelman (3)			54,351				*
Joshua (Shuki) Belkar (4)			10,706				*
Hanit Brenner-Lavie			-				-
Israel Hershko (5)			27,352				-
Mira Rosenzweig (6)			23,688				*
Steven Hanley (7)			23,153				*
Clara Ezed (8)			22,237				*
Mary Jo Gorman (9)			23,036				*
XiangQian (XQ) Lin (10)			41,075				*
Yuval Yanai (11)			23,158				*
All director and executive officers as a group (13 persons)(12)			468,278				0.48	%

(1)	Includes (i) 15,062 outstanding ordinary shares, and (ii) 82,623 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table

(2)

Includes (i) 40,413 ordinary shares directly held by Yoav Kimchy, (ii) 53,061 ordinary shares subject to options and RSUs held by Yoav Kimchy currently exercisable or options and/or RSUs held by Yoav Kimchy that will become exercisable or vested within 60 days of the date of this table, (iii) 26,655 ordinary shares directly held by Sigalit Kimchy, the wife of Yoav Kimchy, and (iv) 1,708 ordinary shares subject to options and RSUs held by Sigalit Kimchy currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.  Yoav Kimchy and Sigalit Kimchy have joint beneficial ownership over the shares beneficially held by them

(3)	Includes (i) 11,737 outstanding ordinary shares, and (ii) 42,614 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(4)	Includes 10,706 ordinary shares subject to options currently exercisable or exercisable within 60 days of the date of this table.

(5)	Includes (i) 4,762 outstanding ordinary shares, and (ii) 22,590 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(6)	Includes 23,688 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(7)	Includes (i) 5,149 outstanding ordinary shares, and (ii) 18,004 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(8)	Includes (i) 4,233 outstanding ordinary shares, and (ii) 18,004 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(9)	Includes (i) 5,032 outstanding ordinary shares, and (ii) 18,004 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(10)	Includes (i) 19,038 outstanding ordinary shares, and (ii) 22,037 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(11)	Includes (i) 5,154 outstanding ordinary shares, and (ii) 18,004 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

(13)	Includes (i) 137,235 outstanding ordinary shares, and (ii) 331,043 ordinary shares subject to options currently exercisable or options and/or RSUs that will become exercisable or vested within 60 days of the date of this table.

B.	Related Party Transactions

C.	Interests of Experts and Counsel

A.	Consolidated Statements and Other Financial Information.

B.	Significant Changes

A.	Offer and Listing Details

B.	Plan of Distribution

C.	Markets for Ordinary Shares

D.	Selling Shareholders

E.

Dilution

F.	Expenses of the Issue

A.	Share Capital

B.	Memorandum and Articles of Association

•

approval of certain related party transactions;

•

increases or reductions of our authorized share capital;

•

mergers; and

•

the exercise of our board of director’s powers by a general meeting, if our board of directors is unable to exercise its powers and the exercise of any of its powers is essential for our proper management.

C.	Material Contracts

D.	Exchange controls

E.

Taxation

•

amortization over an eight-year period, beginning from the year in which such rights were first used, of the cost of purchased know-how and patents and rights to use a patent and know-how which are used for the development or advancement of the Industrial Enterprise;

•

under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and

•

expenses related to a public offering are deductible in equal amounts over three years beginning from the year of the offering.

•

an individual citizen or resident of the United States;

•

a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;

•

an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

•

a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust; or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

•

financial institutions or financial services entities;

•

broker-dealers;

•

persons that are subject to the mark-to-market accounting rules under Section 475 of the Code;

•

tax-exempt entities;

•

governments or agencies or instrumentalities thereof;

•

insurance companies;

•

regulated investment companies;

•

real estate investment trusts;

•

certain expatriates or former long-term residents of the United States;

•

persons that actually or constructively own 5% or more of our shares (by vote or value);

•

persons that acquired our securities pursuant to an exercise of employee options, in connection with employee incentive plans or otherwise as compensation;

•

persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction;

•

persons whose functional currency is not the U.S. dollar;

•

passive foreign investment companies; or

•

controlled foreign corporations.

•

any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares or Series C Warrants or Series D Warrants; and

•

any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the ordinary shares).

•

the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares or Series C Warrants or Series D Warrants;

•

the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we qualified as a PFIC will be taxed as ordinary income;

•

the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest ordinary tax rate in effect for that year and applicable to the U.S. Holder; and

•

the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.

•

fails to provide an accurate taxpayer identification number;

•

is notified by the IRS that backup withholding is required; or

•

in certain circumstances, fails to comply with applicable certification requirements.

F.	Dividends and paying agents

G.	Statement by experts

H.	Documents on display

I.	Subsidiary Information

		2021				2020
Audit Fees (1)		$	140,000			$	75,000
Tax Fees (2)		$	5,060			$	19,437
Other Fees (3)		$	2,961			$	7,000
Total		$	148,021			$	101,434

(1)	The audit fees for the years ended December 31, 2021 and 2020 were for professional services rendered for the audits of our financial statements, consents and in connection with certain of our filings with the U.S. Securities and Exchange Commission.

(2)	Tax fees for the year ended December 31, 2021, are for services rendered by our auditors in connection with a tax audit. Tax fees for the year ended December 31,2020 are for services rendered by our auditors in connection with the IIA.

(3)	Other fees for the year ended December 31, 2021 and 2020, are for services rendered by our auditors in connection with a benchmark study.

•

Nomination of our directors . Israeli law and our amended articles of association do not require director nominations to be made by a nominating committee of our board of directors consisting solely of independent directors, as required under the Listing Rules of the Nasdaq Stock Market. We rely on the exemption available to foreign private issuers under the Nasdaq Listing Rules and follow Israeli law and practice with regard to the process of nominating directors, in accordance with which directors are recommended by our board of directors for election by our shareholders (other than directors elected by our board of directors to fill a vacancy). Our Board of Directors has established a non-independent Nominating Committee, whose role is to select and recommend to the Board of Directors for selection, director nominees, while considering the appropriate size and composition of the Board of Directors, the requirements of applicable law regarding service as a member of our Board of Directors and the criteria for the selection of new members of the Board of Directors.

•

Compensation of officers . We follow Israeli law and practice with respect to the approval of officer compensation. While our compensation committee currently complies with the provisions of the Nasdaq Listing Rules relating to composition requirements and Israeli law generally requires that the compensation of the chief executive officer and all other executive officers be approved, or recommended to the board for approval, by the compensation committee (and in certain instances, shareholder approval is required), Israeli law includes relief from compensation committee approval in certain instances. For details regarding the approvals required under the Israeli Companies Law and regulation promulgated thereunder for the approval of compensation of the chief executive officer, all other executive officers and directors, see Item 6C “Directors, Senior Management and Employees— Board Practices — Approval of Related Party Transactions under Israeli Law — Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions”).

•

Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Israeli Companies Law, rather than seeking approval for corporate actions in accordance with Nasdaq Listing Rule 5635. In particular, under the Nasdaq Listing Rule, shareholder approval is generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest (or such persons collectively have a 10% or greater interest) in the target company or the assets to be acquired or the consideration to be received and the present or potential issuance of ordinary shares, or securities convertible into or exercisable for ordinary shares, could result in an increase in outstanding common shares or voting power of 5% or more; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of a stock option or purchase plan or other equity compensation arrangements, pursuant to which stock may be acquired by officers, directors, employees or consultants (with certain limited exception); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. We will seek shareholder approval for all actions requiring such under the Israeli Companies Law. Under the Israeli Companies Law, the adoption of, and material changes to, equity-based compensation plans generally require the approval of the board of directors. For details regarding the approvals required under the Israeli Companies Law for the approval of compensation of the chief executive officer, all other executive officers and directors, see “Item 6C “Directors, Senior Management and Employees — Board Practices -Approval of Related Party Transactions under Israeli Law — Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions.” For details regarding the approvals required under the Israeli Companies Law for the approval of transactions with and compensation of controlling shareholders, see “Item 6C “Directors, Senior Management and Employees — Board Practices - Approval of Related Party Transactions under Israeli Law — Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions.” For details regarding the approvals required under the Israeli Companies Law for certain acquisitions of our shares and mergers, see Exhibit 2.1. “Description of Securities — Acquisitions under Israeli Law.”

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Quorum requirement. Under our amended and restated articles of association and as permitted under the Israeli Companies Law, a quorum for any meeting of shareholders shall be the presence of at least two shareholders present in person, by proxy or by a written ballot, who hold at least 25% of the voting power of our shares (or if a higher percentage is required by law, such higher percentage) instead of 33 1/3% of the issued share capital required under the Nasdaq Listing Rules. If the meeting was adjourned for lack of a quorum, at the adjourned meeting, at least two shareholders present in person or by proxy shall constitute a quorum, unless the meeting of shareholders was convened at the demand of shareholders, in which case, the quorum shall be the presence of one or more shareholders holding at least 5% of our issued share capital and at least one percent of the voting power of our shares, or one or more shareholders with at least 5% of the voting power of our shares.

Exhibit No.

Description

1.1	Amended and Restated Articles of Association of the Registrant

2.1	Description of Securities Registered under Section 12

2.2	Form of Registrant’s Ordinary Share Warrant Certificate (1)

2.3	Form of Warrant Agreement dated as of February 24, 2015 between Check-Cap Ltd. and American Stock Transfer & Trust Company LLC, as Warrant Agent (1)

2.4	Amendment No.1 dated as of June 24, 2015, to Warrant Agreement dated as of February 24, 2015 between Check-Cap Ltd. and American Stock Transfer & Trust Company LLC, as Warrant Agent (6)

2.5	Form of 2014 Underwriter Warrants (1)

2.6	Form of June 2017 Warrants (4)

2.7	Form of June 2017 Placement Agent Warrants (4)

2.8	Form of November 2017 Warrants (5)

2.9	Form of November 2017 Placement Agent Warrants (5)

2.10	Form of Ordinary Shares Warrant Certificate issued pursuant to a certain Credit Line Agreement dated as of August 20, 2014 (1)

2.11	Forms of Ordinary Shares Warrant Certificate issued to the Pontifax entities (1)

2.12	Form of Series C Warrant (7)

2.13	Form of Warrant Agent Agreement between Check-Cap Ltd. and American Stock Transfer & Trust Company LLC, as Warrant Agent (7)

2.14	Form of February 2019 Series D Warrant (9)

2.15	Form of the February 2019 Placement Agent Warrant (9)

4.1	2006 Unit Option Plan and Amendments thereto (1)

4.2	Form of Series C-1 preferred shares purchase warrant (1)

4.3	Forms of Series C-2 preferred shares purchase warrant (1)

4.4	Asset Transfer Agreement, dated as of May 31, 2009 by and between Check-Cap Ltd. and Check-Cap LLC (1)

4.5	The Agreement for ASIC Design and Development dated November 26, 2009 by and between Check-Cap Ltd. and Politechnico di Milano (1)

4.6	Form of Indemnification Agreement (1)

4.7	2015 Equity Incentive Plan and 2015 United States Sub-Plan to 2015 Equity Incentive Plan (2)

4.8	Compensation Policy for Executive Officers and Directors (17)

4.9	Securities Purchase Agreement dated as of May 30, 2017 by and among Check-Cap Ltd. and the Purchasers named therein (4)

4.10	Securities Purchase Agreement dated as of November 20, 2017 by and among Check-Cap Ltd. and the Purchasers named therein (5)

4.11	Underwriting Agreement, dated as of May 4, 2018, by and between Check-Cap Ltd. and H.C. Wainwright & Co., LLC (8)

4.12	Form of Securities Purchase Agreement dated as of February 4, 2019 by and between Check-Cap Ltd. and the Purchasers named therein (9)

4.13	Form of Securities Purchase Agreement dated as of December 19, 2019 by and between Check-Cap Ltd. and the Purchasers named therein (10)

4.14	Form of Securities Purchase Agreement dated as of April 20, 2020 by and between Check-Cap Ltd. and the Purchasers signatory thereto (11)

4.15	Form of Securities Purchase Agreement dated as of April 30, 2020 by and between Check-Cap Ltd. and the Purchasers signatory thereto (12)

4.16	Form of Securities Purchase Agreement dated as of May 8, 2020 by and between Check-Cap Ltd. and the Purchasers signatory thereto (13)

4.17	Form of Securities Purchase Agreement dated as of June 30, 2021 by and between Check-Cap Ltd. and the Purchasers signatory thereto (18)

4.18	Form of Warrant Exercise Agreement dated as of July 23, 2020 by and between Check-Cap Ltd. and the Purchasers signatory thereto (14)

4.19	Form of Securities Purchase Agreement dated as of March 1, 2022 by and between Check-Cap Ltd. and the Purchasers signatory thereto (19)

4.20	Form of Warrant Amendment Agreement dated as of March 1, 2022 by and between Check-Cap Ltd. and the Purchasers signatory thereto

4.21	Form of Warrant issued by Check-Cap Ltd. on April 22, 2020 (11)

4.22	Form of Warrant issued by Check-Cap Ltd. on May 4, 2020 (12)

4.23	Form of Warrant issued by Check-Cap Ltd. on May 13, 2020 (13)

4.24	Form of Warrant issued by Check-Cap Ltd. on July 27, 2020 (14)

4.25	Form of Warrant issued by Check-Cap Ltd. on July 2, 2021 (18)

4.26	Form of Warrant issued by Check-Cap Ltd. on March 3, 2022 (19)

4.27	Form of Placement Agent Warrant issued by Check-Cap Ltd. on April 22, 2020 (15)

4.28	Form of Placement Agent Warrant issued by Check-Cap Ltd. on May 4, 2020 (15)

4.29	Form of Placement Agent Warrant issued by Check-Cap Ltd. on May 13, 2020 (15)

4.30	Form of Placement Agent Warrant issued by Check-Cap Ltd. on July 27, 2020 (14)

4.31	Form of Placement Agent Warrant issued by Check-Cap Ltd. on July 2, 2021 (18)

4.32	Form of Placement Agent Warrant issued by Check-Cap Ltd. on March 3, 2022 (19)

4.33	Exclusive License Agreement between the Company and the Curators of the University Of Missouri, dated February 26, 2021 (20)

8.1	List of Subsidiaries (16)

12.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)

12.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)

13.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

15.1	Consent of Brightman Almagor Zohar & Co., independent registered public accounting firm

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Inline XBRL Instant Document

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Inline XBRL Taxonomy Extension Schema Document

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Inline XBRL Taxonomy Extension Calculation Linkbase Document

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Inline XBRL Taxonomy Extension Definition Linkbase

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Inline XBRL Taxonomy Extension Label Linkbase

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Inline XBRL Taxonomy Extension Presentation Linkbase

(1)	Incorporated by reference to the Registration Statement on Form F-1 of the Registrant (File No. 333-201250).

(2)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities Exchange Commission on July 6, 2015.

(3)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on August 12, 2016.

(4)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on June 2, 2017.

(5)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on November 22, 2017.

(6)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on June 24, 2015.

(7)	Incorporated by reference to the Registration Statement on Form F-1/A by the Registrant with the Securities and Exchange Commission on April 25, 2018.

(8)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on May 4, 2018.

(9)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on February 6, 2019.

(10)	Incorporated by reference to the Annual Report on Form 20-F filed by the Registrant with the SEC on March 6, 2020.

(11)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on April 22, 2020.

(12)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on May 4, 2020.

(13)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on May 12, 2020.

(14)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on July 24, 2020.

(15)	Incorporated by reference to the Registration Statement on Form F-1 by the Registrant with the SEC on May 20, 2020.

(16)	Incorporated by reference to the Annual Report on Form 20-F filed by the Registrant with the Securities and Exchange Commission on March 15, 2016.

(17)	Incorporated by reference to the Annual Report on Form 20-F filed by the Registrant with the Securities and Exchange Commission on March 15, 2016.

(18)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on July 2, 2021.

(19)	Incorporated by reference to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on March 3, 2022.

	CHECK-CAP LTD.
Date: April 6, 2022	By: /s/ Alex Ovadia
	Name:  Alex Ovadia
	Title:  Chief Executive Officer (Principal Executive Officer)
	By: /s/ Mira Rosenzweig
	Name:  Mira Rosenzweig
	Title:  Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)