As filed with the U.S. Securities and Exchange Commission on August 9, 2018

Registration No. 333-

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

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MaxQ AI Ltd.

(Exact name of registrant as specified in its charter)

Israel		7371		Not Applicable
(State of other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(IRS Employer Identification Number)

76 Yigal Alon Street, 5^th Floor, Tel Aviv, Israel 6706701
+972-3 620 0028

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

Mr. Eugene Saragnese
Chief Executive Officer
MaxQ AI, Inc.
300 Brickstone Square, Suite 201
Andover, MA 01810
(617) 765-0333

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

With copies to:

David S. Glatt, Adv.
Jonathan M. Nathan, Adv.
Meitar Liquornik Geva Leshem Tal
16 Abba Hillel Road
Ramat Gan, Israel 5250608
Tel. +972-3-610-3100
Fax +972-3-610-3111

Mark Selinger, Esq.

Gary Emmanuel, Esq.

McDermott Will & Emery

340 Madison Avenue New York,
NY 10173-1922

Tel. (212) 547-5400
Fax (212) 547-5444

Ralph V. De Martino, Esq.

F. Alec Orudjev, Esq.

Schiff Hardin LLP

901 K Street NW, Suite 700

Washington, DC 20001

Tel: (202) 724-6848

Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒ (Do not check if a smaller reporting company)		Smaller reporting company ☐
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered	Proposed Maximum Aggregate Offering Price⁽¹⁾		Amount of Registration Fee
Ordinary Shares, par value New Israeli Shekel (NIS) 0.01 per share⁽²⁾⁽³⁾	$	8,050,000	$	1,002.23
Representative’s warrants to purchase ordinary shares⁽⁴⁾	$	-	$	-
Ordinary shares, par value NIS 0.01 per share, underlying Representative’s warrants⁽⁴⁾⁽⁵⁾	$	708,400	$	88.20
Total	$	8,758,400	$	1,090.43

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the Securities Act).

(2)	Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional securities as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.

(3)	Includes the offering price of the ordinary shares that may be sold if the option to purchase additional ordinary shares is exercised by the underwriters in full.

(4)	We have agreed to issue to the Representative, upon closing of this offering, warrants exercisable for a period of five years from the effective date of this registration statement representing 8% of the aggregate number of ordinary shares issued in this offering. In accordance with Rule 457(g) under the Securities Act, because the Company’s ordinary shares underlying the warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby.

(5)	Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. We have calculated the proposed maximum aggregate offering price of the ordinary shares underlying the underwriter’s warrants by assuming that such warrants are exercisable at a price per share equal to 110% of the price per share sold in this offering.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED AUGUST 9, 2018

SHARES

Ordinary shares

This is our initial public offering. We are offering of our ordinary shares, par value NIS (or New Israeli Shekel) 0.01 per share. We currently estimate that the initial public offering price will be $ per share. Prior to this offering, no public market has existed for our ordinary shares. We have applied to have our ordinary shares listed on the NASDAQ Capital Market under the symbol “MQAI.” We will not consummate this offering unless that listing is approved.

Investing in our ordinary shares involves a high degree of risk. See “Risk Factors” beginning on page 12 of this prospectus for a discussion of information that should be considered in connection with an investment in our ordinary shares.

We are an “emerging growth company” as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements.

	Per Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions⁽¹⁾	$	$
Proceeds to us, before expenses⁽²⁾	$	$

(1)

Represents underwriting discount and commissions of 8.0% per share (or $ per share). In addition, we agreed to pay a non-accountable expense allowance to the underwriters of 1.0% of the gross proceeds received in this offering and to reimburse the underwriters for other expenses relating to this offering. See “Underwriting” beginning on page 110.

(2)	We estimate the total expenses of this offering payable by us, excluding the underwriting discounts and commissions, will be approximately $ .

The underwriters may also exercise their option to purchase up to additional shares from us at the public offering price, less the underwriting discount, for 45 days after the date of this prospectus to cover over-allotments, if any. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $ and the additional proceeds to us, before expenses, from the over-allotment option exercise will be $ .

The underwriters will also receive warrants to purchase a number of ordinary shares equal to 8% of the ordinary shares sold in connection with this offering, exercisable at a per share price equal to 110% of the offering price per share sold in connection with this offering.

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

The underwriters expect to deliver the ordinary shares on or about , 2018

ViewTrade Securities, Inc.

The date of this prospectus is , 2018.

TABLE OF CONTENTS

PROSPECTUS SUMMARY		1
THE OFFERING		8
SUMMARY FINANCIAL DATA		11
RISK FACTORS		12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		33
EXPLANATORY NOTE REGARDING FORWARD SHARE SPLIT		33
USE OF PROCEEDS		34
DIVIDEND POLICY		34
CAPITALIZATION		34
DILUTION		37
SELECTED HISTORICAL FINANCIAL DATA		40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		41
BUSINESS		53
MANAGEMENT		69
EXECUTIVE COMPENSATION		84
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		90
PRINCIPAL SHAREHOLDERS		93
DESCRIPTION OF SHARE CAPITAL		95
SHARES ELIGIBLE FOR FUTURE SALE		101
TAXATION		104
UNDERWRITING		110
LEGAL MATTERS		114
EXPERTS		114
WHERE YOU CAN FIND MORE INFORMATION		114
INDEX TO FINANCIAL STATEMENTS		F-1

Neither we nor the underwriters have authorized anyone to provide you with information that is different from that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. When you make a decision about whether to invest in our ordinary shares, you should not rely upon any information other than the information in this prospectus or in any free writing prospectus that we may authorize to be delivered or made available to you. Neither the delivery of this prospectus nor the sale of our ordinary shares means that the information contained in this prospectus or any free writing prospectus is correct after the date of this prospectus or such free writing prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy the ordinary shares in any circumstances under which the offer or solicitation is unlawful.

Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. Our management estimates have not been verified by any independent source, and we have not independently verified any third-party information. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements.”

This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ^TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully, especially the “Risk Factors” section of this prospectus and the financial statements and related notes appearing at the end of this prospectus before making an investment decision.

Unless the context provides otherwise, all references in this prospectus to “MaxQ AI,” “we,” “us,” “our,” “our company,” the “Company,” or similar terms, refer to MaxQ AI Ltd. and its wholly-owned subsidiary on a consolidated basis.

Overview

Company Overview

We are a clinical stage artificial intelligence, or AI, company specializing in improving diagnostic accuracy through deep learning technology, an advanced form of AI. Our AI platform and AI-based decision making support tools are designed to interpret and analyze a broad range of patient data concurrently with 3D medical images. Our goal is to provide physicians with tools to achieve a better differential diagnosis, which we believe will ultimately improve patient outcomes and significantly decrease the total cost of care.

Artificial intelligence is a broad term generally used to describe a situation when a machine mimics “cognitive” functions that humans associate with human intelligence, such as “learning” and “problem solving. Basic artificial intelligence includes machine learning, where a machine uses algorithms to parse data, learn from it, and then make a determination or prediction about something in the world. The machine is “trained” using large amounts of data and algorithms that give it the ability to learn how to perform the task. Deep learning is part of a family of machine learning methods based on learning data representations, as opposed to task-specific algorithms.

The global diagnostics market is driven in large part by solutions that can be applied in acute care settings, as these tools will drive decisions regarding hospital admissions and the associated spend. However, despite advances in medical imaging and other diagnostic tools, misdiagnosis remains a common occurrence, and payors in the U.S. and other healthcare systems are increasingly refusing to pay for the cost of care that is the result of misdiagnosis.¹ We believe that improved diagnoses and outcomes are achievable through the adoption of AI-based decision making tools.

Our initial focus is on the development of diagnostic solutions for the emergency room and acute care space utilizing our proprietary AI platform. The platform is designed to interpret and analyze medical images concurrently and in conjunction with other patient data, such as age, co-morbidities, medical history, genomic information and laboratory test results to provide decision making support for the attending physician. Using deep learning technology, the platform is capable of continuous learning which improves its performance with increased use and physician feedback. The result will provide the physician with an assessment of the patient for use in guiding diagnosis and care.

Our initial family of products, Accipio, utilizes machine vision and deep learning technologies to create software tools that help physicians identify or rule out intracranial hemorrhage, or ICH, typically caused by stroke or head trauma. Accipio analyzes non-contrast head computer tomography, or CT, images using algorithms which identify and annotate potential regions of interest, or ROI, consistent with acute ICH.

To date, we have not generated any revenues. In May 2018, our AccipioIx product received CE mark approval. None of our other products have been approved for commercial sale by regulatory authorities. We will not be able to generate revenues for our other products, or generate revenues for any products in the United States, until we obtain those approvals. We have experienced net losses since our inception and had net losses of $9.2 and $1.9 million in fiscal year 2017 and in the first quarter of 2018, respectively. Our auditors have expressed doubt about our ability to continue as a going concern unless we are able to raise equity or debt financing.

Our Accipio products are designed to be easily integrated with most existing medical imaging workflow platforms and to be used with many existing standards-based medical imaging technologies, including CT, magnetic resonance imaging, or MRI, and ultrasound. The Accipio family of products includes the following suite of diagnostic software solutions:

●

AccipioDx is a high-accuracy diagnostic utility intended to support physicians in ruling out ICH in acute settings, supplementing the standard clinical tools available to the treating physician;

(A)

L Berlin. Radiologic errors, past, present and future. L Berlin. Diagnosis, 2014; 1(1): 79–84

(B)

S Burwell. Setting Value-Based Payment Goals — HHS Efforts to Improve U.S. Health Care. N Engl J Med 2015; 372:897-899

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AccipioIx provides (i) workflow prioritization in the picture archiving and communication systems, or PACS, worklist, (ii) case-level signaling of a potential ICH to a reader and/or (iii) case-level signaling of a potential ICH and ROI location(s) to PACS or a reader; and

●

AccipioAx creates a duplicate, annotated series of images, as well as a full 3D image rendering of the brain, which supplements the original, unaltered CT scans. AccipioAx is intended to assist clinicians in interpreting CT examinations of the head by highlighting specific ROIs for identification and further analysis of ICH.

To date, we have entered into agreements with GE Healthcare and IBM Watson Health, two leading radiology original equipment manufacturers, or OEMs, to integrate our products into their radiology software and hardware platforms. The OEMs’ commercial obligations under the agreements commence upon our receiving regulatory approval for the products. In addition, we have entered into an agreement with Samsung Neurologica to collaborate regarding the integration of our applications into portable Samsung Neurologica CereTom® CT scanners used in intensive care units, or ICUs, and mobile stroke units, or MSUs. We have also entered into an agreement with Intel Corporation to optimize our artificial intelligence technology. We believe that by leveraging the existing sales and marketing infrastructure of these channel partners, each of which is a leading medical equipment manufacturer, we will be able to achieve high market penetration and user adoption rates.

We recently received designation under the Expedited Access Pathway, which under the 21st Century Cures Act was converted to Breakthrough Device Program, or Breakthrough, from the U.S. Food and Drug Administration, or the FDA, for AccipioDx. The Breakthrough program is intended to reduce the time associated with product development by promoting earlier and more interactive engagement with the FDA staff during the development and review of medical devices. The FDA designated AccipioDx for Breakthrough based on a proposed indication for use in acute ICH diagnoses. The FDA has stated that it does not intend to grant more than a single Breakthrough designation for a given indication.

We have not submitted any Accipio products for FDA approval, but we intend to do so commencing in the third quarter of 2018. We expect to receive FDA approval for AccipioIx during the fourth quarter of 2018, and we expect to receive FDA approval for AccipioDx as well as AccipioAx in 2019.

We were granted ISO 13485 certification and received CE mark approval for AccipioIx in May 2018. We expect CE mark approvals for AccipioAx and Dx in the first half of 2019. There is no assurance that the FDA will clear any Accipio products for distribution or sale, or that CE marks will be obtained for products which have not yet received it.

Our Competitive Strengths

We believe that our platform will significantly improve patient outcomes through better differential diagnosis and will provide significant value in clinical settings characterized by high medical diagnostic error rates and high economic impact due to direct and indirect costs. We believe that improvement in patient outcomes due to differential diagnosis and treatment, in general, will continue to drive adoption of AI-based diagnostic and decision making support solutions such as ours, and that ultimately such solutions can be part of a new standard of care.

More specifically, we believe that our business benefits from the following competitive strengths:

●

Proprietary AI Platform that Facilitates the Creation of Accurate Algorithms. We have designed our AI platform to be capable of providing accurate assessments through the concurrent processing of complex 3D medical images and related patient data. The platform is designed to handle a wide range of imaging data and multiple forms of structured EMR data, allowing the underlining capabilities of our AI platform to be adapted to any clinical applications that require medical imaging and the related patient data to deliver a differential diagnosis.

●

Breakthrough Device Designation. In January 2018, we were notified that AccipioDx had received Breakthrough Device Designation under the FDA’s Expedited Access Pathway. The FDA has stated that it does not intend to grant more than a single Breakthrough designation for a given indication. We believe that this presents a substantial barrier to entry that may dissuade our competitors from pursuing the development of devices with indications that would compete directly with AccipioDx.

●

Access to Market through Commercial Relationships with OEMs. We have signed commercial agreements with leading radiology OEMs, GE Healthcare and IBM Watson Health. We believe that our relationships with leading OEMs gives us a competitive advantage that positions us to capture future market share.

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Appealing Enterprise Subscription Model Designed to Enhance Product Stickiness. We believe that our “software as a service”, or SaaS, offering based on annual subscriptions is complementary with current market trends in the healthcare industry. Once approved, we anticipate that clinical physicians and managers of healthcare institutions would opt to continue using our products on a commercial basis assuming expected positive user experience, projected improvements in patient outcomes and quality of care, as well as cost savings realization.

●

Easily Integrated into Existing Hardware and Software. Our products are designed to be compatible with current Digital Imaging and Communications in Medicine or DICOM standard compliant devices, including medical imaging scanners, servers, workstations, as well as viewers and PACS and with structured data sources, such as EMR. The integration of our products into existing systems is designed to complement, rather than alter, clinical workflow and to minimize training required for medical personnel.

●

Experienced Management Team. Our team, led by chairman and chief executive officer, Gene Saragnese, has extensive experience in visual and medical software, machine learning, deep learning and algorithms. Mr. Saragnese is a veteran senior executive in the medical imaging industry having served as the chief executive officer of Philips Imaging and in senior positions in GE Healthcare.

●

Access to Large Amounts of Data, Enriched by our Additional Verification. We have secured access to large non-public third-party catalogues of clinical studies, including image data and EMR, covering a diverse patient base and a broad range of medical conditions. Access to such data was secured by data provider agreements with individual institutions, and ethical approvals where required. We enrich training data received from our clinical partners through a verification and annotation process, which is accelerated and optimized via the use of our proprietary purpose-built software. With each new set of training data entered into and processed by the platform, our algorithms can improve their accuracy and predictive value.

Our Strategy

Our goal is to improve patient outcomes, reduce transformation of acute conditions into chronic conditions, increase quality of care and ultimately reduce costs of healthcare via the application of machine vision and deep learning technologies in acute care settings. We aim to create software tools that will allow physicians to have concurrent access to a wide range of available patient data, provide diagnostic and decision making support and facilitate a better differential diagnosis and treatment. We plan to achieve our goal by implementing a multi-step strategy that includes the elements described below.

●

Leverage Existing and Develop New Relationships with Channel Partners to Achieve Sales and Global Market Penetration. We have entered into commercial distribution agreements with GE Healthcare and IBM Watson Health which are conditional on, and may only commence upon, the receipt of required regulatory approvals. As soon as any such regulatory approval is received with respect to any of our current applications, we plan to proceed to commercial distribution of our products in the relevant geographic market via our channel partners.

●

Integrate Accipio Applications into Channel Partners’ Medical Imaging Equipment and Software Platforms. Our initial product family, Accipio, is designed to be integrated into radiology equipment supporting universal software standards in radiology, including DICOM imaging, and routing and storage in PACS/RIS systems. Our goal is to make our products available in every hospital and urgent care unit either on a scanner, in PACS/RIS or via medical records IT solutions.

●

Continue to Develop Scalable Platform and Continuous Learning Technologies; Move into Adjacent Detection and Decision Making Support Opportunities. We intend to continue to invest in enhancing our software and deep learning capabilities and extending our platform to bring the power of AI processing to a broader range of applications with expanded functionality and capabilities. We believe that our platform will facilitate the development of new applications adjacent to our current product offering by utilizing shared input data, and by reapplying our AI platform, certain machine-trained algorithms and other features. In the future, we expect to develop additional products for the detection, workflow prioritization and decision making support applications for skull and spine fractures.

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Engage Directly with Healthcare Industry Participants. Once our products are approved, we plan to seek to cooperate with major healthcare providers to facilitate market adoption of our products. We believe that such institutions are well positioned to directly benefit from improvements in patient outcomes and reduction of cost of care associated with the use of our products. We also believe that the marginal cost of our products compared to potential savings makes it economical for healthcare institutions to adopt our products regardless of whether or not additional costs of purchase of these products will be covered by third-party payors, such as government health care programs and commercial insurance companies. Through cooperation with healthcare providers, we aim to develop and prove an economic model of commercial use of our products in a timely manner. Thereafter, we plan to engage with private insurance plans to develop reimbursement programs encouraging the use of our products. We expect that adoption rates of our products will increase if hospitals and other medical institutions are compensated, in full or in part, for additional costs incurred when purchasing our products.

●

Expand to Additional Geographies. The United States and European Union are our initial target markets. We also believe that there is a significant opportunity for our products outside these initial markets. If and when requisite approvals are granted, we expect to expand commercial distribution of our products to include additional geographies.

Risk Factors

Investing in our ordinary shares involves risks. You should carefully consider the risks described in “Risk Factors” beginning on page 12 before making a decision to invest in our ordinary shares. The following is a summary of some of the principal risks we face:

●

We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and increases the risk of your investment;

●

We have had a history of losses and we may be unable to generate revenues;

●

We may be unable to generate revenues or establish a subscription-based revenue model;

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The report of our independent registered public accounting firm on our 2015, 2016 and 2017 audited consolidated financial statements contains an explanatory paragraph regarding our ability to continue as a going concern;

●

We expect to require additional capital to support our business, and this capital might not be available on acceptable terms, if at all;

●

AI in the healthcare market is new and unproven, and it may decline or experience limited growth, which would adversely affect our ability to fully realize the potential of our platform;

●

If we are not able to compete effectively, our business and operating results will be harmed;

●

We currently anticipate generating a significant portion of our revenue from a limited number of key channel partners and to the extent no such revenue materializes, our business, results of operations and financial results will be materially harmed;

●

Failure to manage our growth effectively could increase our expenses, decrease our revenue and prevent us from implementing our business strategy;

●

We depend on licenses from third parties for certain technologies that we integrate into our AI platform and for which we pay royalties;

●

We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business;

●

Our success depends largely upon the continued services of our chairman and chief executive;

●

If we are unable to protect our intellectual property rights or if our intellectual property rights are inadequate to protect our technology, our competitors could develop and commercialize technology similar to ours, and our competitive position could be harmed;

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	●	We are subject to costly and complex laws and governmental regulations and any adverse regulatory action may materially adversely affect our financial condition and business operations;

	●	We have no FDA approved products and only one with CE mark approval and we may not receive further approvals on a timely basis, if at all;

	●	Following the closing of this offering, a small number of significant beneficial owners of our shares acting together will have a controlling influence over matters requiring shareholder approval, which could delay or prevent a change of control;

●

We may be a passive foreign investment company, which could result in additional taxes for U.S. holders of our ordinary shares; and

●

Our headquarters and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military instability in Israel.

Ordinary Share Issuances Upon the Closing of this Offering

In December 2017, we issued and sold an aggregate of $4.3 million of secured convertible promissory notes, or the December 2017 Notes, to investors in a private placement, or the December 2017 Financing, including a $320,000 convertible note to the placement agent in payment of its placement agent fee, which we refer to as the 2017 Palladium Note. We received gross proceeds of $4.0 million, before deducting certain additional fees and expenses that we incurred in connection with the financing. Interest accrues on the December 2017 Notes at the rate of 5% per annum. The December 2017 Notes mature on the one year anniversary of the original issuance date thereof (i.e., December 29, 2018), unless earlier converted into equity or otherwise repaid. The repayment of the December 2017 Notes is subject to acceleration upon the occurrence of certain customary events of default described in the December 2017 Notes and the related security agreements. Under the security agreements and in order to secure its obligations and performance pursuant to the December 2017 Notes, the Company recorded a first priority fixed charge in favor of lenders on the Company’s assets, and a first priority floating charge on the Company’s assets, as they may exist from time to time. As of July 31, 2018, the aggregate outstanding principal amount of the December 2017 Notes, plus all accrued and unpaid interest thereon, was approximately $4.4 million.

The loan agreement under which the December 2017 Notes were issued also contained an option pursuant to which the lender exercising the option could invest additional amounts up to an aggregate of $1.5 million and receive convertible notes, or the March 2018 Notes, and, together with the December 2017 Notes and the August 2018 Notes (as defined below), the Bridge Notes, under the same terms as the December 2017 Notes except that the conversion price per share on the March 2018 Notes would be $27.30. This option was exercised in full in March 2018, or the March 2018 Financing.

In August 2018, we issued and sold an aggregate of $1.4 million of secured convertible promissory notes, which we refer to as the August 2018 Notes, to investors in a private placement, which we refer to as the August 2018 Financing, and together with the December 2017 Financing and the March 2018 Financing, the Bridge Financings. The August 2018 Notes include a $104,000 convertible note, which we refer to as the 2018 Palladium Note and, collectively with the 2017 Palladium Note, the Palladium Notes. to Palladium in payment of its placement agent fee for the August 2018 Financing, we received gross proceeds of $1.3 million, before deducting certain additional fees and expenses that we incurred in connection with the August 2018 Financing. Other than the different issue dates, the terms of the August 2018 Notes are identical to those of the December 2017 Notes including with respect to the grant of security.

As part of the August 2018 Financing, we issued to the investors warrants to purchase a number of our ordinary shares equal to 100% of the shares issuable to such investors upon conversion of the August 2018 Notes. In addition, we issued to the holders of the December 2017 Notes and the March 2018 Notes warrants to purchase a number of our ordinary shares equal to 25% of the shares issuable to such investors upon conversion of the December 2017 Notes and the March 2018 Notes, respectively. We refer to the warrants issued in connection with the August 2018 Financing as the Bridge Financing Warrants. The exercise price of the Bridge Financing Warrants will be equal to the public offering price in an offering that qualifies under the relevant agreement, and the Bridge Financing Warrants will be exercisable from six months and until 42 months following consummation of the qualified offering. The Bridge Financing Warrants will terminate earlier upon certain merger, consolidation, sale or change in control transactions, or a reorganization or reclassifications of our ordinary shares.

The entire outstanding principal amount under the Bridge Notes, together with all accrued and unpaid interest thereon, will automatically convert into our ordinary shares upon the closing of a qualified offering, subject to our compliance with all conditions of the qualified offering as set forth in the Bridge Notes. Among other things, a qualified offering under the Bridge Notes requires a firm commitment underwritten initial public offering of our ordinary shares not later than September 15, 2018 at a pre-offering valuation of at least $50 million, pursuant to which we raise at least $7 million in gross cash proceeds (not including amounts reflecting converted outstanding indebtedness). The conversion price per share under the Bridge Notes in the event of a qualified offering equals the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, or $ per share, and (ii) 85% of the public offering price in the qualified offering. We expect this offering to constitute a qualified offering under the terms of the Bridge Notes, and, therefore, upon the closing of this offering, we will issue an aggregate of ordinary shares to the investors under the Bridge Notes, based on an assumed initial public offering price of $ . See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Outstanding Convertible Notes.”

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Simultaneously with the December 2017 Financing, existing investors converted convertible notes in an aggregate principal amount and accrued interest of approximately $7.0 million into series A preferred shares, par value NIS 0.01 per share, of the Company, which we refer to as the Series A Preferred Shares. We also issued to these investors warrants to purchase Series A Preferred Shares. Immediately prior to the consummation of a Qualified Offering, the Series A Preferred Shares will also be converted into, and the warrants will be exercised for, our ordinary shares as described elsewhere in this prospectus.

Palladium Capital Advisors LLC, or Palladium, served as our placement agent for the December 2017 Financing and the August 2018 Financing. We paid Palladium a fee for its placement agent services by issuing to it the Palladium Notes. In addition, as a fee for the advisory services that it provided in connection with the December 2017 Financing, we will issue to Palladium, upon the closing of this offering, such number of ordinary shares as equals two percent of our outstanding ordinary shares on a fully-diluted basis (excluding 157,867 ordinary shares reserved for issuance in connection with restricted share units, or RSUs, allocated for our executives) immediately following the closing of this offering (or ordinary shares, assuming that we issue ordinary shares in this offering, based on the price per share set forth on the cover page of this prospectus).

In addition to the foregoing issuances, immediately prior to the consummation of a qualified offering, we will issue an aggregate of 338,537 ordinary shares upon the automatic conversion of 338,537 outstanding series seed preferred shares, par value NIS 0.01 per share, of the Company, or the Series Seed Preferred Shares, and Series A Preferred Shares, under the terms of our existing articles of association. We may also issue up to an aggregate of 110,632 ordinary shares issuable upon the exercise of outstanding warrants to purchase up to 110,632 Series A Preferred Shares that expire upon the consummation of this offering, at an exercise price of $31.40 per share, and the automatic conversion of the preferred shares issuable upon such exercise into ordinary shares under the terms of our existing articles of association.

An aggregate of ordinary shares (assuming that we issue ordinary shares in the offering, based on the price per share set forth on the cover page of this prospectus) are subject to lockup agreements of at least 180 days. See “Shares Eligible for Future Sale — Lock-up Agreements” and in section titled “Underwriting — Lock-up Agreements.” The representative of the underwriter may, in their sole discretion, and at any time without notice, release all or any portion of the shares subject to the corresponding lock-up agreements.

Sale of our Ordinary Shares by Our Shareholders

In November 2017, we engaged Palladium to serve as a non-exclusive agent in connection with the December 2017 Financing and related transactions. Prior to consummation of the December 2017 Financing, we determined, following discussions with Palladium, to request that certain of our shareholders transfer an aggregate of 107,900 ordinary shares to South Florida Biotech Ventures, LLC (and certain designees) to serve as the initial committed investor in the December 2017 Financing.

As a result of this request, concurrently with the December 2017 Financing, Exigent Capital affiliated entities, which we refer to as Exigent Capital, our largest existing shareholder, entered into a share purchase agreement with South Florida Biotech Ventures, LLC and certain of its third-party designees, pursuant to which Exigent Capital agreed to transfer an aggregate of 107,900 ordinary shares to South Florida Biotech Ventures, LLC and certain of its third-party designees at a nominal purchase price, which shares have been deposited in escrow and will be released concurrently with the closing of this offering.

Implications of Being an Emerging Growth Company

As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012. An “emerging growth company” may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

●

being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus;

●

not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

●

reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

●

exemptions from the requirements under the U.S. proxy rules for holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved (we will still need to obtain any relevant shareholder approvals for executive compensation and such parachute payments to the extent required under the Israeli Companies Law, 5759-1999, or the Companies Law).

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We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of our ordinary shares pursuant to an effective registration statement under the Securities Act of 1933, as amended, or the Securities Act. However, if certain events occur before the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.07 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an “emerging growth company” before the end of such five-year period.

We have elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our shareholders may be different than the information you might receive from some other public reporting companies in which you hold equity interests.

To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, after we cease to qualify as an “emerging growth company,” certain of the exemptions available to us as an “emerging growth company” may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; (2) scaled executive compensation disclosures; and (3) the ability to provide only two years of audited financial statements, instead of three years.

Forward Share Split

We expect to effect a forward share split of our ordinary shares at a ratio of -for-1 prior to or upon the effective date of the registration statement of which this prospectus forms a part. The number of shares subject to issued and outstanding options and warrants will be split on the same basis and exercise prices will be adjusted accordingly. Unless noted otherwise, all information presented in this prospectus assumes that the -for-1 forward share split of our outstanding ordinary shares, options and warrants has not occurred.

Company Information

We were incorporated on October 2, 2013 as an Israeli limited company. Our principal executive office is located at 76 Yigal Alon Street, 5^th Floor, Tel Aviv, Israel 6706701. Our telephone number is +972-3 620 0028. Our website address is www.maxq.ai. Information contained in, or accessible through, our website does not constitute a part of this prospectus or any prospectus supplement.

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THE OFFERING

The following summary of the offering contains basic information about the offering and the ordinary shares and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the ordinary shares, please refer to the section of this prospectus entitled “Description of Share Capital.”

Ordinary shares offered by us		ordinary shares.

Over-allotment option		We have granted the underwriters a 45-day option to purchase up to additional ordinary shares from us at the public offering price less underwriting discounts and commissions.

Ordinary shares outstanding after this offering		ordinary shares.

Use of proceeds		We estimate that the net proceeds from our sale of ordinary shares in this offering will be approximately $ million, or approximately $ million if the underwriters exercise their option to purchase additional ordinary shares in full, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

		We currently expect to use the net proceeds from this offering as follows:

		● approximately $ towards clinical trials and additional steps required for obtaining regulatory approvals for our Accipio product family, including approval by the U.S. Food and Drug Administration, or the FDA;

		● approximately $ towards developing our own channel support team and encouragement programs for channel partners;

		● approximately $ towards continuing our research and clinical development of our future products; and

		● the remaining $ (or approximately $ if the underwriters exercise their option to purchase additional ordinary shares in full) will be used for general corporate purposes, including working capital requirements.

		For additional information please refer to the section entitled “Use of Proceeds” on page 34 of this prospectus.

Dividend policy		We do not anticipate paying any cash dividends on our ordinary shares. In addition, we may incur indebtedness in the future that may restrict our ability to pay dividends. See “Dividend Policy” on page 34.

Representative’s Warrants		Upon the closing of this offering, we will issue to ViewTrade Securities, as the representative of the underwriters, warrants entitling the representative to purchase a number of ordinary shares equal to 8% of the ordinary shares sold in connection with this offering, exercisable at a per share price equal to 110% of the offering price per share sold in connection with this offering. The warrants will be exercisable commencing one (1) year after the effective date of the registration statement related to this offering and will expire five years after the effective date of the registration statement related to this offering.

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Lock-up agreements	There are three categories of “lock-up” periods following the closing of this offering during which our current security holders may not, without the prior written consent of the Representative, offer, sell, pledge or otherwise dispose of the shares that they beneficially own, including the issuance of shares upon the exercise of convertible securities and options that are currently outstanding or which may be issued:

	(i)	Investors who purchased Bridge Notes or shares from existing shareholders as part of the Bridge Financings are subject to a six month “lock-up” period, followed by a four month “leak out” period during which limited quantities of shares may be sold;

	(ii)	Exigent Capital is subject to a 10 month “lock-up” period, followed by a two month “leak out” period during which limited quantities of shares may be sold; and

	(iii)	Our officers, directors and other holders of our currently outstanding shares prior to the offering, are subject to a 12 month “lock-up” period;

	For additional information, please refer to the section entities “Shares Eligible for Future Sale — Lock-up Agreements” on page 101 of this prospectus.

Risk Factors		See the section entitled “Risk Factors” beginning on page 12 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ordinary shares.

NASDAQ Capital Market symbol		We have applied to have our ordinary shares listed on the NASDAQ Capital Market under the symbol “MQAI.”

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The number of our ordinary shares to be outstanding after this offering is based on 640,856 ordinary shares outstanding, on an as converted basis, as of July 31, 2018. However, it does not include, as of July 31, 2018, the following:

●

136,405 ordinary shares issuable upon the exercise of outstanding share options under our MaxQ AI Ltd. 2015 Share Incentive Plan, or the 2015 Plan, with a weighted average exercise price of $13.39 per share;

	●	up to 110,632 ordinary shares issuable upon exercise of outstanding Series A Preferred Shares warrants, at an exercise price of $31.40 per share, and automatic conversion of the underlying Series A Preferred Shares into ordinary shares, which warrants will expire upon the closing of this offering;

	●	up to an estimated 14,899 ordinary shares issuable at an exercise price per share equal to the par value, upon the exercise of warrants that do not expire upon the closing of this offering;

	●	110,507 ordinary shares issuable upon the vesting of 110,507 RSUs granted under the 2015 Plan, which grant becomes effective upon the closing of this offering;

	●	the issuance of ordinary shares to Palladium upon the closing of this offering, representing two percent of our outstanding ordinary shares on a fully-diluted basis (excluding 157,867 ordinary shares reserved for issuance in connection with RSUs allocated for our executives) immediately following the closing of this offering ( ordinary shares, assuming that we issue ordinary shares in this offering, based on the price per share set forth on the cover page of this prospectus);

	●	47,360 ordinary shares underlying RSUs that are reserved for future issuance under the 2015 Plan;

	●	42,805 ordinary shares reserved for future issuance under the 2015 Plan;

	●	the ordinary shares issuable upon the closing of this offering due to the automatic conversion of approximately $5.8 million principal amount and accrued interest outstanding under the December 2017 Notes and August 2018 Notes at a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in this offering (i.e., 85% of the price per share set forth on the cover page of this prospectus);
	●	the ordinary shares issuable upon the closing of this offering due to the automatic conversion of approximately $1.5 million principal amount and accrued interest outstanding under March 2018 Notes into ordinary shares (based on a conversion price equal to $27.30, subject to adjustment for share splits and other recapitalization events);
	●	up to 29,245 ordinary shares issuable upon exercise of the Intel Warrant (as defined below); and
	●	up to 85,489 ordinary shares issuable upon exercise of the Bridge Financing Warrants.

In addition, unless otherwise noted, the information in this prospectus assumes:

●

the automatic conversion of approximately $5.8 million principal amount and accrued interest under outstanding December 2017 Notes and August 2018 Notes into ordinary shares (based on a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in this offering, i.e., 85% of $ , which is the price per share set forth on the cover page of this prospectus);

●

the automatic conversion of approximately $1.5 million principal amount and accrued interest under outstanding March 2018 Notes into ordinary shares (based on a conversion price equal to $27.30, subject to adjustment for share splits and other recapitalization events);

	●	the conversion of 338,537 outstanding Series Seed Preferred Shares and Series A Preferred Shares into an equivalent number of ordinary shares under the terms of our existing articles of association, as amended;

	●	that the underwriters will not exercise their option to purchase up to an additional ordinary shares in this offering; and

	●	the adoption and effectiveness of our amended and restated articles of association, which will occur immediately prior to the closing of this offering.

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SUMMARY FINANCIAL DATA

The following tables set forth a summary of our financial data for the three months ended March 31, 2017 and 2018 and as of March 31, 2018. We have derived these data from our unaudited financial statements appearing elsewhere in this prospectus. You should read this data together with our financial statements and related notes appearing elsewhere in this prospectus and the sections in this prospectus entitled “Capitalization,” “Selected Historical Financial Data,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our historical results for any prior period are not necessarily indicative of our future results.

	Three Months Ended March 31,
	2018		2017
	(in thousands, except per share data)
Statement of Operations Data:
Total operating expenses	$	1,771	$	1,198
Financial expenses, net		169		636
Net Loss	$	1,940	$	1,834
Basic and diluted net loss per share	$	6.65	$	10.29
Shares used in computation of basic and diluted net loss per share		292,438		179,013

	March 31, 2018
	Actual			Adjustments			Pro Forma
				(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	2,179		$	-		$	2,179
Total assets		2,339			-			2,339
Convertible loans		5,527			(5,527	)		-
Accumulated deficit		(17,289	)		(346	)		(17,635	)
Total shareholders’ equity (deficiency)		(4,212	)		5,527			1,315

The pro forma balance sheet data give effect to the conversion of all of our outstanding preferred shares, convertible notes and exercise of certain preferred share warrants into an aggregate of ordinary shares upon the closing of this offering.

The pro forma as adjusted balance sheet data give further effect to our issuance and sale of ordinary shares in this offering at an assumed initial public offering price of $ per share set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, total assets and total shareholders’ deficit by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses.

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RISK FACTORS

Investing in our ordinary shares involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this prospectus, including our consolidated financial statements, the notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our ordinary shares. The occurrence of any of the following risks could have a material and adverse effect on our business, reputation, financial condition, results of operations and future growth prospects, as well as our ability to accomplish our strategic objectives. As a result, the trading price of our ordinary shares could decline and you could lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and share price. Certain statements contained in this section constitute forward-looking statements. See the information included in “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Financial Condition

We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.

We are a clinical stage artificial intelligence, or AI, company with a limited operating history, specializing in improving diagnostic accuracy through deep learning technology, an advanced form of AI. We were founded in October 2013. As a result of our limited operating history, our ability to forecast our future results of operations is limited and subject to a number of uncertainties, including our inability to plan for future growth. We have encountered and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as risks and uncertainties related to:

	●	FDA and CE regulatory approval:

	●	market acceptance of our platform and products;

	●	reliability and scalability of our platform and products;

	●	acceptance of our subscription based SaaS model;

	●	adding new channel partners and customers and entering new vertical markets;

	●	retention of channel partners and customers;

	●	the successful expansion of our business in the area of stroke and trauma and beyond into other diagnostic applications in the acute care space;

	●	reliance on channel partners;

	●	competition;

	●	our ability to control costs, particularly our product development and sales and marketing expenses; and

	●	general economic and political conditions.

If we do not address these risks successfully, our business, results of operations and financial condition may be adversely affected.

We have had a history of losses and we may be unable to generate revenues.

We experienced net losses of $9.2 million, $4.6 million and $1.5 million in fiscal years 2017, 2016 and 2015, respectively, and $1.9 million and $1.8 million in the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, we had an accumulated deficit of approximately $17.3 million. While we have received CE mark approval for our AccipioIX in May 2018, our other products have not been approved for commercial sale by any regulatory authority and AccipioIX has not been approved by the FDA, and we have not yet generated any revenue from product sales to date. We continue to incur significant research and development and other expenses related to our ongoing operations, which expenses are expected to continue even after products are available for commercial sales. While we have entered into agreements which potentially provide for revenue, those revenues are predicated upon specific regulatory milestones which we have not yet achieved.

Even if we obtain approval for sale of our products, we may be unable to generate revenues or establish a subscription-based revenue model.

Our business plan assumes that we will receive annual subscription fees from our channel partners as SaaS business. In order for us to generate substantial revenues and establish our SaaS business model, we must achieve the milestones under our agreements and enter into additional distribution or similar agreements. We are currently in the early stages of developing our licensing business, and we may not be able to succeed with respect to these efforts.

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Many factors may adversely affect our ability to establish a viable and profitable SaaS business, including but not limited to:

	●	Failure to articulate the perceived benefits of our solution, or failure to persuade potential channel partners or customers that such benefits justify the additional cost over competitive solutions or technologies;

	●	Failure to develop and offer solutions that satisfy customers’ needs;

	●	Introduction of competitive offerings by other companies, including many that are larger, better financed and more well-known than us;

	●	Inability to fulfill existing agreements or enter into satisfactory agreements relating to the integration of our platform with products of other companies to pursue particular vertical markets, or the failure of such relationships to achieve their anticipated benefits;

	●	Failure to provide adequate channel partners and customer support;

	●	Long sales cycles for customers in the acute healthcare markets; and

	●	Failure to generate broad customer acceptance of or interest in our solutions.

If we fail to generate revenues and develop a successful SaaS business, our business, results of operations and financial condition will suffer and you may lose all or part of your investment in this offering.

Our recurring losses from operations, current cash balances, anticipated future expenses and working capital deficiency raise substantial doubt about our ability to continue as a going concern without additional equity or debt financing. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our audited consolidated financial statements for 2015, 2016 and 2017 with respect to this uncertainty. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our ordinary shares and make it more difficult for us to obtain financing. If we are unable to obtain sufficient capital in this offering, our business, financial condition, and results of operations will be materially and adversely affected, and we will need to obtain alternative financing or significantly modify our operational plans to continue as a going concern. Further, even if we successfully complete and receive the net proceeds from this offering, given our planned expenditures for the next several years, our independent registered public accounting firm may conclude, in connection with the preparation of our financial statements for 2018 or any subsequent period that there continues to be substantial doubt regarding our ability to continue as a going concern. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.

We expect to require additional capital to support our business, and this capital might not be available on acceptable terms, if at all.

We intend to continue to make investments to support our business and will likely require additional funds. In particular, we expect to seek additional funds to develop new products and cover the cost of the clinical trials in respect of those products, and enhance our platform, expand our operations, including our sales and marketing organizations and our presence outside of the United States. Accordingly, we expect to engage in equity and/or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our shareholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares. Any debt financing that we may secure in the future could involve debt service obligations and restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, and we may be obligated to issue equity securities to the providers of that financing. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth, scale our infrastructure, develop product enhancements and to respond to business challenges could be significantly impaired, and our business, results of operations and financial condition may be adversely affected.

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We may never achieve profitability.

Because of the numerous risks and uncertainties associated with AI generally and specifically the development and commercialization of AI solutions for acute care clinical use, we are unable to accurately predict the timing or amount of future revenue or expenses or when, or if, we will be able to achieve profitability. We have financed our operations primarily through convertible loans and the issuance and sale of equity, including ordinary shares, preferred shares and warrants. The size of our future net losses will depend, in part, on the rate of growth or contraction of our expenses and the level and rate of growth, if any, of our revenues. We expect to continue to expend substantial financial and other resources on, among other things:

	●	investments to expand and enhance our platform and technology infrastructure, make improvements to the scalability, availability and security of our platform, and develop new products;

	●	acquiring non-public third-party medical imaging and related electronic medical records, or EMR, data that are used as training data for our platform and enriching that data through a verification and annotation process;

	●	sales and marketing, including expanding our indirect sales organization and marketing programs, and expanding our programs directed at increasing our brand awareness among current and new customers;

	●	planning and conducting clinical trials to obtain regulatory approval for the commercialization of our products;

	●	expansion of our operations and infrastructure, both domestically and internationally; and

	●	general administration, including legal, accounting and other expenses related to being a public company.

If we are unable to successfully commercialize our products or if revenue from any of our products that receives marketing approval is insufficient, we will not achieve profitability. Furthermore, even if we successfully commercialize our products, our planned investments may not result in increased revenue or growth of our business. We may not be able to generate net revenues sufficient to offset our expected cost increases and planned investments in our business and platform. As a result, we may incur significant losses for the foreseeable future, and may not be able to achieve and sustain profitability. If we fail to achieve and sustain profitability, then we may not be able to achieve our business plan, fund our business or continue as a going concern.

Our quarterly results may fluctuate significantly and period-to-period comparisons of our results may not be meaningful.

Our quarterly results, including the levels of future revenue, if any, our operating expenses and other costs, and our operating margins, may fluctuate significantly in the future, and period-to-period comparisons of our results may not be meaningful. This may be especially true to the extent that we do not successfully establish our SaaS business model. Accordingly, the results of any one period should not be relied upon as an indication of our future performance. In addition, our quarterly results may not fully reflect the underlying performance of our business. Factors that may cause fluctuations in our quarterly results include, but are not limited to:

	●	the timing of regulatory approvals for our products;

	●	our ability to successfully establish our SaaS business model;

	●	our ability to attract and retain our existing channel partners, customers and to expand our business;

	●	enacted or pending legislation effecting the healthcare industry;

	●	changes in our pricing policies or those of our competitors;

	●	the impact of the relatively long sales cycle that is typical of customers in our current industry vertical, which are large hospitals and healthcare delivery organizations;

	●	the timing of our recognition of revenue and the mix of our revenues during the period;

	●	the amount and timing of operating expenses and other costs related to the maintenance and expansion of our business, infrastructure and operations;

	●	the amount and timing of operating expenses and other costs related to the development or acquisition of businesses, services, technologies or intellectual property rights;

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	●	the timing and impact of security breaches, service outages or other performance problems with our technology infrastructure and software solutions;

	●	the timing and costs associated with legal or regulatory actions;

	●	changes in the competitive dynamics of our industry, including consolidation among competitors, channel partners or customers;

	●	loss of our executive officers or other key employees;

	●	industry conditions and trends that are specific to the vertical markets in which we sell or intend to sell our SaaS solutions;

	●	disruptions of or interference with our channel partners’ services; and

	●	general economic and market conditions.

Fluctuations in quarterly results may negatively impact the value of our ordinary shares, regardless of whether they impact or reflect the overall performance of our business. If our quarterly results fall below the expectations of investors or any securities analysts who follow our shares, or below any guidance we may provide, the price of our ordinary shares could decline substantially.

Currency exchange rate fluctuations affect our results of operations, as reported in our financial statements.

We report our financial results, and most of our future revenues will be recorded, in U.S. dollars. However, substantially all of the research and development expenses of our Israeli operations, as well as a portion of the cost of revenues, selling and marketing, and general and administrative expenses of our Israeli operations, are (or will be, as appropriate) incurred in NIS. As a result, we are exposed to exchange rate risks that may adversely affect our financial results. If the NIS appreciates against the U.S. dollar or if the value of the NIS declines against the U.S. dollar at a time when the rate of inflation in the cost of Israeli goods and services exceeds the rate of decline in the relative value of the NIS, then the U.S. dollar cost of our operations in Israel would increase and our results of operations would be adversely affected. Our Israeli operations also could be adversely affected if we are unable to effectively hedge against currency fluctuations in the future. We cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the NIS against the U.S. dollar. The Israeli annual rate of deflation amounted to 0.2% and 1.0% for the years ended December 31, 2017 and 2016, respectively. The annual appreciation (devaluation) of the NIS in relation to the U.S. dollar amounted to 9.8% and (1.5%) for the years ended December 31, 2017 and 2016, respectively.

From time to time we may engage in currency hedging activities. Those measures, however, may not adequately protect us from material adverse effects due to the impact of inflation in Israel or from fluctuations in the relative values of the U.S. dollar and the New Israeli Shekel, and may result in a financial loss.

Risks Related to Our Business and Industry

AI in the healthcare market is new and unproven, and it may decline or experience limited growth, which would adversely affect our ability to fully realize the potential of our platform.

AI in the healthcare market is relatively new, and evaluating the size and scope of the market is subject to a number of risks and uncertainties. We believe that our future success will depend in large part on the growth of this market. The utilization of an AI-based software platform by physicians for high-impact diagnostic and decision- making support is still relatively new, and physicians may not recognize the need for, or benefits of, our platform. This may prompt them to reject or cease use of our platform or decide to adopt alternative products and services to satisfy their requirements Even if this market does grow, our ability to expand our business and extend our market position depends upon a number of factors, including the cost, performance and perceived value of our platform and the applications we develop for it. The perceived value of our platform and the applications we develop for it may be a function of estimated cost savings by healthcare providers using our platform, which may be difficult to accurately predict. Market opportunity and cost saving estimates are subject to significant uncertainty and are based on assumptions and estimates, including our internal analysis and industry experience. Assessing the market for our solutions in each of the vertical markets we are competing in, or are planning to compete in, is particularly difficult due to a number of factors, including limited available information and rapid evolution of the market. The market for our platform and the applications we develop for it may fail to grow significantly or be unable to meet the level of growth we expect. As a result of these and other factors, we may experience lower-than-expected demand for our products and services due to lack of channel partner, hospital and/or physician acceptance, technological challenges, competing products and services, decreases in spending by current and prospective customers, weakening economic conditions and other causes. If our market does not experience significant growth, or if demand for our platform does not increase in line with our projections, then our business, results of operations and financial condition will be adversely affected.

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We currently expect to depend heavily on any future revenues generated through a limited number of channel partners. Our base of existing channel partners with whom we have entered into agreements consists of GE Healthcare and IBM Watson Health, and we intend to pursue commercial agreements with other major medical equipment manufacturers. If these partners are not satisfied with our products, they may not continue using our platform and the applications we develop for it or enter into new contracts with us. Further, if these partners do not dedicate sufficient time to the commercialization of our AI-based products or otherwise fail to comply with their obligations under our agreements with them, then this may have an adverse effect on our business and prospects. These partners are not obligated to deal with us exclusively and therefore may sell competing products or solutions. As a result, these partners may give higher priority to products or services of our competitors, thereby reducing their efforts in commercialization of our AI-based products. While our agreements with GE Healthcare and IBM Watson Health are for initial terms of five years, respectively, they may be terminated under specified circumstances. The termination of any such agreement or the failure of one of such partners to extend its relationship with us after the term of an agreement with it expires, could harm our brand and reputation. A significant decline in any future revenue stream from these key channel partners would have a material adverse effect on our business, results of operations and financial condition.

If we are not able to develop a strong brand for our platform and the applications we develop for it and increase market awareness of our company and our platform and the applications we develop for it, then our business, results of operations and financial condition may be adversely affected.

We believe that the success of our platform and the applications we develop for it will depend in part on our ability to develop a strong brand identity for our company and products, and to increase the market awareness of our platform and its capabilities. The successful promotion of our brand will depend largely on our continued marketing efforts and our ability to offer high quality AI applications on our platform and ensure that our technology provides the expected benefits to our customers. We also believe that it is important for us to be perceived as leaders in the AI-based medical computing market. Our brand promotion and thought leadership activities may not be successful or produce increased revenue. In addition, independent industry analysts may provide reviews of our platform and of competing products and services, which may significantly influence the perception of our platform in the marketplace. If these reviews are negative or not as positive as reviews of our competitors’ products and services, then our brand may be harmed.

The promotion of our brand also requires us to make substantial expenditures, and we anticipate that these expenditures will increase as our industry becomes more competitive and as we seek to expand into new markets. These higher expenditures may not result in any increased revenue or in revenue that is sufficient to offset the higher expense levels. If we do not successfully maintain and enhance our brand, then our business may not grow, we may see our pricing power reduced relative to competitors and we may lose customers, all of which would adversely affect our business, results of operations and financial condition.

Failure to manage our growth effectively could increase our expenses, decrease our revenue and prevent us from implementing our business strategy.

We expect that our ability to generate revenues and achieve profitability will require substantial growth in our business, which will put a strain on our management and financial resources. To manage this and our anticipated future growth effectively, including as we expand into new clinical areas and geographic regions, we must continue to maintain and enhance our platform and information technology infrastructure, as well as our financial and accounting systems and controls. We also must attract, train and retain a significant number of qualified software developers and engineers, technical and management personnel, sales and marketing personnel and customer and channel partner support personnel. Failure to effectively manage our rapid growth could lead us to over-invest or under-invest in development and operations, result in weaknesses in our platform, systems or controls, give rise to operational mistakes, losses, loss of productivity or business opportunities and result in loss of employees and reduced productivity of remaining employees. Our growth could require significant capital expenditures and might divert financial resources from other projects such as the development of new products and services. If our management is unable to effectively manage our growth, our expenses might increase more than expected, our revenue could decline or grow more slowly than expected, and we might be unable to implement our business strategy. The quality of our products and services might suffer, which could negatively affect our reputation and harm our ability to retain and attract channel partners or customers.

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If we are not able to enhance or introduce new applications for our AI platform or other new products that achieve market acceptance and keep pace with technological developments, our business, results of operations and financial condition could be harmed.

Our ability to attract new channel partners and customers and increase revenue from existing channel partners and customers depends in part on our ability to enhance and improve our applications for our AI software platform, increase adoption and usage of our products and introduce new products and features for clinical decision support in acute care settings. The success of any enhancements or new products depends on several factors, including timely completion, adequate quality testing, actual performance quality, market-accepted pricing levels, regulatory approvals and overall market acceptance and demand. Enhancements and new products that we develop may not be introduced in a timely or cost-effective manner, may contain defects, may have interoperability difficulties with our platform, or may not achieve the market acceptance necessary to generate significant revenue. If we are unable to successfully enhance our existing platform and capabilities to meet evolving customer requirements, increase adoption and usage of our platform, develop new products, or if our efforts to increase the usage of our products are more expensive than we expect, then our business, results of operations and financial condition could be harmed.

We depend on licenses from third parties for certain technologies that we integrate into our AI platform and for which we pay royalties.

We integrate certain technologies developed and owned by third parties into our products, and rely upon licenses from those third parties in order to use their technologies. The licensed components of our AI platform include software solutions provided by Imagu Vision Technologies Ltd. that provides machine vision functionality, and image registration software from Mirada Medical Ltd., or Mirada Medical, that is used in the development and calculation of feature attributes in the machine learning and AI process. Under these license agreements, we are obligated to pay royalties on revenues generated by our products that incorporate the third-party technology. If we are unable to maintain our contractual relationships with the third party licensors on which we depend, we may not be able to find replacement compatible technology to integrate into our products on a timely basis or on similar economic terms. Also, as our platform becomes more complex, we may not be able to integrate the software we license, or technology of other third parties that we may seek to integrate, in a seamless or timely manner due to a number of factors, including incompatible software applications, lack of cooperation from developers, insufficient internal technical resources, and the inability to secure the necessary licenses or legal authorizations required. In any such case, our business, results of operations and financial condition may be materially adversely affected.

Our AI Platform deploys on our channel partners’ infrastructure and we are therefore dependent on our channel partners’ infrastructure and the associated security, continuity and recovery structures in place. Any disruption of or interference with our channel partners’ services would adversely affect our business operations.

Our software solutions are designed to be deployed through our channel partners’ hardware and network infrastructure, regardless of whether the architecture is cloud-based or on premises. We are therefore dependent on our channel partners’ infrastructure including for our storage needs, including for all continuity, recovery and security needs. Given that our solutions are designed to be used in acute medical care settings, our success depends in part on the ability of users to access our platform at any time and within an acceptable amount of time. Users of our solutions may experience disruptions, outages and other performance problems due to a variety of problems with our platform or our channel partners’ infrastructure, including infrastructure changes, introductions of new applications and functionality, software errors and defects, capacity constraints due to an increasing number of users accessing our platform simultaneously, or security related incidents. In addition, from time to time we may experience limited periods of server downtime due to server failure or other technical difficulties (as well as maintenance requirements). Because we also incorporate diverse software and hosted services from many third-party vendors, we may encounter difficulties and delays in integrating and synthesizing these applications and programs, which may cause downtimes or other performance problems. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our platform becomes more complex and our user traffic increases. In addition, if our channel partners’ security is compromised, our platform is unavailable to our customers, or our customers are unable to use our platform within a reasonable amount of time or at all, then our business, results of operations and financial condition could be materially adversely affected. If our platform is unavailable or if our users are unable to access our platform within a reasonable amount of time or at all, our business would be adversely affected and our brand could be harmed. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, channel partners, hospitals and/or physicians may cease to use our platform and our business and operating results may be adversely affected.

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The security of our platform and the applications we develop for it, networks or computer systems may be breached, which could have an adverse effect on our business and reputation.

Our platform and the applications we develop for it may be subject to computer malware, viruses and computer hacking, all of which have become more prevalent in our industry. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, they may include the theft or destruction of data owned by us or our customers, and/or damage to our platform. Any failure to maintain the performance, reliability, security and availability of our products and technical infrastructure to the satisfaction of our customers may harm our reputation and our ability to retain existing customers and attract new users.

While we have implemented procedures and safeguards that are designed to prevent security breaches and cyber-attacks, they may not be able to protect against all attempts to breach our systems, and we may not become aware in a timely manner of any such security breach. Unauthorized access to or security breaches of our platform, network or computer systems or those of our technology service providers, could result in the loss of business, reputational damage, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, civil and criminal penalties for violation of applicable laws, regulations or contractual obligations, and significant costs, fees and other monetary payments for remediation. If customers believe that our platform does not provide adequate security for the storage or transmission of critical information, our business will be harmed.

Privacy and data security laws and regulations could require us to make changes to our business, impose additional costs on us and reduce the demand for our software solutions.

Our business model contemplates that the users of our products will process and transmit patients’ medical data. End users of our products may transmit a significant amount of personal or identifying information through our platform, which may be transmitted inappropriately and therefore be revealed to unauthorized third parties. In addition, the health and research institutions which provide us with data for purposes of training our algorithms may inadvertently fail to de-identify data (when regulated) prior to sending it to us which then places on us the responsibility of handling that sensitive information in accordance with applicable law. In addition, there may be additional agreements for use of data in connection with the research and development of our products. Privacy and data security have become significant issues in the United States and in other jurisdictions where we may offer our software solutions. The regulatory framework relating to privacy and data security issues worldwide is evolving rapidly and is likely to remain uncertain for the foreseeable future. Federal, state, local and foreign government bodies and agencies have in the past adopted, or may in the future adopt, laws and regulations regarding the collection, use, processing, storage and disclosure of personal or identifying information obtained from customers and other individuals, and these laws may create varied and potentially conflicting requirements. In addition to government regulation, privacy advocates and industry groups may propose various self-regulatory standards that may legally or contractually apply to our business. Because the interpretation and application of many privacy and data security laws, regulations and applicable industry standards are uncertain, it is possible that these laws, regulations and standards may be interpreted and applied in a manner inconsistent with our existing privacy and data management practices. As we expand into new jurisdictions or verticals, we will need to understand and comply with various new requirements applicable in those jurisdictions or verticals.

To the extent applicable to our business or the businesses of our end users, these laws, regulations and industry standards could have negative effects on our business, including by increasing our costs and operating expenses, and delaying or impeding our deployment of new core functionality and products. Compliance with these laws, regulations and industry standards requires significant management time and attention, and failure to comply could result in negative publicity, subject us to fines or penalties or result in demands that we modify or cease existing business practices. In addition, the costs of compliance with, and other burdens imposed by, such laws, regulations and industry standards may adversely affect our end users’ ability or desire to collect, use and process personal information using our software solutions, which could reduce overall demand for them. Even the perception of privacy and data security concerns, whether or not valid, may inhibit market acceptance of our software solutions in certain verticals. Furthermore, privacy and data security concerns may cause our end users or their employees and other industry participants to resist providing the personal information necessary to allow our customers to use our applications effectively. Any of these outcomes could adversely affect our business and operating results.

Furthermore, our business requires continued access to non-public third-party medical imaging and related EMR data that are used as training data for our platform and to develop applications for it. If end-users refuse or limit our access to relevant information on grounds of privacy it will inhibit our ability to continue to improve our platform and the applications we develop for it and thereby could adversely affect our business, operating results and competitiveness. In the event that regulated data is used or disclosed inappropriately, we have an obligation to notify regulators and/or impacted individuals and may incur breach notification related costs.

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If we are not able to compete effectively, our business and operating results will be harmed.

The market for AI based healthcare systems for clinical decision support is in its early stages of development, but competition in the market has grown rapidly and includes various large, well-capitalized technology companies as well as early stage entrants. Although our initial focus is on the development of intracranial hemorrhage, or ICH, diagnostic solutions for the emergency room and acute care space, we expect to face increased competition in both this market and other markets where we may expand our platform application.

Our competitors may have better brand name recognition, greater financial and engineering resources and larger sales teams than we have. In addition, some of our competitors may be further along in obtaining regulatory approval for their products than us. As a result, these competitors may be able to develop and introduce competing solutions and technologies that may have greater capabilities than ours or that are able to achieve greater acceptance, they may be able to achieve commercialization of their products sooner than us, and they may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or requirements. We expect that competition will increase and intensify as we continue to expand our serviceable markets and improve our platform and services. Increased competition may result in pricing pressures and require us to incur additional sales and marketing expenses, which could negatively impact our sales, ability and market share.

Any failure to properly train our channel partners concerning the proper use of our products may adversely affect our ability to successfully deploy our products and could ultimately harm our reputation and results of operations.

Our ability to retain existing channel partners and end users, and attract new channel partners and end users, depends in part on our ability to properly train our channel partners and ensure that they maintain a consistently high level of customer service and technical support. End users may depend on service support teams of our channel partners to assist them in utilizing our platform effectively and to help them to resolve issues quickly and to provide ongoing support. If we are unable to ensure (whether contractually or practically) that our channel partners hire and train sufficient support resources, or if our channel partners are otherwise unsuccessful in assisting end users effectively, it could adversely affect our ability to retain existing channel partners and end users, and could cause prospective end users to refrain from adopting our platform. Our channel partners may be unable to respond quickly enough to accommodate short-term increases in demand for customer support. We also may be unable to modify the nature, scope and delivery of our training and support to our channel partners to compete with changes in the support services provided by our competitors. Increased demand for such support, without corresponding revenue, could increase our costs and adversely affect our business, results of operations and financial condition. Our sales are highly dependent on our business reputation and on positive recommendations from end users. Any failure of ours to properly train our channel partners, or if our channel partners fail to maintain high-quality customer support to end users, or even a market perception that our solutions are not backed by high-quality customer support, could adversely affect our reputation, business, results of operations and financial condition.

Our success depends largely upon the continued services of our chairman and chief executive officer, Eugene (Gene) Saragnese, and our other executive officers. We rely on our leadership team in the areas of strategy and implementation, research and development, operations, regulatory, security, marketing, sales, support and general and administrative functions. As of July 15, 2018, we employed 21 people and knowledge of our AI platform, products and clinical trials is concentrated among a small number of individuals. Members of our executive team as well as key clinical, scientific and technical personnel may resign at any time and there can be no assurance that we will be able to continue to retain such personnel. Further, we currently do not maintain key-man insurance on Mr. Saragnese. If we cannot recruit suitable replacements in a timely manner, our business and operations will be adversely impacted and our relationships with our key customers will be disrupted.

If we are unable to hire, retain and motivate qualified personnel, our business will suffer.

Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel. We believe that there is, and will continue to be, intense competition for highly skilled management, engineering, data science, sales and other personnel with experience in our industry, especially in Israel, where our research and development and a substantial part of our executive activities are located. We must provide competitive compensation packages and a high-quality work environment to hire, retain and motivate employees. If we are unable to retain and motivate our existing employees and attract qualified personnel to fill key positions, we may be unable to manage our business effectively, including the development, marketing and sale of our products, which could adversely affect our business, results of operations and financial condition. To the extent we hire personnel from competitors, we also may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential information.

Volatility in, or lack of performance of, our share price may also affect our ability to attract and retain key personnel. Many of our key personnel are, or will soon be, vested in a substantial number of ordinary shares or options. Employees may be more likely to terminate their employment with us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or, conversely, if the exercise prices of the options that they hold are significantly above the trading price of our ordinary shares. If we are unable to retain our employees, our business, results of operations and financial condition could be adversely affected.

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Under applicable employment laws, we may not be able to enforce covenants not to compete.

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

We may pursue the acquisition of other companies, businesses or technologies, which could be expensive, divert our management’s attention and/or fail to achieve the expected benefits.

As part of our growth strategy, we may acquire businesses, services, technologies or intellectual property rights that we believe could complement, expand or enhance the features and functionality of our platform and our technical capabilities, broaden our service offerings or offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not such acquisitions are consummated. Acquisitions also could result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results and financial condition. In addition, we may experience difficulties in integrating the acquired personnel, operations and/or technologies successfully or effectively managing the combined business following the acquisition. We also may not achieve the anticipated benefits from the acquired business and may incur unanticipated costs and liabilities in connection with any such acquisitions. If any of these results occurs, our business and financial results could be adversely affected.

If our business model changes to depend on commercial third-party payors or government payors, and those payors fail to provide coverage or adequate reimbursement for the services in which our products are used, our revenue and prospects for profitability would be harmed.

Our current go-to-market strategy does not contemplate or rely upon governmental or third party payor reimbursement. We may in the future seek reimbursement for our products as a means to expand the adoption of products and broaden our customer base. To the extent that we adopt a market strategy which is in whole or in part reliant on third party reimbursement, commercial sales of our products will depend in part on the availability of reimbursement from such third-party payors, including government health administrative authorities, managed care providers, private health insurers and other organizations. Each third-party payor may have its own policy regarding what products it will cover, the conditions under which it will cover such products, and how much it will pay for such products. Third-party payors are increasingly examining the medical necessity and cost effectiveness of medical products and services in addition to safety and efficacy and, accordingly, significant uncertainty exists as to the reimbursement status of newly approved devices.

Risks Related to Our Intellectual Property

We rely on a combination of patent and trademark laws in the United States and other countries, trade secret protection, confidentiality agreements and other contractual arrangements with our employees, channel partners and others to maintain our competitive position. In particular, our success depends, in part, on our ability to maintain patent protection for our products, technologies and inventions, maintain the confidentiality of our trade secrets and know-how, operate without infringing upon the proprietary rights of others and prevent others from infringing upon our proprietary rights. Despite our efforts to protect our proprietary rights, it is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose our technologies, inventions, processes or improvements. Moreover, other parties may independently develop similar or competing technology, methods, know-how or design around any patents that may be issued to or held by us. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. We cannot assure you that our existing or any future patents or other intellectual property rights will not be challenged, invalidated or circumvented, or will otherwise provide us with meaningful protection. If our patents and other intellectual property do not adequately protect our technology, our competitors may be able to offer products similar to ours. Our competitors may also be able to develop similar technology independently or design around any patent(s) granted to us, and we may not be able to detect the unauthorized use of our proprietary technology or take appropriate steps to prevent such use.

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Any such activities by our competitors that circumvent our intellectual property protection could subvert our competitive advantage and have an adverse effect on our results of operations.

Furthermore, filing, prosecuting, maintaining and defending patents on our solutions in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States are less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Also, it may not be possible to effectively enforce intellectual property rights in some foreign countries at all or to the same extent as in the United States and other countries. Consequently, we may be unable to prevent third parties from using our inventions in all countries, or from selling or importing products made using our inventions in the jurisdictions in which we do not have (or are unable to effectively enforce) patent protection. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop, market or otherwise commercialize their own products, and we may be unable to prevent those competitors from importing those infringing products into territories where we have patent protection but enforcement is not as strong as in the United States.

We may be sued by third parties for alleged infringement of their proprietary rights, which could adversely affect our business, results of operations and financial condition.

There is often litigation between competing companies relying on their respective technologies based on allegations of infringement or other violations of intellectual property rights. Our future success depends, in part, on not infringing the intellectual property rights of others. We have received, and in the future we may receive, claims from third parties, including our competitors, alleging that our platform and the applications we develop for it and underlying technology infringe or violate such third party’s intellectual property rights, and we may be found to be infringing upon such rights. We may be unaware of the intellectual property rights of others that may cover some or all of our technology. Any such claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering some portion of our platform, or require that we comply with other unfavorable terms. We may also be obligated to indemnify our customers or channel partners in connection with any such litigation and to obtain licenses or modify our platform, which could further exhaust our resources. Patent infringement, trademark infringement, trade secret misappropriation and other intellectual property claims and proceedings brought against us, whether successful or not, could harm our brand, business, results of operations and financial condition. Litigation is inherently uncertain, and any judgment or injunctive relief entered against us or any adverse settlement could negatively affect our business, results of operations and financial condition. In addition, litigation can involve significant management time and attention and be expensive, regardless of the outcome. During the course of litigation, there may be announcements of the results of hearings and motions and other interim developments related to the litigation. If securities analysts or investors regard these announcements as negative, the trading price of our ordinary shares may decline.

We may become involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming and unsuccessful.

If we attempt enforcement of our patents or other intellectual property rights, we may be subject or party to claims, negotiations or complex, protracted litigation. These claims and any resulting lawsuits, if resolved adversely to us, could subject us to significant liability for damages, impose temporary or permanent injunctions against our solutions or business operations, or invalidate or render unenforceable our intellectual property. In addition, because patent applications can take many years until the patents issue, there may be applications now pending of which we are unaware, which may later result in issued patents that our solutions may infringe. If any of our solutions infringes a valid and enforceable patent, or if we wish to avoid potential intellectual property litigation on its alleged infringement, we could be prevented from selling our solutions unless we can obtain a license, which may be unavailable. Alternatively, we could be forced to pay substantial royalties or redesign our solutions to avoid infringement. Additionally, we may face liability to our channel partners or other third parties for indemnification or other remedies in the event they are sued for infringement in connection with their use of our solutions.

Intellectual property disputes and litigation, regardless of merit, can be costly and disruptive to our business operations by diverting attention and energies of management and key technical personnel, and by increasing our costs of doing business. Such litigation, regardless of its success, could seriously harm our reputation with our channel partners, business partners and patients and in the industry at large. Some of our competitors may be able to sustain the costs of complex patent or intellectual property litigation more effectively than we can because they have substantially greater resources. Any of the foregoing could adversely affect our operating results.

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We may be subject to claims asserting that our employees, consultants, independent contractors and advisors have wrongfully used or disclosed confidential information and/or alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.

Many of our employees, consultants, independent contractors and advisors were previously employed at other companies, including our potential competitors. We could in the future be subject to claims that these employees and others, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending against such claims, a court could order us to pay substantial damages and prohibit us from using technologies or features that are essential to our solutions, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. An inability to incorporate technologies or features that are important or essential to our solutions would have a material adverse effect on our business, and may prevent us from distributing our solutions. In addition, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper or prevent our ability to commercialize certain potential solutions, which could severely harm our business. Even if we are successful in defending against these claims, such litigation could result in substantial costs and be a distraction to management. Incurring such costs could have a material adverse effect on our financial condition, results of operations and cash flow.

Risks Related to Regulatory Matters

We are subject to costly and complex laws and governmental regulations and any adverse regulatory action may materially adversely affect our financial condition and business operations.

Our AI applications, including software solutions that contain algorithms or AI, are subject to regulation by numerous government agencies, including the FDA and comparable agencies outside the United States. To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing, and distribution of our products. Congress recently passed the 21st Century Cures Act, or the Cures Act, which amended certain provisions of the Federal Food, Drug and Cosmetic Act, or the FDCA, related to medical devices and software. The Cures Act amended the definition of “medical device” to exclude several types of software and digital health solutions from the FDA’s medical device requirements and to ease the path to market for novel devices and products. The FDA has interpreted this law to exclude from regulation certain clinical decision support, or CDS, tools that are intended to aid in diagnosis, treatment or health management. However, the FDA intends to regulate other categories of CDS, software, algorithms and AI tools depending on the functions and intended use of those products. Recent changes to FDA regulations and advances in AI have also generated compliance uncertainty across a variety of industry and settings, including about which legal and regulatory frameworks should apply to current and future iterations. However, the FDA currently regulates CDS and software-based devices and tools that analyze medical and diagnostic images for patient treatment or diagnosis. Further, the FDA regulates Picture Archiving and Communications Systems, or PACS, or those devices that “provide one or more capabilities relating to the acceptance, transfer, display, storage, and digital processing of medical images” and whose software components may “provide functions for performing operations related to image manipulation, enhancement, compression or quantification” under 21 C.F.R. § 892.2050(a). PACS must obtain a 510(k) before commercialization in the United States. The FDA is concerned with the accuracy of alterations, modifications, measurements, or analysis to or of images that could affect the accuracy of treatment and diagnosis decisions made using such data.

We cannot guarantee that we will be able to obtain or maintain marketing clearance for our medical device products or enhancements or modifications to existing products. We have no FDA approved products and only one with CE mark approval, and we may not receive further approvals on a timely basis, if at all. The failure to maintain approvals or obtain approval or clearance for new products or functions could have a material adverse effect on our business, results of operations, financial conditions and cash flows. Even if we are able to obtain such approval or clearance, it may:

	●	take a significant amount of time;

	●	require the expenditure of substantial resources;

	●	involve stringent clinical and pre-clinical testing, as well as increased post-market compliance requirements and surveillance;

	●	involve modifications, repairs, or replacements of our products; and

	●	result in limitations on the proposed uses and marketing of our products.

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Further, if the FDA or other applicable regulatory authorities approve or clear a similar product that competes with our AI applications, it could decrease our expected sales. Both before and after a product is commercially released, we have ongoing responsibilities under FDA regulations. Many of our facilities and procedures and those of our suppliers are also subject to periodic inspections by the FDA to determine compliance with the FDA’s requirements, including primarily the quality system regulations and medical device reporting regulations. The results of these inspections can include inspectional observations on FDA’s Form-483, warning letters, or other forms of enforcement. Since 2009, the FDA has significantly increased its oversight of companies subject to its regulations, including medical device companies, by hiring new investigators and increasing inspections of manufacturing facilities. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could prohibit us from marketing such medical devices, detain or seize adulterated or misbranded medical devices, order a recall, repair, replacement, or refund of such devices, refuse to grant pending pre-market approval applications or require certificates of non-U.S. governments for exports, or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health. The FDA may also assess civil or criminal penalties against us, our officers or employees and impose operating restrictions on a company-wide basis, or enjoin or restrain certain conduct resulting in violations of applicable law. The FDA may also recommend prosecution to the U.S. Department of Justice. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling our products and limit our ability to obtain future pre-market clearances or approvals, and could result in a substantial modification to our business practices and operations.

Our ability to generate product revenue is dependent on the success of our application of our AI applications and other products for human therapeutic use, specifically the diagnosis of stroke and head trauma. We are in the early stage of developing our products. FDA clearance may require significant additional discovery efforts, preclinical testing and studies, as well as applicable regulatory guidance for preclinical and clinical studies from the FDA and other regulatory authorities before we can seek regulatory clearance and begin commercial sales of any potential products. The design and execution of clinical trials to support FDA clearance of our AI Application is subject to substantial risk and uncertainty. Clinical development is a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. Clinical failure can occur at any stage of clinical development. We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, or if they terminate their agreement with us, we may not be able to obtain regulatory clearance for or commercialize our products.

The regulatory clearance processes of the FDA are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory clearance for our products, our business will be substantially harmed.

In addition, the marketing license for any product is limited by the FDA to those specific indications and conditions for which clinical safety and efficacy have been demonstrated. The FDA has taken the position that device manufacturers are prohibited from promoting their products other than for the uses and indications set forth in the approved product labeling. The U.S. government has initiated a number of enforcement actions against manufacturers that promote products for “off-label” uses, including actions alleging that federal health care program reimbursement of products promoted for “off-label” uses (or services in which such products are utilized) constitute false and fraudulent claims to the government. The failure to comply with “off-label” promotion restrictions can result in significant civil or criminal exposure, administrative obligations and costs, or other potential penalties from, or agreements with, the federal government. Further, clinical practice guidelines and recommendations published by various organizations could have significant influence on the use of our AI applications.

We will face extensive FDA and foreign regulatory requirements and may face future regulatory difficulties.

The FDA and other regulatory authorities require that our devices be manufactured in compliance with Quality System Regulations, or QSR, and similar standards in foreign markets where we intend to sell our products. Any failure by us or our third-party manufacturers to comply with QSR or failure to scale up manufacturing processes as needed, including any failure to deliver sufficient quantities of products in a timely manner, could have a material adverse effect on our business, financial condition, operating results and cash flows. In addition, such failure could be the basis for action by the FDA to withdraw clearance for products previously granted to us and for other regulatory action. Compliance with quality standards is further complicated by the fact that the FDA’s guidance and expectations for software quality systems is evolving. Thus, changes to current product standards, guidance and regulations may impact the timeline and resources required to develop our product.

Our industry is experiencing greater scrutiny and regulation by governmental authorities, which may lead to greater regulation in the future.

Our medical devices and technologies and our business activities are subject to a complex regime of regulations and enforcement environment, including regulations promulgated by the FDA, U.S. Department of Justice, the Office of Inspector General of the Department of Health and Human Services, and numerous other federal, state, and non-U.S. governmental authorities. In addition, certain state governments and the federal government have enacted legislation aimed at increasing transparency of our interactions with health care providers. As a result, if our devices and solutions (or the procedures in which they are used) are reimbursed by Federal Healthcare programs such as Medicare or Medicaid, we are required by law to disclose payments and other transfers of value to health care providers licensed by certain states and to all U.S. physicians and U.S. teaching hospitals at the federal level. Any failure to comply with these legal and regulatory requirements could impact our business. In addition, we will continue to devote substantial additional time and financial resources to further develop and implement policies, systems, and processes to comply with enhanced legal and regulatory requirements, which may also impact our business. We anticipate that governmental authorities will continue to scrutinize our industry closely, and that additional regulation may increase compliance and legal costs, exposure to litigation, and other adverse effects to our operations.

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Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of our AI applications and any other products that we may develop.

Because our initial product family upon approval will be used, and we intend to initially focus our future product development efforts, in acute care settings, where real-time decisions are challenging and critical to delivering differentiated care and preventing patients, product malfunctions in this context create heightened risk of product liability lawsuits. A product liability or professional liability claim could result in substantial financial and reputational damages and be costly and time-consuming for us to defend.

Although we maintain liability insurance, including for errors and omissions, we cannot assure you that our insurance would fully protect us from the financial impact of defending against these types of claims or any judgments, fines or settlement costs arising out of any such claims. Any liability claim, including an errors and omissions liability claim, brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future. Additionally, any liability lawsuit could cause injury to our reputation or cause us to suspend sales of our software solutions. The occurrence of any of these events could have an adverse effect on our business, reputation and results of operations.

If we fail to comply with applicable health information privacy and security laws and other state and federal privacy and security laws, we may be subject to significant liabilities, reputational harm and other negative consequences, including decreasing the willingness of current and potential customers to work with us.

We are subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. The Health Insurance Portability and Accountability Act of 1996, or HIPAA, established uniform federal standards for “covered entities,” which include certain healthcare providers, healthcare clearinghouses, and health plans, governing the conduct of specified electronic healthcare transactions and protecting the security and privacy of protected health information, or PHI. The Health Information Technology for Economic and Clinical Health Act, or HITECH Act, which became effective on February 17, 2010, makes HIPAA’s security standards directly applicable to “business associates,” which are independent contractors or agents of covered entities that create, receive, maintain, or transmit PHI in connection with providing a service for or on behalf of a covered entity. The HITECH Act also increased the civil and criminal penalties that may be imposed against covered entities, business associates and certain other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA’s requirements and seek attorney’s fees and costs associated with pursuing federal civil actions.

A portion of the data that we obtain and handle for or on behalf of certain of our clients is considered PHI, subject to HIPAA. We are also required to maintain similar business associate agreements with our subcontractors that have access to PHI of our customers in rendering services to us or on our behalf. Under HIPAA and our contractual agreements with our HIPAA-covered entity health plan customers, we are considered a “business associate” to those customers, and are required to maintain the privacy and security of PHI in accordance with HIPAA and the terms of our business associate agreements with our clients, including by implementing HIPAA-required administrative, technical and physical safeguards. We have incurred, and will continue to incur, significant costs to establish and maintain these safeguards and, if additional safeguards are required to comply with HIPAA regulations or our clients’ requirements, our costs could increase further, which would negatively affect our operating results. Furthermore, we cannot guarantee that such safeguards have been and will continue to be adequate. If we have failed, or fail in the future, to maintain adequate safeguards, or we or our agents or subcontractors use or disclose PHI in a manner prohibited or not permitted by HIPAA, our subcontractor business associate agreements, or our business associate agreements with our customers, or if the privacy or security of PHI that we obtain and handle is otherwise compromised, we could be subject to significant liabilities and consequences, including, without limitation:

	●	breach of our contractual obligations to clients, which may cause our clients to terminate their relationship with us and may result in potentially significant financial obligations to our clients;

	●	investigation by the federal and state regulatory authorities empowered to enforce HIPAA and other data privacy and security laws, which include the U.S. Department of Health and Human Services the Federal Trade Commission and state attorneys general, and the possible imposition of civil and criminal penalties;

	●	private litigation by individuals adversely affected by any misuse of their personal health information for which we are responsible and/or breach notification related costs; and

	●	negative publicity, which may decrease the willingness of potential future customers to work with us and negatively affect our sales and operating results.

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Further, we publish statements to end users of our services that describe how we handle and protect personal information. If federal or state regulatory authorities or private litigants consider any portion of these statements to be untrue, we may be subject to claims of deceptive practices, which could lead to significant liabilities and consequences, including, without limitation, damage to our reputation and costs of responding to investigations, defending against litigation, settling claims and complying with regulatory or court orders.

Recent legal developments in Europe have created compliance uncertainty regarding certain transfers of personal data from Europe to the United States. For example, the General Data Protection Regulation (GDPR), which came into application in the European Union (EU) on May 25, 2018, applies to all of our activities conducted from an establishment in the EU or related to products and services that we offer to EU users. The GDPR created a range of new compliance obligations which may cause us to change our business practices, and significantly increased financial penalties for noncompliance (including possible fines of up to 4% of global annual turnover for the preceding financial year or €20 million (whichever is higher) for the most serious infringements).

Federal or state governmental authorities may impose additional data security standards or additional privacy or other restrictions on the collection, use, maintenance, transmission and other disclosures of health information. Legislation has been proposed at various times at both the federal and the state level that would limit, forbid or regulate the use or transmission of medical information outside of the United States. Such legislation, if adopted, may render our use of off-shore partners for work related to such data impracticable or substantially more expensive. Alternative processing of such information within the United States may involve substantial delay in implementation and increased cost.

Breakthrough Device Program designation by the FDA does not guarantee clearance or approval and may not actually lead to a faster development or regulatory review or approval process.

In January 2018, the FDA notified us that AccipioDx has been designated under the FDA’s Expedited Access Pathway, which under the 21st Century Cures Act was converted to Breakthrough Device Program, or Breakthrough. The Breakthrough program is intended to reduce the time associated with product development by promoting earlier and more interactive engagement with the FDA staff during development and review of medical devices. The FDA designated AccipioDx for Breakthrough based on a proposed indication for use in acute ICH diagnoses.

There is no assurance we will receive similar designations for any of our future products. Further, even though we have received Breakthrough designation for AccipioDx, we may not experience a faster development process, review or approval compared to conventional FDA procedures, or may not receive approval at all. The FDA may withdraw Breakthrough designation for AccipioDx if it believes that such designation is no longer supported by data from our clinical development program.

If we fail to comply with federal and state healthcare laws and regulations, including those governing submission of false or fraudulent claims to government healthcare programs and financial relationships among healthcare providers, we may be subject to civil and criminal penalties or loss of eligibility to participate in government healthcare programs.

We may be subject to certain federal and state laws and regulations designed to protect patients, governmental healthcare programs, and private health plans from fraudulent and abusive activities. These laws include anti-kickback restrictions and laws prohibiting the submission of false or fraudulent claims. These laws are complex and their application to our specific products, services and relationships may not be clear and may be applied to our business in ways that we do not anticipate. Federal and state regulatory and law enforcement authorities have recently increased enforcement activities with respect to Medicare and Medicaid fraud and abuse regulations and other reimbursement laws and rules. From time to time in the future, we may receive inquiries or subpoenas to produce documents in connection with such activities. We could be required to expend significant time and resources to comply with these requests, and the attention of our management team could be diverted to these efforts. If we are found to be in violation of any federal or state fraud and abuse laws, we could be subject to civil and criminal penalties, and we could be excluded from participating in federal and state healthcare programs such as Medicare and Medicaid. The occurrence of any of these events could significantly harm our business and financial condition.

Provisions in Title XI of the Social Security Act, commonly referred to as the federal Anti-Kickback Statute, prohibit the knowing and willful offer, payment, solicitation or receipt of remuneration, directly or indirectly, in cash or in kind, in return for or to induce either the referral of an individual or arranging for the referral of an individual for items or services for which payment may be made in whole or in part by a federal health care program, or the purchasing, leasing, ordering, or arranging for or recommending the purchasing, leasing, or ordering of items, services, goods, or facilities for which payment may be made, in whole or in part, by a federal healthcare program, including but not limited to Medicare or Medicaid. The definition of “remuneration” has been broadly interpreted to include anything of value such as gifts, discounts, rebates, waiver of payments or providing anything at less than its fair market value. Many states have adopted similar prohibitions against kickbacks and other practices that are intended to induce referrals which are applicable to all patients regardless of whether the patient is covered under a governmental health program or private health plan. We attempt to scrutinize our business relationships and activities to comply with the federal Anti-Kickback Statute and similar laws and we generally attempt to structure our sales and group purchasing arrangements in a manner that is consistent with the requirements of applicable safe harbors to these laws. We cannot assure you, however, that our arrangements will be protected by such safe harbors or that such increased enforcement activities will not directly or indirectly have an adverse effect on our business, financial condition or results of operations. Any determination by a state or federal agency that any of our activities or those of our vendors or customers violate any of these laws could subject us to civil or criminal penalties, monetary fines, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, could require us to change or terminate some portions of operations or business, could disqualify us from providing services to healthcare providers doing business with government programs and, thus, could have an adverse effect on our business.

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Our business is also subject to numerous federal and state laws regarding submission of false or fraudulent claims, including without limitation the civil False Claims Act, which forbids knowingly presenting or “causing to be presented” false or fraudulent claims for payment to a federal health care program. Analogous state laws and regulations may apply to our arrangements and our customers’ claims involving healthcare items or services reimbursed by non-governmental third-party payors. Additionally, HIPAA also imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.

These laws and regulations may change rapidly, and it is frequently unclear how they apply to our business. Errors created by our products that relate to entry, formatting, preparation or transmission of claim or cost report information may be determined or alleged to be in violation of these laws and regulations. Any failure of our products or services to comply with these laws and regulations could result in substantial civil or criminal liability, monetary fines, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, could adversely affect demand for our one or more of our offerings, could invalidate all or portions of some of our customer contracts, could require us to change or terminate some portions of our business, could require us to refund certain amounts collected, could cause us to be disqualified from serving clients doing business with government payors and could have an adverse effect on our business.

Our activities are also subject to state and federal self-referral laws, including the federal Physician Self-referral Law, commonly known as the Stark Law, which prohibits physicians from referring patients to an entity for Medicare-covered “designated health services” if the physician, or a member of the physician’s immediate family, has a financial relationship with the entity, unless a statutory or regulatory exception applies. Many states have similar laws that may apply regardless of payor. In addition, our activities may also implicate state laboratory licensure laws, as well as the corporate practice of medicine prohibition in certain states that maintain such laws or regulations. Our failure to abide by these state and federal laws could expose us to criminal, civil and administrative sanctions, reputational harm, and could harm our results of operations and financial conditions.

If our business model changes to depend on commercial third-party payors or government payors, legislative or regulatory reforms may impact the ability of our customer to obtain such reimbursement, and our revenue and prospects for profitability would be harmed.

Our current go-to-market strategy does not contemplate or rely upon governmental or third party payor reimbursement. We may in the future seek reimbursement for our products as a means to expand the adoption of products and broaden our customer base. Healthcare policy and payment reform models and medical cost containment models are being considered and/or adopted in the United States and other countries. Legislative and/or administrative reforms to applicable reimbursement systems may significantly reduce reimbursement for the services in which our products are used or result in the denial of coverage for such services outright. As a result, third-party reimbursement adequate to enable us to realize an appropriate return on our investment in research and product development may not be available for our products.

Risks Related to Our Ordinary Shares and the Offering

The market price of our ordinary shares could be negatively affected by future sales of our ordinary shares.

After this offering, there will be ordinary shares outstanding (based on an assumed initial public offering price of $ ). Many shareholders paid substantially less than the public offering price for their shares. Sales by us or our shareholders of a substantial number of ordinary shares in the public market following this offering, or the perception that these sales might occur, could cause the market price of our ordinary shares to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities. Of our issued and outstanding shares, all the ordinary shares sold in this offering will be freely transferable, except for any shares acquired by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. Following completion of this offering, % of our outstanding ordinary shares (or % if the underwriters exercise their option in full) will be considered restricted shares and will be held by our affiliates. Such securities can be resold into the public markets in the future in accordance with the requirements of Rule 144, including volume limitations, manner of sale requirements and notice requirements. See “Shares Eligible for Future Sale.”

We, our executive officers and directors, and the holders of approximately % of the ordinary shares to be outstanding upon the closing of this offering (based on an assumed initial public offering price of $ ), have agreed with us and the underwriters that, subject to limited exceptions, for certain designated periods described below, which we refer to as lock-up periods after the date of this prospectus, we and they will not directly or indirectly offer, pledge, sell, contract to sell, grant any option to purchase or otherwise dispose of any ordinary shares or any securities convertible into or exercisable or exchangeable for ordinary shares, or in any manner transfer all or a portion of the economic consequences associated with the ownership of ordinary shares, or cause a registration statement covering any ordinary shares to be filed except for the ordinary shares offered in this offering, without the prior written consent of the designated representatives of the underwriters, who may, in their sole discretion and at any time without notice, release all or any portion of the shares subject to these lock-up agreements. The designated periods are as follows: (i) six months with respect to the investors in the Bridge Financings, South Florida Biotech Ventures, LLC and certain of its third-party designees, to which Exigent Capital transferred an aggregate of 107,900 ordinary shares; (ii) 10 months with respect to Exigent Capital; and (iii) 365 days with respect to our other shareholders who have entered into lock-up agreements with the underwriters.

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At any time following the closing of this offering, subject, however, to the terms of the lock-up agreements of varying length entered into with us and the underwriters, certain holders of ordinary shares (including ordinary shares issuable upon conversion of Bridge Notes upon the closing of this offering) are entitled to require that we register their shares under the Securities Act for resale into the public markets. This sale and any future sales of a substantial number of shares of our ordinary shares in the public market, or the perception that such sales may occur, could adversely affect the price of our ordinary shares. We cannot predict the effect, if any, that market sales of those ordinary shares or the availability of those ordinary shares for sale will have on the market price of our ordinary shares. All shares sold pursuant to an offering covered by such registration statement will be freely transferable. See “Shares Eligible for Future Sale — Registration Rights.”

In addition to our current shareholders’ and convertible note holders’ registration rights, as of July 31, 2018, we had 136,405 ordinary shares that were subject to outstanding option awards under our 2015 Plan. In addition, we have granted 110,507 RSUs under our 2015 Plan to certain of our executive officers, which grant becomes effective upon the closing of this offering. These RSUs vest upon the later of the following: (a) one-third when our trading price per ordinary share reaches a multiple of 1.25 of $4.63, one-third when our trading price per ordinary share reaches a multiple of 1.75 of $4.63, and one-third when the trading price per ordinary share reaches a multiple of 2.25 of $4.63 (with the price per share of $4.63 utilized under the RSU vesting terms subject to adjustment depending on the actual number of shares outstanding immediately prior to this offering); and (b) the Securities and Exchange Commission, or the Commission, having declared effective a resale registration statement with respect to the ordinary shares underlying these RSUs, which we expect would be shortly after the one-year anniversary of this offering.

Following this offering, we intend to file a registration statement on Form S-8 under the Securities Act registering the shares under our 2015 Plan. Shares included in such registration statement will be available for sale in the public market immediately after such filing, subject to vesting provisions, except for shares held by affiliates who will have certain restrictions on their ability to sell. There has been no prior public market for our ordinary shares, and an active trading market may not develop.

Prior to this offering, there has been no public market for our ordinary shares. An active trading market may not develop following completion of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital by selling share capital and may impair our ability to acquire other companies by using our shares as consideration.

Our share price may be volatile, and you may lose all or part of your investment.

The initial public offering price for the ordinary shares sold in this offering will be determined by negotiation between us and representatives of the underwriters. This price may not reflect the market price of our ordinary shares following this offering and the price of our ordinary shares may decline. In addition, the market price of our ordinary shares could be highly volatile and may fluctuate substantially as a result of many factors, including:

	●	actual or anticipated fluctuations in our results of operations;

	●	variance in our financial performance from the expectations of market analysts;

	●	announcements by us or our competitors of significant business developments, changes in service provider relationships, acquisitions or expansion plans;

	●	changes in the prices of our products and services;

	●	our involvement in litigation;

	●	our sale of ordinary shares or other securities in the future;

	●	market conditions in our industry;

	●	changes in key personnel;

	●	the trading volume of our ordinary shares;

	●	changes in the estimation of the future size and growth rate of our markets; and

	●	general economic and market conditions.

In addition, the stock markets have experienced extreme price and volume fluctuations. Broad market and industry factors may materially harm the market price of our ordinary shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company. If we were involved in any similar litigation we could incur substantial costs and our management’s attention and resources could be diverted.

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If we do not meet the expectations of equity research analysts, if they do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our ordinary shares, the price of our ordinary shares could decline.

The trading market for our ordinary shares may rely in part on the research and reports that equity research analysts publish about us and our business. The analysts’ estimates are based upon their own opinions and are often different from our estimates or expectations. If our results of operations are below the estimates or expectations of public market analysts and investors, our share price could decline. Moreover, the price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

Following the closing of this offering, a small number of significant beneficial owners of our shares acting together will have a controlling influence over matters requiring shareholder approval, which could delay or prevent a change of control.

Following the closing of this offering, the largest beneficial owners of our shares, Exigent Capital, and South Florida Biotech Ventures, LLC, that as of , 2018, together with related parties, beneficially owned, % and % of our outstanding shares, respectively, will beneficially own in the aggregate, % of our ordinary shares or % if the underwriters exercise their option to purchase additional ordinary shares. As a result, these shareholders, acting together, could exercise a controlling influence over our operations and business strategy and will have sufficient voting power to control the outcome of matters requiring shareholder approval. These matters may include:

	●	the composition of our board of directors which has the authority to direct our business and to appoint and remove our officers;

	●	approving or rejecting a merger, consolidation or other business combination;

	●	raising future capital; and

	●	amending our articles of association which govern the rights attached to our ordinary shares.

This concentration of ownership of our ordinary shares could delay or prevent proxy contests, mergers, tender offers, open-market purchase programs or other purchases of our ordinary shares that might otherwise give you the opportunity to realize a premium over the then-prevailing market price of our ordinary shares. This concentration of ownership may also adversely affect our share price.

We are an “emerging growth company” and we cannot be certain whether the reduced requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 effective on April 5, 2012, or the JOBS Act, and we may take advantage of certain exemptions from various requirements that are applicable to other public companies that are not “emerging growth companies.” We will remain an emerging growth company until the earliest of: (a) the last day of our fiscal year during which we have total annual gross revenues of at least $1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. When we are no longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannot predict if investors will find our ordinary shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be more volatile.

We may be a passive foreign investment company, which could result in additional taxes for U.S. holders of our ordinary shares.

A non-U.S. corporation will be classified as a PFIC, for federal income tax purposes in any taxable year in which, after applying certain look-through rules with respect to the income and assets of subsidiaries, either at least 75% of its gross income is “passive income,” or at least 50% of the average quarterly value of its total gross assets (which may be determined in part by the market value of our ordinary shares, which is subject to change) is attributable to assets that produce “passive income” or are held for the production of passive income. Based on our income and the composition of our income and assets, we believe we were a PFIC for our taxable year ended December 31, 2017. We must determine our PFIC status annually based on tests, which are factual in nature, and our PFIC status in future years will depend on our income, assets and activities in those years. Thus, there can be no assurance that we will not be considered a PFIC for our taxable year ending December 31, 2018 or for any other taxable year. Our classification as a PFIC may result in material adverse consequences for you if you are a U.S. taxable investor, including having gains realized on the sale of the ordinary shares treated as ordinary income, rather than capital gains, having potentially punitive interest charges apply to those gains, and the denial of the taxation of certain dividends we pay at the lower rates applicable to long-term capital gains. A U.S. investor may be able to mitigate some of the adverse U.S. federal income tax consequences described above with respect to owning the ordinary shares if we are classified as a PFIC for our taxable year ending December 31, 2018, provided that such U.S. investor is eligible to make, and successfully makes, a “mark-to-market” election. U.S. investors could also mitigate some of the adverse U.S. federal income tax consequences of us being classified as a PFIC by making a “qualified electing fund” election, provided that we provide the information necessary for a U.S. investor to make such an election. We do not intend to make available to U.S. investors the information necessary for U.S. holders to make qualified electing fund elections if we are classified as a PFIC. Prospective U.S. investors should consult their own tax advisers regarding the potential application of the PFIC rules to them. For more information related to classification as a PFIC, see “Taxation and Government Programs — U.S. Federal Income Taxation — Passive Foreign Investment Company Considerations.”

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You will experience immediate and substantial dilution in the net tangible book value of the ordinary shares you purchase in this offering.

The initial public offering price of our ordinary shares substantially exceeds the net tangible book value per share of our ordinary shares immediately after this offering. Therefore, if you purchase our ordinary shares in this offering, you will suffer, as of , 2018, immediate dilution of $ per share or $ per share if the underwriters exercise their option in full, in net tangible book value after giving effect to the sale of ordinary shares in this offering at an assumed public offering price of $ per share, less underwriting discounts and commissions and the estimated expenses payable by us. If outstanding options to purchase our ordinary shares are exercised in the future, you will experience additional dilution. See “Dilution.”

We have broad discretion over the use of proceeds we receive in this offering and may not apply the proceeds in ways that increase the value of your investment.

Our management will have broad discretion in the application of the net proceeds from this offering and, as a result, you will have to rely upon the judgment of our management with respect to the use of these proceeds. Our management may spend a portion or all of the net proceeds in ways that not all shareholders approve of or that may not yield a favorable return. The failure by our management to apply these funds effectively could harm our business.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

As a public company whose ordinary shares are listed in the United States, we will incur accounting, legal and other expenses that we did not incur as a private company, including costs associated with our reporting requirements under the Exchange Act. We are an “emerging growth company,” as defined in the JOBS Act, and therefore we will take advantage of temporary exemptions from reporting requirements, including, but not limited to, the exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act (and the rules and regulations of the Commission thereunder). When these exceptions cease to apply, we expect to incur additional expenses and to devote increased management efforts toward ensuring compliance with them. In addition, we anticipate that we will incur costs associated with corporate governance requirements as well as rules implemented by the Commission and the NASDAQ Stock Market, and provisions of Israeli corporate law applicable to public companies. We expect that these rules and regulations will increase our legal and financial compliance costs, introduce new costs such as investor relations and stock exchange listing fees, and will make some activities more time-consuming and costly. We estimate that the additional annual costs we will incur as a public company will range from $500,000 to $700,000, including legal and accounting expenses, directors’ fees (excluding share-based compensation expenses) and other fees.

Furthermore, changes in the laws and regulations affecting public companies will result in increased costs to us as we respond to their requirements. These laws and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. We cannot predict or estimate the amount or timing of additional costs we may incur in order to comply with such requirements.

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We have never paid cash dividends on our share capital, and we do not anticipate paying any cash dividends in the foreseeable future.

We have never declared or paid cash dividends on our share capital, nor do we anticipate paying any cash dividends on our share capital in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our ordinary shares will be an investors’ sole source of gain for the foreseeable future. In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to Israeli withholding taxes, and our payment of dividends (out of tax-exempt income) may subject us to certain Israeli taxes, to which we would not otherwise be subject (see “Dividend Policy,” “Description of Share Capital — Dividend and Liquidation Rights” and “Taxation and Government Programs — Israeli Tax Considerations and Government Programs”).

We have not yet determined whether our existing internal controls over financial reporting systems are compliant with Section 404 of the Sarbanes-Oxley Act, and we cannot provide any assurance that there are no material weaknesses or significant deficiencies in our existing internal controls.

Pursuant to Section 404 of the Sarbanes-Oxley Act and the related rules adopted by the Commission and the Public Company Accounting Oversight Board, starting with the second annual report that we file with the Commission after the closing of this offering, our management will be required to report on the effectiveness of our internal control over financial reporting. In addition, once we no longer qualify as an “emerging growth company” under the JOBS Act and lose the ability to rely on the exemptions related thereto discussed above, our independent registered public accounting firm will also need to attest to the effectiveness of our internal control over financial reporting under Section 404. We have not yet commenced the process of determining whether our existing internal controls over financial reporting systems are compliant with Section 404 and whether there are any material weaknesses or significant deficiencies in our existing internal controls. This process will require the investment of substantial time and resources, including by our chief financial officer and other members of our senior management. In addition, we cannot predict the outcome of this determination and whether we will need to implement remedial actions in order to implement effective control over financial reporting. The determination and any remedial actions required could result in us incurring additional costs that we did not anticipate. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. As a result, we may experience higher than anticipated operating expenses, as well as higher independent auditor fees during and after the implementation of these changes. If we are unable to implement any of the required changes to our internal control over financial reporting effectively or efficiently or are required to do so earlier than anticipated, it could adversely affect our operations, financial reporting and/or results of operations and could result in an adverse opinion on internal controls from our independent auditors.

Risks Relating to Our Incorporation and Location in Israel

Our headquarters and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military instability in Israel.

Our headquarters and principal research and development facilities are located in Israel. In addition, the majority of our key employees, officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries. In recent years, these have included hostilities between Israel and Hezbollah in Lebanon and Hamas in the Gaza strip, both of which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities. In addition, Israel faces threats from more distant neighbors, in particular, Iran. Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflict involving Israel could adversely affect our operations and results of operations.

Further, our operations could be disrupted by the obligations of personnel to perform military service. As of July 15, 2018, we had 17 employees based in Israel, certain of whom may be called upon to perform military reserve duty until they reach the age of 40 (and in some cases, depending on their specific military profession, up to 45 or even 49 years of age) and, in certain emergency circumstances, may be called to immediate and unlimited active duty. Our operations could be disrupted by the absence of a significant number of employees related to military service, which could materially adversely affect our business and results of operations.

Several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies whether as a result of hostilities in the region or otherwise. In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli government policies. Such actions, particularly if they become more widespread, may adversely impact our ability to sell our solutions.

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We may not be eligible for tax benefits that may be available to us under Israeli law and such benefits may be terminated or reduced in the future.

We may be eligible for certain tax benefits provided to “Preferred Enterprises” under the Israeli Law for the Encouragement of Capital Investments, 1959, referred to as the Investment Law. In order to be eligible for the tax benefits for “Preferred Enterprises,” we must meet certain conditions stipulated in the Investment Law and its regulations, as amended. If we do not satisfy these conditions, our Israeli taxable income would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies is currently set at 24% for 2017 and 23% for 2018 and thereafter. Even if we were to become eligible for these tax benefits, they may be reduced, cancelled or discontinued. See “Taxation and Government Programs — Israeli Tax Considerations and Government Programs — Law for the Encouragement of Capital Investments, 5719-1959.”

We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.

A significant portion of our intellectual property has been developed by our employees in the course of their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee in the course and as a result of or arising from his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee proprietary rights. The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for his inventions Recent case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case by case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one specific formula for calculating this remuneration (but rather uses the criteria specified in the Patent Law). Although we generally enter into assignment-of-invention agreements with our employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of their employment or engagement with us, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negatively affect our business.

Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, us, even when the terms of such a transaction are favorable to us and our shareholders.

Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares and voting rights above specified thresholds, requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. For example, a tender offer for all of a company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the tender offer, unless at least 98% of the company’s outstanding shares are tendered. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer (unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek appraisal rights), may, at any time within six months following the completion of the tender offer, petition an Israeli court to alter the consideration for the acquisition. See “Description of Share Capital — Acquisitions under Israeli Law” for additional information.

Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. These provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.

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It may be difficult to enforce a judgment of a U.S. court against us, our officers and directors or the Israeli experts named in this prospectus in Israel or the United States, to assert U.S. securities laws claims in Israel or to serve process on our officers and directors and these experts.

We are incorporated in Israel. A majority of our directors and our executive officers, and the Israeli experts listed in this prospectus reside outside of the United States, and most of our assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the United States or to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court.

Your rights and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.

The rights and responsibilities of the holders of our ordinary shares are governed by our amended articles of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders, and to refrain from abusing its power in the company, including, among other things, in voting at a general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and related party transactions requiring shareholder approval. In addition, a shareholder who is aware that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the nature of this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.

We may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act and other U.S. and foreign anti-corruption anti-money laundering, export control, sanctions, and other trade laws and regulations, and any determination that we violated these laws could have a material adverse effect on our business.

We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. We are also subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act 2010, the Proceeds of Crime Act 2002, and possibly other anti-bribery and anti-money laundering laws in countries outside of the United States in which we conduct our activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting, or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. As we commercialize our AI applications and any other products that we may develop, we may engage with third-party manufacturers and collaborators who operate abroad and are required to obtain certain necessary permits, licenses and other regulatory approvals with respect to our business. Our activities abroad create the risk of unauthorized payments or offers of payments by employees, consultants, sales agents or distributors, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees, consultants, sales agents and distributors. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents, or distributors of our company may engage in conduct for which we might be held responsible, even if we do not explicitly authorize such activities.

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Noncompliance with anti-corruption, anti-money laundering, export control, sanctions, and other trade laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially harmed. Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense and compliance costs and other professional fees. In addition, the U.S. government may seek to hold us liable for successor liability FCPA violations committed by companies in which we invest or that we acquire. As a general matter, enforcement actions and sanctions could harm our business, results of operations, and financial condition.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, timing and likelihood of success, plans and objectives of management for future operations, and future results of current and anticipated products are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described under the sections in this prospectus entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

This prospectus also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.

EXPLANATORY NOTE REGARDING FORWARD SHARE SPLIT

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USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $ million, or $ million if the underwriters exercise their option to purchase additional shares in full, from the sale of the ordinary shares offered by us, based upon the assumed initial public offering price of $ per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the net proceeds to us from this offering by $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of one million in the number of shares we are offering would increase (decrease) each of pro forma as adjusted additional paid-in capital, total shareholders’ equity (deficit) and total capitalization by approximately $ million, assuming the assumed initial public offering price per share remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We currently intend to use the net proceeds of this offering as follows:

	●	approximately $ towards clinical trials and additional steps required for obtaining regulatory approvals for Accipio, including approval by the FDA;

	●	approximately $ towards developing our own channel support team and encouragement programs for our channel partners;

	●	approximately $ towards continuing our research and clinical development of our other products under our AI-based software platform; and

	●	the balance of net proceeds for general corporate purposes, including working capital requirements.

Although it is difficult to predict our liquidity requirements, based upon our current operating plan, and assuming successful completion of this offering, we believe we will have sufficient cash to complete any planned clinical trials involving the Accipio family of products and complete the regulatory approval and clearance process for our Accipio family of products in the United States.

The expected use of net proceeds of this offering represents our current intentions based upon our present plan and business conditions. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering. We will have broad discretion in the application of the net proceeds in the category of “for general corporate purposes, including working capital requirements,” and investors will be relying on our judgment regarding the application of the proceeds of this offering. For example, if we identify opportunities that we believe are in the best interests of our shareholders, we may use a portion of the net proceeds from this offering to acquire, invest in or license complementary products, technologies or businesses although we have no current commitments, understandings or agreements to do so. Depending on the outcome of our business activities and other unforeseen events, our plans and priorities may change and we may apply the net proceeds of this offering in different proportions than we currently anticipate.

Pending use of the proceeds from this offering as described above, we intend to invest the net proceeds of this offering in short-term, interest-bearing, investment-grade securities or certificates of deposit.

DIVIDEND POLICY

We have never paid dividends on our ordinary shares, and currently do not intend to pay any cash dividends on our ordinary shares in the foreseeable future. In addition, we may incur debt financing in the future, the terms of which will likely prohibit us from paying cash dividends or distributions on our ordinary shares. Even if we are permitted to pay cash dividends in the future, we currently anticipate that we will retain all future earnings, if any, to fund the operation and expansion of our business and for general corporate purposes.

CAPITALIZATION

The following table sets forth our capitalization as of July 31, 2018 on:

	●	an actual basis;

	●	a pro forma basis, to give effect to:

○

the conversion of approximately $4.4 million principal amount outstanding under the December 2017 Notes, together with all accrued and unpaid interest thereon (approximately $0.1 million as of July 31, 2018), into ordinary shares at a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in this offering (i.e., 85% of the price per share set forth on the cover page of this prospectus) in accordance with the terms of such December 2017 Notes. The Company did not record a Beneficial Conversion Feature, or BCF, with respect to the December 2017 Notes, since the contingent BCF could not have been recognized in earnings until the contingency was resolved. In addition, the Company did not record a BCF with respect to the March 2018 Notes since no BCF existed at time of issuance;

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	○	the conversion of approximately $1.5 million principal amount and accrued interest under outstanding March 2018 Notes into ordinary shares (based on a conversion price equal to $27.30, subject to adjustment for share splits and other recapitalization events);

	○	the conversion of 338,537 outstanding Series Seed Preferred Shares and Series A Preferred Shares into an equivalent number of ordinary shares under the terms of our existing articles of association, as amended; and

○

up to 110,632 ordinary shares issuable upon exercise of outstanding Series A Preferred Shares warrants, at an exercise price of $31.40 per share, and automatic conversion of the underlying Series A Preferred Shares into ordinary shares, which warrants will expire upon the closing of this offering.

●

a pro forma as adjusted basis, to give further effect to our issuance and sale of ordinary shares in this offering at an assumed initial public offering price of $ per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

This table should be read in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial statements and related notes thereto appearing elsewhere in this prospectus.

	March 31, 2018
	Actual			Pro Forma			Pro Forma As Adjusted
	(in thousands, except share and per share amounts)
Cash and cash equivalents	$	2,179		$	2,179		$
Convertible loan	$	5,527			-
Convertible preferred shares
Series A, NIS 0.01 par value 435,488 shares authorized at March 31, 2018 and December 31, 2017; 216,956 shares issued and outstanding at March 31, 2018 and December 31, 2017; no shares issued and outstanding pro forma and pro forma as adjusted as of March 31, 2018		10			-
Series Seed, NIS 0.01 par value, 121,583 shares authorized at March 31, 2018 and December 31, 2017; 121,581 shares issued and outstanding at March 31, 2018 and December 31, 2017; no shares issued and outstanding pro forma and pro forma as adjusted as of March 31, 2018			*
Shareholders’ equity (deficit)
Ordinary shares; 9,442,931 shares authorized at March 31, 2018 and December 31, 2017; 302,107 shares issued and 292,438 shares outstanding at March 31, 2018; 302,107 shares issued and 291,057 shares outstanding at December 31, 2017(1)			*
Additional paid-in capital	$	13,067			18,940
Accumulated deficit		(17,289	)		(17,635	)
Total shareholders’ equity (deficit)		(4,212	)		1,315
Total capitalization	$	2,339		$	2,339		$

(1) Outstanding ordinary shares excludes (i) 9,669 restricted ordinary shares issued to Gene Saragnese, as our Chairman and Chief Executive Officer, which had not vested as of March 31, 2018 and (ii) 11,050 restricted ordinary shares issued to Mr. Saragnese that had not vested as of December 31, 2017.

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, would increase (decrease) each of pro forma as adjusted additional paid-in capital, total shareholders’ equity (deficit) and total capitalization by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of one million in the number of shares we are offering would increase (decrease) each of pro forma as adjusted additional paid-in capital, total shareholders’ equity (deficit) and total capitalization by approximately $ million, assuming the assumed initial public offering price per share remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

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The outstanding share information above excludes the following:

	●	136,405 ordinary shares issuable upon the exercise of outstanding share options under our 2015 Plan, with a weighted average exercise price of $13.39 per share;

	●	up to an estimated 14,899 ordinary shares issuable at a nominal exercise price per share, upon the exercise of warrants that will remain outstanding following the closing of this offering;

	●	110,507 ordinary shares issuable upon the vesting of 110,507 RSUs granted under the 2015 Plan, which grant becomes effective upon the closing of this offering;

	●	the issuance of ordinary shares to Palladium upon the closing of this offering, representing two percent of our outstanding ordinary shares on a fully-diluted basis (excluding 157,867 ordinary shares reserved for issuance in connection with RSUs allocated for our executives) immediately following the closing of this offering ( ordinary shares, assuming that we issue ordinary shares in this offering, based on the price per share set forth on the cover page of this prospectus);

	●	47,360 ordinary shares underlying RSUs that are reserved for future issuance under the 2015 Plan;

	●	42,805 ordinary shares reserved for future issuance under the 2015 Plan;

	●	up to 29,245 ordinary shares issuable upon exercise of the Intel Warrant;

	●	up to 85,489 ordinary shares issuable upon exercise of the Bridge Financing Warrants; and

●

up to ordinary shares issuable upon the conversion of approximately $1.4 million principal amount outstanding under the August 2018 Notes, together with all accrued and unpaid interest thereon at a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in this offering (i.e., 85% of the price per share set forth on the cover page of this prospectus) in accordance with the terms of such August 2018 Notes.

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DILUTION

If you invest in our ordinary shares in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our ordinary shares and the pro forma net tangible book value per share of our ordinary shares immediately after this offering. The historical net tangible book value (deficit) of our ordinary shares as of March 31, 2018 was $ million, or $ per share. Historical net tangible book value (deficit) per share represents our total tangible assets less our total liabilities and convertible preferred shares, divided by the number of outstanding ordinary shares at March 31, 2018.

Pro forma net tangible book value per share represents the amount of our tangible assets less our total liabilities, divided by the number of ordinary shares outstanding, after giving effect to: (a) the conversion of all our outstanding Series Seed Preferred Shares and Series A Preferred Shares into 338,537 ordinary shares; (b) the conversion of approximately $5.8 million in the aggregate of principal amount under the December 2017 Notes and August 2018 Notes, plus accrued interest ($0.1 million as of July 31, 2018), into ordinary shares at a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in this offering (i.e., 85% of $ , which is the price per share set forth on the cover page of this prospectus); (c) the conversion of approximately $1.5 million in the aggregate of principal amount under the March 2018 Notes, plus accrued interest (none as of July 31, 2018), into ordinary shares at a conversion price equal to $27.30, and (d) the exercise of warrants to purchase 110,632 Series A Preferred Shares and their immediate conversion into 110,632 ordinary shares.

After giving effect to our receipt of the net proceeds from our sale of ordinary shares in this offering at an assumed initial public offering price of $ per share, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, pro forma as adjusted net tangible book value as of March 31, 2018 would have been $ million, or $ per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $ per share to existing shareholders and an immediate dilution of $ per share to new investors purchasing ordinary shares in this offering.

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The following table illustrates this dilution on a per share basis to new investors (unaudited):

Assumed public offering price per share		$
Historical net tangible book value per share as of March 31, 2018		$
Increase in historical net tangiable book value per share attributable to pro rata adjustments above		$
Pro forma net tangible book value per share as of March 31, 2018		$
Increase in pro forma net tangible book value per share after this offering		$
Pro forma net tangible book value per share after this offering		$
Dilution in pro forma net tangible book value per share to new investors		$

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the pro forma net tangible book value, as adjusted to give effect to this offering, by $ per share, and the dilution to new investors by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of one million in the number of ordinary shares offered by us would increase (decrease) the pro forma net tangible book value, as adjusted to give effect to this offering, by $ per share and the dilution to new investors by $ per share, assuming the assumed initial public offering price per share remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their option to purchase additional ordinary shares in full, the pro forma net tangible book value per share of our ordinary shares, as adjusted to give effect to this offering, would be $ per share, and the dilution in pro forma net tangible book value per share to investors in this offering would be $ per share.

The table below summarizes as of March 31, 2018, on a pro forma as adjusted basis described above, the number of our ordinary shares, the total consideration and the average price per share (i) paid to us by existing shareholders and (ii) to be paid by new investors purchasing our ordinary shares in this offering at an assumed initial public offering price of $ per share, before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Shares Purchased

Total Consideration

Average
Price Per

Number

Amount

Existing shareholders

New investors

Total

A $1.00 increase or decrease in the assumed initial public offering price would increase or decrease total consideration paid by new investors, total consideration paid by all shareholders and average price per share paid by all shareholders by $ , respectively, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of one million in the number of shares offered by us would increase or decrease total consideration paid by new investors and total consideration paid by all shareholders by , respectively, assuming an initial public offering price of $ per share, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of one million in the number of shares offered by us would increase or decrease the average price per share paid by all shareholders by $ and $ per share, respectively, assuming an initial public offering price of $ , and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional ordinary shares in this offering in full, the percentage of ordinary shares held by existing shareholders will be reduced to % of the total number of ordinary shares to be outstanding after this offering, and the percentage of ordinary shares to be owned by parties who will receive ordinary shares outside of this offering concurrently with the closing of this offering will be reduced to % of the total number of ordinary shares to be outstanding after this offering, and the number of ordinary shares held by investors participating in this offering will be further increased to , or % of the total number of ordinary shares to be outstanding after this offering.

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To the extent that any outstanding options are exercised or new options are issued under our 2015 Plan or other future share-based incentive plans, or we issue additional ordinary shares in the future, there will be further dilution to investors participating in this offering. If all outstanding options under our 2015 Plan were exercised, then our existing shareholders, including the holders of those options, would own % of the total number of our ordinary shares to be outstanding after this offering and investors participating in this offering would own % of the total number of our ordinary shares outstanding upon the completion of this offering. In such event, the total consideration paid by our existing shareholders, including the holders of these options, would be approximately $ million, or % of $ , the total consideration paid by investors participating in this offering would be $ million, or % of $ , the average price per share paid by our existing shareholders would be $ , and the average price per share paid by investors participating in this offering would be $ .

If the underwriters exercise their option to purchase additional ordinary shares in this offering in full, and if all outstanding options under our 2015 Plan as of March 31, 2018 were exercised, then our existing shareholders, including the holders of those options, would own % of the total number of ordinary shares to be outstanding after this offering and investors participating in this offering would own % of the total number of our ordinary shares outstanding upon the completion of this offering. In that case, the total consideration paid by our existing shareholders, including the holders of those options, would be approximately $ million, or % of $ , the total consideration paid by investors participating in this offering would be $ million, or % of $ , the average price per share paid by our existing shareholders would be $ , and the average price per share paid by investors participating in this offering would be $ .

The outstanding share information above excludes the following (as of July 31, 2018):

	●	136,405 ordinary shares issuable upon the exercise of options outstanding under our 2015 Plan, with a weighted average exercise price of $13.39 per share;

	●	up to 110,632 ordinary shares issuable upon exercise of outstanding Series A Preferred Shares warrants, at an exercise price of $31.40 per share, and automatic conversion of the underlying Series A Preferred Shares into ordinary shares, which warrants will expire upon the closing of this offering;

	●	up to an estimated 14,899 ordinary shares issuable at an exercise price per share equal to the par value, upon the exercise of warrants that will remain outstanding following the closing of this offering;

	●	110,507 ordinary shares issuable upon the vesting of 110,507 RSUs granted under the 2015 Plan, which grant becomes effective upon the closing of this offering;

	●	the issuance of ordinary shares to Palladium upon the closing of this offering, representing two percent of our outstanding ordinary shares on a fully-diluted basis (excluding 157,867 ordinary shares reserved for issuance in connection with RSUs allocated for our executives) immediately following the closing of this offering ( ordinary shares, assuming that we issue ordinary shares in this offering, based on the price per share set forth on the cover page of this prospectus);

	●	47,360 ordinary shares underlying RSUs that are reserved for future issuance under the 2015 Plan;

	●	42,805 ordinary shares reserved for future issuance under the 2015 Plan;

	●	29,245 ordinary shares issuable upon exercise of the Intel Warrant; and

	●	85,489 ordinary shares upon exercise of the Bridge Financing Warrants.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of those securities could result in further dilution to our shareholders.

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SELECTED HISTORICAL FINANCIAL DATA

The following tables set forth certain selected historical financial and operating data for our business as of and for the years ended December 31, 2017 and 2016 and for the three months ended March 31, 2018 and 2017, which has been derived from, and should be read together with, our audited and unaudited financial statements and related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected for any future periods. Our selected financial data should be read together with the sections in this prospectus entitled “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our financial statements and their related notes, which are included elsewhere in this prospectus.

	Three months ended March 31,				Years ended December 31,
	2018		2017		2017		2016
	(in thousands, except per share data)
Statement of Operations Data:

Total operating expenses	$	1,771	$	1,198	$	5,095	$	4,111

Financial expenses, net		169		636		4,117		454
Net Loss	$	1,940	$	1,834	$	9,212	$	4,565
Basic and diluted net loss per share	$	6.65	$	10.29	$	50.90	$	23.84
Shares used in computation of basic and diluted net loss per share		292,438		179,013		180,971		191,508
Pro forma basic and diluted net loss per share
Share used in computation of pro forma basic and diluted net loss per share⁽¹⁾

	March 31, 2018			December 31, 2017
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	2,179		$	3,010
Total assets		2,339			3,164
Promissory note		-			83
Total current liabilities		1,024			1,618
Convertible loan		5,527			3,856
Accumulated deficit		(17,289	)		(15,349	)
Total shareholders’ equity (deficiency)		(4,212	)		(2,310	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those set forth in the section entitled “Risk Factors” and elsewhere in this prospectus. You should read the following discussion in conjunction with “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”

Overview

We are a clinical stage artificial intelligence, or AI, company, founded in 2013, specializing in improving diagnostic accuracy through deep learning technology, an advanced form of AI. Our AI platform and AI-based decision making support tools are designed to interpret and analyze a broad range of patient data concurrently with 3D medical images. Our goal is to provide physicians with tools to achieve a better differential diagnosis, which we believe will ultimately improve patient outcomes and significantly decrease the total cost of care.

The global diagnostics market is driven in large part by solutions that can be applied in acute care settings, as these tools will drive decisions regarding hospital admissions and the associated spend. However, despite advances in medical imaging and other diagnostic tools, misdiagnosis remains a common occurrence, and payors in the U.S. and other healthcare systems are increasingly refusing to pay for the cost of care that is the result of misdiagnosis. We believe that improved diagnoses and outcomes are achievable through the adoption of AI-based decision making tools.

To date, we have not generated any revenues. In May 2018, our AccipioIX product received CE mark approval. None of our other products have been approved for commercial sale by regulatory authorities. We will not be able to generate revenues for our other products, or generate revenues for any products in the United States, until we obtain those approvals. We have experienced net losses since our inception and had net losses of $9.2 million in 2017. Our auditors have expressed doubt about our ability to continue as a going concern unless we are able to raise equity or debt financing.

To date, we have entered into agreements with GE Healthcare and IBM Watson Health, two leading radiology original equipment manufacturers, or OEMs, to integrate our products into their radiology software and hardware platforms. The OEMs’ commercial obligations under the agreements commence upon our receiving regulatory approval for the products. In addition, we have entered into agreements with Samsung Neurologica and Intel Corporation to collaborate regarding the integration of our applications into portable Samsung Neurologica CereTom® CT scanners used in intensive care units, or ICUs, and mobile stroke units, or MSUs. We have also entered into an agreement with Intel Corporation to optimize the Company’s artificial intelligence technology. We believe that by leveraging the existing sales and marketing infrastructure of these channel partners, each of which is a leading medical equipment manufacturer, we will be able to achieve high market penetration and user adoption rates.

We have not commenced commercial operations and have not generated any revenue or cash flow from operations. Since inception, we have raised an aggregate of approximately $14.8 million from sales of equity interests and convertible notes, which have provided financing for our operation.

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Since inception, we have incurred significant operating losses. Our net losses were $1.9 million and $9.2 million for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively.

We expect to continue to incur significant expenses and net losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase significantly as we plan to: make investments to expand and enhance our platform and technology infrastructure, improve the scalability, availability and security of our platform, and develop new products; conduct clinical trials; expand our indirect sales organization and marketing programs; expand our operations and infrastructure, both domestically and internationally; and hire additional personnel. In addition, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company.

Components of Statement of Operations

Revenue

Our ability to generate revenue will depend on receiving regulatory approval for, followed by successful commercialization of, our products. We expect to market our products through channel partners in a “software as a service,” or SaaS, offering, which, if we are successful, will provide us with recurring revenues that are less volatile based on the sales cycle. We cannot predict the timing of the development of the market for our products or when we will receive any revenues, if at all.

Operating Expenses

Research and Development Expenses

Our research and development expenses consist primarily of costs incurred for our research and development activities, including our AI platform development efforts, data acquisition and improvement costs and the development of our products, which include the following:

	●	employee-related expenses, including salaries, benefits, travel and share-based compensation;

	●	external research and development expenses incurred under arrangements with third parties, such as consulting fees and research testing of our products;

●

acquiring non-public third-party medical imaging data that are used as training data for our platform and enriching that data through a verification and annotation process;

●

third party license fees; and

●

costs of facilities, depreciation and other expenses.

We do not believe that it is possible at this time to accurately project total expenses to generate revenue. There are numerous factors associated with the successful commercialization of our Accipio products, including market acceptance and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will affect our research and development programs and plans. As a result, our product development faces numerous uncertainties, including:

	●	the scope, rate of progress and expense of our research and development activities;

	●	clinical trial results;

	●	the terms and timing of regulatory approvals;

	●	the expense of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and

	●	the ability to market, commercialize and achieve market acceptance for any Accipio products or products that we may develop in the future.

A change in the outcome of any of these variables could result in a significant change in the costs and timing associated with the development of our products.

During the years ended December 31, 2017 and December 31, 2016, we incurred a total of $3.0 million and $2.1 million in expenses for research and development, respectively. Research and development expenses are charged to operating expenses as they are incurred. We expect research and development expenses to increase in absolute terms in the near term. Our internal resources, employees and infrastructure are not directly tied to any one research or development project and are typically deployed across multiple projects involving the development of our AI platform through which we intend to deliver our solutions.

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We expect to incur ongoing research and development expenses for the foreseeable future to continue improving on our platform and to develop new products utilizing our platform.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related benefits, including share-based compensation, related to our executive, finance and support functions and not otherwise included in research and development expenses. Other general and administrative expenses include allocated facility related costs not otherwise included in research and development expenses, travel expenses and professional fees for auditing, tax and legal services.

We expect that our general and administrative expenses will increase in the future as our business expands and we incur additional costs associated with being a public company in the United States, including compliance under the Sarbanes-Oxley Act of 2002 and rules promulgated by the Commission, as well as compliance with provisions of the Companies Law applicable to publicly traded companies. These public company-related costs will likely include costs associated with hiring additional personnel, increased legal, accounting and audit fees, directors’ liability insurance premiums and costs related to investor relations.

Financial Expenses, Net

Financial expenses, net consists of imputed interest expenses in respect of convertible loans and notes, promissory notes and a line of credit, bank fees and other transactional costs and foreign currency transaction adjustments, as well as changes in fair value of outstanding warrants.

In December 2017, we issued and sold an aggregate of $4.3 million of December 2017 Notes to investors in the December 2017 Financing, including the Palladium Notes. We received gross proceeds of $4.0 million, before deducting certain additional fees and expenses that we incurred in connection with the financing. Interest accrues on the December 2017 Notes at the rate of 5% per annum. The December 2017 Notes mature on the one year anniversary of the original issuance date thereof (i.e., December 29, 2018), unless earlier converted into equity or otherwise repaid. The repayment of the December 2017 Notes is subject to acceleration upon the occurrence of certain customary events of default described in the December 2017 Notes and the related security agreements. Under the security agreements, and in order to secure its obligations and performance pursuant to the December 2017 Notes, the Company recorded a first priority fixed charge in favor of lenders on the Company’s assets, and a first priority floating charge on the Company’s assets, as they may exist from time to time. As of March 31, 2018, the aggregate outstanding principal amount of the December 2017 Notes, plus all accrued and unpaid interest thereon, was approximately $4.4 million.

The loan agreement under which the December 2017 Notes were issued also contained an option pursuant to which the lender exercising the option could invest additional amounts up to an aggregate of $1.5 million under the same terms as the December 2017 Notes except that the conversion price per share on the 2018 Notes will be $27.30. This option was exercised in full in March 2018, pursuant to which $1.5 million of March 2018 Notes were issued.

During the period after March 31, 2018, in August 2018, we issued and sold an aggregate of $1.4 million of August 2018 Notes to investors in the August 2018 Financing. We received gross proceeds of $1.3 million, before deducting certain additional fees and expenses that we incurred in connection with the August 2018 Financing. Other than the different issue dates, the terms of the August 2018 Notes are identical to those of the December 2017 Notes including with respect to the grant of security.

As part of the August 2018 Financing, we issued to the investors warrants to purchase a number of our ordinary shares equal to 100% of the shares issuable to such investors upon conversion of the August 2018 Notes. In addition, we issued to the holders of the December 2017 Notes and the March 2018 Notes, Bridge Financing Warrants to purchase a number of our ordinary shares equal to 25% of the shares issuable to such investors upon conversion of the December 2017 Notes and the March 2018 Notes, respectively. The exercise price of the Bridge Financing Warrants will be equal to the public offering price in an offering that qualifies under the relevant agreement, and the Bridge Financing Warrants will be exercisable from six months and until 42 months following consummation of the qualified offering.

The entire outstanding principal amount under the Bridge Notes, together with all accrued and unpaid interest thereon, will automatically convert into our ordinary shares upon the closing of a qualified offering, subject to our compliance with all conditions of the qualified offering as set forth in the Bridge Notes. Among other things, a qualified offering under the Bridge Notes requires a firm commitment underwritten initial public offering of our ordinary shares not later than June 30, 2018 (which date was later extended to September 15, 2018) at a pre-offering valuation of at least $50 million, pursuant to which we raise at least $7 million in gross cash proceeds (not including amounts reflecting converted outstanding indebtedness). The conversion price per share under the December 2017 Notes in the event of a qualified offering equals the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in the qualified offering; while the conversion price per share under the 2018 Notes is $27.30 per share. We expect this offering to constitute a qualified offering under the terms of the Bridge Notes, and, therefore, upon the closing of this offering, we will issue an aggregate of ordinary shares to the investors under the Bridge Notes, based on an assumed initial public offering price of $ .

Simultaneously with the December 2017 Financing, existing investors converted convertible notes in an aggregate principal amount and accrued interest of approximately $7.0 million into Series A Preferred Shares. We also issued to these investors warrants to purchase Series A Preferred Shares. Immediately prior to the consummation of a Qualified Offering, the Series A Preferred Shares will be converted into, and the warrants will be exercised for, our ordinary shares as described elsewhere in this prospectus. The fair value of the warrants was recorded as debt discount and warrant liabilities upon issuance of the convertible notes on the balance sheets. The debt discount is amortized to interest expense over the term of the notes.

For more information refer to Notes 6 and 7 to the consolidated financial statements as of, and for the year ended, December 31, 2017.

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Taxes on Income

The standard corporate tax rate in Israel was 26.5%, 25% and 24% for the tax years 2015, 2016 and 2017, respectively. The corporate income tax rate was further reduced to 23% effective from January 1, 2018.

To date, we have not generated taxable income due to our operating losses. As of December 31, 2017, we had Israeli carry forward tax losses in the amount of $7.2 million.

Results of Operations

The following table summarizes our results of operations for the periods presented:

	For the three months ended March 31,
	2018		2017
	(audited)
Operating expenses:
Research and development		803		655
Selling and marketing		217		174
General and administrative		751		369
Total operating expenses		1,771		1,198
Financial expenses, net		169		636
Net loss		1,940		1,834

Comparison of the Three Months Ended March 31, 2018 and March 31, 2017

Operating Expenses

Research and development expenses rose 22.6% from $0.7 million in the three months ended March 31, 2017 to $0.8 million in the three months ended March 31, 2018. The increase was primarily due to accelerated investment in development of our platform and products.

Selling and Marketing

Selling and marketing expenses remained $0.2 million in the three months ended March 31, 2017 and in the three months ended March 31, 2018. The slight increase was primarily due to spending related to the agreements entered into with our channel partners and costs of personnel engaged in marketing activity.

General and Administrative

General and administrative expenses increased 103.5% from $0.4 million in the three months ended March 31, 2017 to $0.8 million in the three months ended March 31, 2018. This increase was primarily the result of expenses incurred in connection with this offering mainly the preparation of the financial reports.

Financial Expenses, Net

Financial expenses, net decreased from $0.6 million in the three months ended March 31, 2017 to $0.2 million in the three months ended March 31, 2018. The decrease was mainly due to expenses in the first quarter of 2017 related to warrants issued in connection with a financing transaction in April 2016, and, to a lesser extent, interest on convertible notes that were converted to preferred stock in December 2017, which expenses were not incurred in 2018.

Comparison of the Years Ended December 31, 2017 and December 31, 2016

Operating Expenses

Research and development expenses rose 40.1% from $2.1 million in the year ended December 31, 2016 to $3.0 million in the year ended December 31, 2017. The increase was primarily due to accelerated investment in development of our platform and products.

Selling and Marketing

Selling and marketing expenses increased by from $0.2 million in the year ended December 31, 2016 to $0.5 million in the year ended December 31, 2017. The increase was primarily due to spending related to the agreements entered into with our channel partners and costs of personnel engaged in marketing activity.

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General and Administrative

General and administrative expenses declined 13.3% from $1.8 million in the year ended December 31, 2016 to $1.6 million in the year ended December 31, 2017. This decrease was primarily the result of reduced travel and legal expenses.

Financial Expenses, Net

Financial expenses, net rose from $0.5 million in the year ended December 31, 2016 to $4.1million in the year ended December 31, 2017. The increase was mainly driven by costs related to the December 2017 Financing, including recognition of remaining unamortized discount on conversion of convertible loan amounts to preferred shares and secondarily from interest on our convertible loan facility.

Liquidity and Capital Resources

We have incurred losses and generated negative cash flows from operations since inception. To date, we have not generated any revenue from the sale of products, and we do not expect to generate significant revenues from sale of our products until mid to late 2018 at the earliest. We do not expect to generate sufficient revenues from sales of products to support our capital needs for at least several quarters. We have financed our operations to date primarily through proceeds from sales of our equity and convertible debt. In December 2017, March 2018 and August 2018, we entered into securities purchase agreements with certain purchasers named therein with respect to the Bridge Notes in the aggregate principal amount of $7.2 million, which are convertible, upon satisfaction of certain conditions, into our ordinary shares. Gross proceeds of the sale of the Bridge Notes to us amounted to $6.8 million. Currently, our only source of liquidity is our current cash on hand. We do not currently have any commitments for future external funding. Our agreements with our channel partners provide for certain payments on milestones, including obtaining FDA approval or CE marking and successfully completing clinical trials. After receiving CE mark approval for AccipioIx in May 2018, in July 2018, we invoiced one of our channel partners for the initial delivery of AccipioIx licenses.

Our current cash balances and our current and anticipated future expenses, among other reasons, raise substantial doubt about our ability to continue as a going concern. Our independent public accounting firm, in their report on our audited financial statements for the year ended December 31, 2017, expressed substantial doubt about our ability to continue as a going concern. However, we believe that, based on our current business plan, our existing cash and cash equivalents and the net proceeds from this offering we will have sufficient funds to meet our currently anticipated cash requirements through at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we may use our capital resources sooner than we currently expect.

We will require significant additional financing in the future to fund our operations, including for marketing (upon obtaining regulatory approval) and further R&D activity. Our future capital requirements will depend on many factors, including:

	●	the progress and costs of our clinical trials and other research and development activities;

	●	the number of potential new products we identify and decide to develop;

	●	the scope, prioritization and number of our clinical trials and other research and development programs;

	●	the costs and timing of obtaining regulatory approval for our product;

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

	●	market acceptance of our platform and products;

	●	the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and

	●	the magnitude of our general and administrative expenses.

For more information as to the risks associated with our future funding needs, see “Risk Factors — We expect to require additional capital to support our business, and this capital might not be available on acceptable terms, if at all.” If additional capital is not available, we may have to delay, reduce or cease operations.

To the extent that existing cash, cash from operations and net proceeds from this offering are insufficient to fund our future activities, we may need to raise additional funding through debt and equity financing. Potential sources of liquidity may include our issuance of equity or debt securities or our obtaining a credit facility from one or more financial institutions or otherwise. We may also seek to finance the receivable from GE Healthcare (or future receivables). The sale of equity or convertible debt securities would result in dilution to our existing shareholders, and the incurrence of indebtedness would result in increased fixed obligations and could also subject us to covenants that restrict our operations and we may issue equity securities to providers of debt financing. Additional funds may not be available on favorable terms or at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to, one or more of our products.

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Cash Flows

The following table summarizes our cash flows for the periods presented:

	For the three months ended March 31
	2018			2017
	(audited)
Net cash (used in) provided by:
Operating activities		(2,245	)		(1,070	)
Investing activities		(3	)		(28	)
Financing activities		1,417			1,200
Cash and cash equivalents at period-end		2,206			493

Comparison of the Three Months Ended March 31, 2018 and March 31, 2017

Cash Flows from Operating Activities

In the three months ended March 31, 2018, net cash used in operating activities amounted to $2.2 million and primarily included spending related to development of our platform and products, activities in working with channel partners and in raising capital, including preparing for this offering. The increase from net cash used in operating activities in the first quarter of 2017 is primarily related to increased overhead and spending related to capital raising activity and this offering.

In the three months ended March 31, 2017, net cash used in operating activities amounted to $1.1 million and primarily included spending related to development of our platform and products and activities in working with potential channel partners.

Cash Flows used in Investing Activities

In the three months ended March 31, 2018, cash flow used in investing activities amounted to an outflow of $3 million and primarily included the purchase of equipment for our development activity.

In the three months ended March 31, 2017, cash flow used in investing activities amounted to an outflow of $28 million and primarily included the purchase of equipment for our development activity.

Cash Flows from Financing Activities

In the three months ended March 31, 2018, cash flow provided by financing activities amounted to an inflow of $1.4 million and was primarily attributable to our receipt of proceeds for a convertible loan in the amount of $1,500,000.

In the three months ended March 31, 2017, cash flow provided by financing activities amounted to an inflow of $1.2 million which consisted of proceeds from our receipt of a convertible loan.

Comparison of the Years Ended December 31, 2017 and December 31, 2016

Cash Flows from Operating Activities

In the year ended December 31, 2017, cash flow used in operating activities amounted to an outflow of $4.0 million and primarily included spending related to development of our platform and products, activities in working with channel partners and in raising capital.

In the year ended December 31, 2016, cash flow used in operating activities amounted to an outflow of $3.5 million and primarily included spending related to development of our platform and products, activities in working with potential channel partners and in raising capital.

Cash Flows used in Investing Activities

In the year ended December 31, 2017, cash flow used in investing activities amounted to an outflow of $32,000 and primarily included the purchase of equipment for our development activity.

In the year ended December 31, 2016, cash flow used in operating activities amounted to an outflow of $80,000 and primarily included the purchase of equipment for our development activity.

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Cash Flows from Financing Activities

In the year ended December 31, 2017, cash flow provided by financing activities amounted to an inflow of $6.7 million and was attributable to our receipt of proceeds for a convertible loan and the December 2017 Financing.

In the year ended December 31, 2016, cash flow provided by financing activities amounted to an inflow of $3.7 million and primarily consisted of proceeds from our receipt of a convertible loan in the amount of $3.4 million and proceeds from the issuance of preferred shares in the amount of $0.3 million.

Off-Balance Sheet Arrangements

We do not currently engage in off-balance sheet financing arrangements. In addition, we do not have any interest in entities referred to as variable interest entities, which includes special purposes entities and other structured finance entities. In April 2018, we entered into another lease for office space in Tel Aviv, which consists of approximately 4,950 square feet. The term of the lease is until May 2022 and we have the option to extend the lease for an additional two years. The base rent under this lease is approximately $13,900 per month.

Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of foreign currency exchange rates.

Foreign Currency Exchange Risk

We report our financial results, and most of our future revenues will be recorded, in U.S. dollars. However, substantially all of the research and development expenses of our Israeli operations, as well as a portion of the cost of revenues, selling and marketing, and general and administrative expenses of our Israeli operations, are (or will be, as appropriate) incurred in New Israeli Shekels. As a result, we are exposed to exchange rate risks that may adversely affect our financial results. If the New Israeli Shekel appreciates against the U.S. dollar or if the value of the New Israeli Shekel declines against the U.S. dollar at a time when the rate of inflation in the cost of Israeli goods and services exceeds the rate of decline in the relative value of the New Israeli Shekel, then the U.S. dollar cost of our operations in Israel would increase and our results of operations would be adversely affected. Our Israeli operations also could be adversely affected if we are unable to effectively hedge against currency fluctuations in the future. We cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the New Israeli Shekel against the U.S. dollar. The Israeli annual rate of deflation amounted to 0.2% and 1.0% for the years ended December 31, 2017 and 2016, respectively. The annual appreciation (devaluation) of the New Israeli Shekel in relation to the U.S. dollar amounted to 9.8% and (1.5%) for the years ended December 31, 2017 and 2016, respectively.

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Critical Accounting Policies and Estimates

Fair Value of Financial Instruments

The estimated fair value of financial instruments has been determined by us using available market information and valuation methodologies. Considerable judgment is required in estimating fair values. Accordingly, the estimates may not be indicative of the amounts we could realize in a current market exchange.

The following methods and assumptions were used by us in estimating our fair value disclosures for financial instruments:

The carrying amounts of cash and cash equivalents, restricted deposit, other accounts receivable, trade payables, other accounts payable and promissory note approximate their fair value due to the short-term maturity of such instruments.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820, “Fair Value Measurements and Disclosures” establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data

Level 3 - Unobservable inputs which are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair Value of Derivative Instruments

Warrants that provide the holders with an option for variable exercise price are considered a derivative liability and are therefore classified as financial liabilities at fair value through profit or loss. Accordingly, these warrants are measured at fair value and the changes in fair value in each reporting period are recognized in profit or loss.

Share-Based Compensation

We account for share-based compensation in accordance with ASC No. 718, “Compensation-Stock Compensation” and ASC 505, “Equity-based payments to nonemployees”.

We account for stock options and restricted shares issued to employees using a fair-value-based method, under which we measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The resulting cost is recognized for the awards expected to vest over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.

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We account for stock options issued to nonemployees on a fair-value-based method as well; however, the fair value of the options granted to nonemployees is re-measured each reporting period until the service is complete, and the resulting increase or decrease in value, if any, is recognized as income during the period the related services are rendered.

We recognize compensation expenses for the value of our equity awards granted based on the straight-line method over the requisite service period of each of the awards.

Valuation of our options and restricted shares

We generally estimate the fair value of options granted using the Black-Scholes model. For the purpose of the evaluation of the fair value of options using the Black-Scholes model, our management is required to estimate, among others, various subjective and complex parameters that are included in the calculation of the fair value of the option as well as our results and the number of options that will vest. These parameters are further discussed below:

●

Fair Value of Ordinary Shares. As our ordinary shares are not publicly traded, we must estimate the fair value of our ordinary shares, as discussed below in “Valuation of Ordinary Shares”.

●

Expected Term. The expected term represents the period that our options are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options. The expected term of employee option awards is determined using the average midpoint between vesting and the contractual term for outstanding awards, or the simplified method, because we do not yet have a sufficient history of option exercises. We consider this appropriate as we plan to see significant changes to our equity structure in the future and there is no other method that would be more indicative of exercise activity.

●

Expected Volatility. Since there has been no public market for our ordinary shares and lack of company-specific historical volatility, we have determined the share price volatility for options granted based on an analysis of the volatility of similar companies’ stock. In evaluating similarity, we consider factors such as industry, stage of life cycle and size.

●

Risk-free Interest Rate. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

●

Expected Dividend Rate. The expected dividend was assumed to be zero as we have never paid dividends and have no current plans to do so.

During 2015 and 2016, we granted options to employees and non-employees at a per share exercise price of $0.003 and determined that the fair value of the options equaled the fair value of our ordinary shares upon grant.

During 2016 we granted restricted shares, to an employee, and valued them based on the market value of the underlying shares at the date of grant.

During March and May 2017, we granted options to employees at a per share exercise price of $12.13.

During January 2018 we granted options to employees at a per share exercise price of $17.73.

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The assumptions used in estimating the fair value of the March and May 2017 and January 2018 options using the Black-Scholes model for the year ended December 31, 2017 and the three months ended March 31, 2018, are as follows:

	Year ended December 31,			Three Months ended March 31,
	2017			2018

Expected term		5-6.9 years			5.5-7 years
Expected volatility		58.91-64.55	%		58.29%-60.03	%
Risk-free interest		1.79-2.33	%		2.66%-2.79	%
Expected dividend rate		0	%		0	%

If factors change and we employ different assumptions, stock-based compensation cost on future awards may differ significantly from what we have recorded in the past. Higher volatility and longer expected terms result in an increase to share-based compensation determined at the date of grant. Future stock-based compensation cost and unrecognized share-based compensation will increase to the extent that we grant additional equity awards to employees or we assume unvested equity awards in connection with acquisitions. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost. Share-based compensation cost affects our research and development expense and selling, general, and administrative expenses.

Assuming a fair value of our ordinary shares of $6.05 and $22.94 at December 31, 2016, and 2017, respectively, and $22.76 at March 31, 2018, the aggregate intrinsic value of the vested and unvested options to purchase shares of our ordinary shares outstanding as of December 31, 2016, and 2017, and March 31, 2018 was $106,000, $1,300,000 and $1,420,000 respectively.

Valuation of our ordinary shares

We performed valuations to estimate the fair value of our ordinary share for each option grant during the 12-month period ended March 31, 2018. The per share exercise prices, fair values of underlying shares and fair values of the option awards as of the respective dates of valuation are as follows:

	Number of Ordinary Shares Underlying Options Granted		Exercise Price per Ordinary Share		Fair Value of Underlying Ordinary Share		Fair Value of Options Granted
March 16, 2017		54,456	$	12.13		9.61	$	5.02 - 5.18
March 28, 2017		38,147	$	12.13		9.61	$	4.62
May 18, 2017		5,600	$	12.13		9.61	$	4.85
January 25, 2018		19,900	$	17.73		22.94	$	14.56

As there has been no public market for our ordinary shares to date, the fair value of ordinary shares was historically determined with the assistance of an independent financial and economic consultant (the “Consultant”), based on inputs from management and objective and subjective factors, including the following:

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Valuations performed at periodic intervals by an independent third-party valuation specialist;

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The purchase price paid for our preferred shares by third party investors in arms’ length transactions and the prices, rights, preferences and privileges of our convertible preferred shares;

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Current business conditions and projections;

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The progress of our research and development programs;

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The likelihood of a liquidity event for the ordinary shares underlying these options, such as an initial public offering or sale of our company, given prevailing market conditions; and

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Any adjustments necessary due to the lack of marketability of our ordinary shares.

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The Company, with the assistance of the Consultant, considered various scenarios for the future operations of the Company to arrive at a range of initial potential equity values for the Company. These scenarios involved use of an income approach as well as other methodologies. The initial estimated values were then subjected to a probability-weighted expected return method, or PWERM, which produced the per ordinary share value utilizing a combination of an option pricing model, or OPM, and IPO exit scenarios. The following scenarios were assumed:

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Initial Public Offering. Estimates the value based on an estimated IPO value discounted to the present value based on both risk and timing;

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No qualified round. Uses the income approach to estimate the equity value as of the valuation date, and then allocates that value among equity securities, including the ordinary shares, using an OPM, assuming that the company remains private for longer than in the previous scenario; and

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Qualified round. Estimates the value of the entire enterprise, based on management’s estimates of future financing round in a potential qualified round transaction, as defined in the relevant equity and convertible debt investment agreements, or Equity Agreements.

When estimating the equity value at each valuation date and the corresponding value of the ordinary shares, we determined an appropriate weighting between the valuations derived from the PWERM analysis, including an IPO exit scenario, based on the various scenarios presented in the following paragraphs.

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The OPM treats ordinary share and preferred shares as call options on the enterprise’s equity value, with exercise prices based on the liquidation preference of the preferred stock. Under this method, the ordinary shares have value only if the funds available for distribution to shareholders exceed the value of the liquidation preference at the time of a liquidity event (for example, a merger, IPO or sale), assuming the enterprise has funds available to make a liquidation preference meaningful and collectible by the shareholders. OPM requires a number of assumptions the most significant of which are, expected share price volatility, the expected time to liquidity event, risk-free interest rate and the expected dividend yield. The expected volatility was calculated based on comparable companies, the expected time to a liquidity event was based on management’s assumptions, risk-free interest rate was based on US treasury government bonds and the expected dividend yield used is zero since historically we have not paid dividends and have no foreseeable plans to pay dividends.

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The income approach involves applying an appropriate risk-adjusted discount rate to projected cash flows based on forecasted revenue and costs. The measurement is based on the value indicated by current market expectations about those future amounts. The Company use the income approach, based on management’s 5-year projections and terminal value based on a Gordon growth model. The discount rate was calculated based on the Capital Asset Pricing Model build-up method.

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The IPO exit scenario treats all preferred shares as ordinary shares. The fair value of warrants to purchase Series A preferred shares and options to purchase our ordinary shares was calculated based on the Black-Scholes option-pricing model. The firm value is divided by the resulting number of shares to determine a per share value.

The main driver for the increase in the equity value in the past 18 months is the fact that, during such period, we have signed commercial agreements with major global distributors in the healthcare equipment industry such that income growth, if and when commenced, is expected to drive high revenues. This information caused changes in the Company’s forecasted operations, thereby driving an increase in the estimated fair value of our ordinary shares for purposes of valuing equity awards over that same time period.

The following is a discussion of the significant factors contributing to the fair value determination of the date of grants:

March and May 2017 — Options granted had an exercise price of $12.13 per share. The valuation used a non-marketability discount of 17.1% for the income approach scenario and 7.2% for the IPO scenario. The qualified financing round was estimated at a likelihood of 67.5% due to the progress made by the Company in its commercial and technical readiness achieved during the period and the IPO scenario was estimated a likelihood of 10% at the time of the valuation due to the early stage of the Company.

January 2018 — Options granted had an exercise price of $17.73 per share. The valuation used a non-marketability discount of 20.9% for the income approach scenario and 8% for the IPO scenario. The IPO scenario was estimated a likelihood of 50% at the time of the valuation due to the December 2017 Convertible Note Financing of the Company and no probability was attributed to qualified financing as defined in the Equity Agreements.

There is inherent uncertainty in our forecasts and projections and, if we had made different assumptions and estimates than those described previously, the amount of our stock-based compensation expense, net loss, and net loss per share amounts could have been materially different.

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Impact of Recently Issued Accounting Pronouncements

In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, or the ASU 2014-15, which provides guidance on management’s responsibility in evaluating whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). ASU 2014-15 also provide guidance related to the required disclosures as a result of management evaluation.

The pronouncement is effective for annual periods ending after December 15, 2016 with early adoption permitted. We adopted this standard in 2016. The impact of the adoption of the standard is included in Note 1b to our consolidated financial statements.

On March 30, 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation”, which effects all entities that issue share-based payment awards to their employees. The amendments in this ASU cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. Effective as of January 1, 2017, we adopted the new guidance prospectively. Upon adoption of ASU 2016-09, we elected to change our accounting policy to account for forfeitures as they occur. This new guidance does not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash” (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. This new guidance does not have a material impact on our consolidated financial statements.

New Accounting Pronouncements Not Yet Effective

In February 2016, the FASB issued ASU 2016-02, “Leases”, on the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a manner similar to the accounting under existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASC 842 supersedes the previous leases standard, ASC 840, “Leases.” The guidance is effective for the interim and annual periods beginning on or after December 15, 2018, and early adoption is permitted. This new guidance does not have a material impact on our consolidated financial statements.

In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606). On July 9, 2015 the FASB voted to approve a one year delay of the effective date and to permit companies to voluntarily adopt the new standard as of the original effective date. The new standard is effective for reporting periods beginning after December 15, 2017. The standard will supersede existing revenue recognition guidance, including industry-specific guidance, and will provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. At this stage, we have not commenced generating revenues and still evaluating the possible effect of implementing ASU 2014-09 on our consolidated financial statements and related disclosures.

JOBS Act Exemptions

The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are electing to delay such adoption of new or revised accounting standards. As a result, our consolidated financial statements may not be comparable to companies that comply with the public company effective date.

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BUSINESS

Company Overview

The global diagnostics market is driven in large part by solutions that can be applied in acute care settings, as these tools will drive decisions regarding hospital admissions and the associated spend. However, despite advances in medical imaging and other diagnostic tools, misdiagnosis remains a common occurrence, and payors in the U.S. and other healthcare systems are increasingly refusing to pay for the cost of care that is the result of misdiagnosis. We believe that improved diagnoses and outcomes are achievable through the adoption of AI-based decision making tools.

To date, we have not generated any revenues. In May 2018, our AccipioIx product received CE mark approval. None of our other products have been approved for commercial sale by regulatory authorities. We will not be able to generate revenues for our other products, or generate revenues for any products in the United States, until we obtain those approvals. We have experienced net losses since our inception and had net losses of $9.2 and $1.9 million in 2017 and in the first quarter of 2018, respectively. Our auditors have expressed doubt about our ability to continue as a going concern unless we are able to raise equity or debt financing.

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AccipioDx is a high-accuracy diagnostic utility intended to support physicians in ruling out ICH in acute settings, supplementing the standard clinical tools available to the treating physician;

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To date, we have entered into agreements with GE Healthcare and IBM Watson Health, two leading radiology original equipment manufacturers, or OEMs, to integrate our products into their radiology software and hardware platforms. The OEMs’ commercial obligations under the agreements commence upon our receiving regulatory approval for the products. In addition, we have entered into an agreement with Samsung Neurologica to collaborate regarding the integration of our applications into portable Samsung Neurologica CereTom® CT scanners used in intensive care units, or ICUs, and mobile stroke units, or MSUs. We have also entered into an agreement with Intel Corporation to optimize the Company’s artificial intelligence technology. We believe that by leveraging the existing sales and marketing infrastructure of these channel partners, each of which is a leading medical equipment manufacturer, we will be able to achieve high market penetration and user adoption rates.

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Market Opportunity

The global diagnostics market is driven in large part by solutions that are applicable in the acute care setting. Decisions made in acute care settings are key to determining hospital admissions and the associated spend, and medical imaging is a key factor in many of those decisions. In addition, acute diseases such as a stroke require critical and time sensitive decisions that directly impact patient outcomes and ultimately the cost of long-term care for that patient.

Despite the advances in medical care, imaging and other diagnostic tools, misdiagnosis remains a common occurrence. In fact, the misdiagnosis rate has remained steady for 30 years. An estimated 30% of diagnostic decisions involving medical imaging result in a misdiagnosis.²Payors in the U.S. and other systems are increasingly refusing to pay for the cost of care that is the result of misdiagnosis.

Diagnostic tools using AI have the potential to reduce the rate of misdiagnosis with a resulting improvement in patient care and outcomes as well as a reduction in unnecessary or misguided hospital admissions and unnecessary spending. The potential value of this capability is reflected in a 2018 study of radiology professionals and decision makers in which 84% of respondents reported plans to adopt machine learning tools by 2020.

Medical Data Capture, Storage and Synchronization

Medical records maintained by hospitals and other healthcare providers generally comprise two types of patient data: medical imaging (such as CT, MRI, ultrasound and X-ray), also referred to as “unstructured data,” and other records that include data such as age, co-morbidities, medical history, genomic information and laboratory test results, referred to as “structured data.” Collected structured and unstructured patient data is typically stored by healthcare providers in separate information technology, or IT, systems that are not synchronized and do not allow exchanges of information even within an institution. Most medical images are captured and stored in picture archiving and communication systems, or PACS, and radiology information systems, or RIS, which utilize a universal format for image storage and transfer, known as Digital Imaging and Communications in Medicine, or DICOM.

The problem of exchange and synchronization of different types of patient records captured and stored in separate medical IT systems is exacerbated by inherent obstacles to the digitalization, standardization and processing of structured medical data. However, the advent of machine vision, big data and deep learning technologies may unlock the potential of using the entirety of available patient data in clinical care settings.

Shifting Economic Environment in Healthcare

Approaches to diagnosis and treatment of many acute care procedures are being influenced by changes in economic approaches to the delivery of health care. Under the traditional fee-for-service, or FFS, model in the U.S., physicians are paid for each medical test they run. As the population of elderly patients and those with chronic conditions increases, healthcare systems face unsustainable growth in spending coupled with poor health outcomes. In recent years, this has triggered a fundamental shift to payments for health outcomes rather than for service volume. In 2015, the U.S. government announced that 30% of Medicare payments would go toward alternative payment models by end of 2016.³ By 2018, 90% of all Medicare payments will be tied to quality or value, including 50% via alternative payment models.⁴ Commercial payors and state governments have followed the U.S. federal government in changing to provider payment models, resulting in increasing pressure on healthcare organizations to reduce costs and increase quality.

The passage of the Medicare Access and CHIP Reauthorization Act, or MACRA, in 2015 codified the creation of new payment models, such as accountable care organizations, or ACOs, expanding the number of healthcare professionals delivering care under payment programs that are driven by quality measures. Beginning in 2019, physician payments provided through Medicare will be subject to reduction if providers do not participate in one of two payment schemes created by the quality payment program established by MACRA, either the merit-based incentive payment system, or MIPS, or an alternate payment model, or APM. Under MIPS, physician payments will remain in an FFS model but payments will increase or decrease based on certain quality metrics currently under development. Existing Medicare incentive programs such as the physician quality reporting system, value-based payment modifier program, and meaningful use of health information technology, or Health IT, will be incorporated into the MIPS program. Under the APM option, physicians will be paid through programs such as advanced APMs and patient-focused payment models.

The ongoing replacement of FFS with outcome based payment models increases the need for new, effective and cost-efficient healthcare solutions based on technological innovations. Driven by the changes in laws and regulations and the rising pressure from private payors, we believe that healthcare providers will adopt quality-based programs that provide quality care and seek to prevent transformation of acute conditions into chronic conditions and ultimately significantly reduce the cost of healthcare.

² Atten Percept Psychophys; 72(5): 10.3758/APP.72.5.1205, 2010, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3881280

³ https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-01-26-3.html

⁴ http://www.e-mds.com/50-medicare-payments-be-tied-value-2018

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Prevalence and Cost of Misdiagnosis in Stroke and Head Trauma

We believe that there exists a substantial market for diagnostic tools using AI to support decisions made by doctors in acute care settings and we have identified stroke and head trauma as an initial area of focus due to the significance of those areas in acute care as well as the level of misdiagnosis and determination of treatment. Stroke is the leading cause of serious long-term disability among Americans, as reported by the American Heart Association, or AHA. As measured by the Centers for Disease Control and Prevention, or CDC, 795,000 cases of stroke occur annually in the United States and the AHA projects this to increase to 3.4 million cases by 2030.

The total cost of stroke in the United States in 2010 is estimated at $73.7 billion by the AHA; this includes direct costs consisting primarily of medications to treat stroke as well as the costs of healthcare services including those provided in hospitals or nursing homes by professionals such as physicians and home healthcare assistants (making up more than 60% of the total costs) and indirect costs such as lost productivity (making up almost 40% of the total costs). Combined direct and indirect costs of stroke are expected to reach $240 billion by 2030.⁵ These numbers translate into both significant economic impact and significant market opportunity.

Stroke is also a significant health burden in Europe, a region where we plan to market our products. The 2017 Burden of Stroke in Europe report projected a 34% increase in total number of stroke events in the European Union from 613,148 in 2015 to 819,771 in 2035. In the EU, the direct cost of stroke was estimated at €20 billion in 2015. Seventy-two percent of this was dedicated in-hospital care. However, the direct healthcare costs represent less than half of the total cost of stroke, which was estimated at €45 billion in 2015.

There are two types of stroke: ischemic stroke is caused by lack of blood flow (generally due to a blockage) and hemorrhagic stroke is caused by ICH. Diagnostics and treatment of both types of stroke require assessment for ICH either to confirm the condition or to rule it out. While the symptoms associated with ischemic stroke and hemorrhagic stroke are similar, failure to correctly diagnose and treat the specific underlying condition can be catastrophic.

Treatment for acute ischemic stroke can consist of intravenous lysis (i.e., dissolution) of the clot with the administration of tissue plasminogen activator, which must commence within three hours of first presentation of ischemic stroke symptoms in most patients and is more effective the sooner it is delivered. Ischemic stroke may also be treated by mechanical clot retrieval; recent increases in the time window for this treatment (up to twenty-four hours) are poised to sharply increase the number of patients requiring assessment for intervention. Inaccurate assessment of stroke type may lead to prolonged or exacerbated symptoms and a greater degree of disability or dependence in the daily activities of the recovering stroke patient.

Conversely, hemorrhagic stroke is a medical emergency that requires immediate identification and treatment to mitigate neurological deterioration and avoid otherwise common re-bleeding. According to the AHA, once an aneurysm bleeds, there is an approximately 30% to 40% likelihood of death and an approximately 20% to 35% likelihood of moderate to severe brain damage, even if the aneurysm is successfully treated.⁶If the aneurysm is not treated quickly, additional bleeding may occur from the already ruptured aneurysm.

Another acute condition that requires assessment for ICH is head trauma. The CDC has reported that traumatic brain injury is responsible for 1.365 million emergency department visits and 275,000 hospitalizations annually in the United States.⁷ The economic cost of traumatic brain injury was estimated by CDC at $76.5 billion ($11.5 billion direct medical costs in hospitals) in 2010.⁸This estimate did not include non-hospital treatment and more than 31,000 patients treated in Department of Defense and Veterans Administration medical systems. Similar to the case of strokes, failure to identify traumatic hemorrhage can lead to poor outcomes, whereas in cases of substantial bleeding or hemorrhage in specific brain areas, timely neurosurgical intervention can spare brain tissue and improve chances for recovery.

Despite significant advances in medical imaging technologies, diagnostic errors remain common. A recent meta-analysis of studies including over 15,000 patients found that general diagnostic error rates in emergency departments can reach 24-60% depending on clinical presentation.⁹ In addition, increased error rates have also been observed in community and rural hospitals that may lack specialists trained specifically in stroke diagnosis and treatment.

⁵	https://www.medpagetoday.com/cardiology/strokes/39329
⁶	http://www.strokeassociation.org/STROKEORG/AboutStroke/TypesofStroke/HemorrhagicBleeds/What-You-Should-Know-About-Cerebral-Aneurysms_UCM_310103_Article.jsp#.WoFh3-huYzN
⁷	https://www.cdc.gov/traumaticbraininjury/pdf/bluebook_factsheet-a.pdf
⁸	Morbidity and Mortality Weekly Report Vol. 62, No. 27 (July 12, 2013), pp. 549-552 http://www.jstor.org/stable/24852312 [p.1]
⁹	ED misdiagnosis of cerebrovascular events in the era of modern neuroimaging Neurology 88(15): 1468-1477, 2017 [p.1]

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Stroke diagnostics and ICH assessment primarily occur in emergency departments and other urgent care settings, where the initial determination and assessment of patient radiology data are often made by emergency department physicians or other non-neuroradiologists. In many misdiagnosed radiology cases, evidence of a medical condition was present but missed by clinical personnel due to the physician’s lack of specialized training and experience, difficulty of the case and time pressure.

Our Solution

We have developed a proprietary machine vision and deep learning platform that is capable of considering the full richness of unstructured medical images along with a broad range of patient medical records. Our platform combines an AI engine and software solution to process medical data efficiently and with expert-level accuracy. The platform leverages machine vision and deep learning analytics to provide a comprehensive assessment of patient data to detect or rule out a wide range of anomalies. Multiple machine vision, engineering and deep learning features of our platform build the required infrastructure and form a solid foundation for research and future development of multiple diagnostic and decision making support applications.

Our platform is designed to provide physicians with actionable insights and high-impact diagnosis, decision making tools and workflow support. Through AI-based diagnostic support tools, clinicians will be provided with automatically generated 3D and quantitative imaging data, alongside other types of patient records that may be relevant for concurrent analysis. Our deep learning platform is capable of processing a wide range of medical images, including CT, X-ray, ultrasound and MRI. It can also analyze structured patient medical records together with processed radiology data. It enables simultaneous multi-task processing, such as real-time case selection or triage, as well as concurrent processing and assessment of imaging and other patient attributes, including age, co-morbidities, medical history, genomic information and laboratory test results. The solution will deliver these interpretations and analyses of medical images in near real-time.

Our initial product family, Accipio, will provide diagnostic and decision support in accurately identifying or ruling out probable ICH in acute care settings. The Accipio family products read and analyze non-contrast CT images, the medical image modality most commonly used in emergency departments for stroke diagnostics. Medical images are analyzed and processed by our proprietary algorithm developed via deep learning, which identifies ROIs characterized by high probability of ICH. Upon completion of processing, final results can be delivered to the physician in a variety of forms, including workflow prioritization in the PACS worklist, case-level signaling, signaling of ROI and its annotation. The application also creates a full 3D image of the brain and makes it available to the physician. To avoid meaningful delays in clinical workflow, our Accipio products are designed to process each case and return results to the physician in under five minutes.

The Accipio product family consists of the following products, which we plan on submitting for approval to the FDA and CE:

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AccipioDx is a first-in-class diagnostic for ruling out the presence of ICH in non-contrast head CT cases. It is designed to allow a clinician to pursue a non-hemorrhage clinical workflow in emergency medicine settings based on the results generated by the AccipioDx application.

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AccipioAx provides CT images with highlighted ROI reflecting areas of suspected intracranial hemorrhage. In future releases, it will also be capable of providing 3D representation of the brain and suspected hemorrhages. These are designed to facilitate clinical decisions based on anatomical and volumetric considerations.

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AccipioIx provides a stand-alone identification of ICH at the case-level with output available for integration into workflow tools such as PACS worklists. AccipioIx has been granted CE mark approval.

We have developed our products to bring diagnostic accuracy and decision making support to physicians, and see our mission in establishing a new industry standard of care that we believe will improve patient outcomes and quality of care, reduce transformations of acute conditions into chronic conditions and reduce costs of healthcare.

We plan to offer our products as “software as a service,” or SaaS, a software licensing and delivery model in which software is licensed on a subscription basis. As part of a broader trend away from an FFS model, we believe the market is also moving from traditional software licenses based on time and usage subscription models, making our SaaS offering a more attractive solution. If approved, we also believe that a significant percentage of clinical physicians and managers of healthcare institutions would opt to continue using our products on a commercial basis assuming positive user experience, improvements in patient outcomes and quality of care, as well as cost savings realization. We therefore anticipate offering our products on an annual subscription basis with unlimited use, and we aim to generate revenues in the form of recurring annual licensing fees.

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We believe that the best way to achieve high customer adoption and retention rates is the pre-installation of our software on medical imaging devices and PACS of OEMs with a free trial period followed by commercial use. This model also allows us to extend the potential customer base of our products by including institutions that may be unwilling to make significant upfront payments for adjunct software solutions. We also believe that the enterprise subscription model will maximize the long-term revenue generation potential of our products, while making our revenue stream more predictable.

Competitive Strengths

If approved, we believe that our products will significantly improve patient outcomes through better differential diagnosis and will provide significant value in clinical settings characterized by high medical diagnostic error rates and high economic impact due to direct and indirect costs. We believe that improvement in patient outcomes due to better differential diagnosis and treatment, in general, will continue to drive adoption of AI-based diagnostic and decision making support solutions such as ours and that ultimately such solutions can be part of a new standard of care.

More specifically, we believe that our business benefits from the following competitive strengths:

Proprietary AI Platform that Facilitates the Rapid Creation of Highly Accurate Algorithms

We have designed our AI platform to be capable of providing accurate assessments through the concurrent processing of complex 3D medical images and related patient data. The platform is based on our proprietary approach which minimizes the need for a massive amount of data. For every single patient case collected, the platform is able to generate approximately 200 derivative data elements. The platform is supported by proprietary data curation and data management tools, which allow remote experts to rapidly verify and annotate data. Our platform is embedded with continuous machine learning intellectual property that facilitates a highly selective approach to case selection, leading to continuous learning. The platform is designed to handle a wide range of imaging data and multiple forms of structured EMR data, allowing the underlining capabilities of our AI platform to be adapted to any clinical applications that require medical imaging and the related patient data to deliver a differential diagnosis.

Breakthrough Device Designation

In January 2018, we were notified that AccipioDx had received Breakthrough Device Designation under the FDA’s Expedited Access Pathway, which under the 21st Century Cures Act was converted to the Breakthrough Device Program. The Breakthrough program is intended to reduce the time associated with product development by promoting earlier and more interactive engagement with the FDA staff during development and review of medical devices. The FDA designated AccipioDx for Breakthrough based on a proposed indication for use in acute ICH diagnoses. The FDA has stated that it does not intend to grant more than a single Breakthrough designation for a given indication. We believe that this presents a substantial barrier to entry that may dissuade our competitors from pursuing the development of devices with indications that would compete directly with AccipioDx. For more information on the Breakthrough Device Program, see “Government Regulation – FDA Regulatory and Market Pathway Process –Breakthrough Device Program.”

Access to Market through Commercial Relationships with OEMs

We have signed commercial agreements with leading radiology OEMs, GE Healthcare and IBM Watson Health. In addition to significant market share, our channel partners have extensive sales and support infrastructure, as well as established relationships with healthcare institutions. Commercial distribution of our products pursuant to our agreements with GE Healthcare and IBM Watson Health is scheduled to commence upon receipt of applicable required regulatory approvals. We believe that our relationships with leading OEMs will give us a competitive advantage and position us to capture future market share. Together with our management team’s substantial experience, we believe we are well positioned to capitalize on our advantages and enhance our brand recognition among manufacturers of medical imaging equipment, hospitals, radiologists and other clinical physicians.

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Appealing Enterprise Subscription Model Designed to Enhance Product Stickiness

We believe that our SaaS offering based on annual subscriptions will be complementary with current market trends in the healthcare industry. The offering is consistent with the movement away from FFS and towards payments for health outcomes rather than for service volume. We anticipate that clinical physicians and managers of healthcare institutions would opt to continue using our products on a commercial basis after positive user experience, improvements in patient outcomes and quality of care, as well as cost savings realization.

Easily Integrated into Existing Hardware and Software

Our products are designed to be compatible with current DICOM standard compliant devices, including medical imaging scanners, servers, workstations, as well as viewers and PACS and with structured data sources, such as EMR. The integration of our products into existing systems is designed to complement, rather than alter, clinical workflow and to minimize training required for medical personnel. We believe that this approach will help make the adoption and use of our products by healthcare providers seamless, quick and inexpensive.

Experienced Management Team

Our team, led by chairman and chief executive officer, Gene Saragnese, has extensive experience in visual and medical software, machine learning, deep learning and algorithms. Mr. Saragnese is a veteran senior executive in the medical imaging industry having served as the chief executive officer of Philips Imaging and a member of Philips Healthcare’s executive team. He previously headed CT, molecular imaging and image processing divisions in GE Healthcare, served as GE Healthcare chief technological officer and General Manager of GE’s MRI business.

Access to Large Amounts of Data, Enriched by our Additional Verification

We have secured access to large non-public third-party catalogues of clinical studies, including image data and EMR, covering a diverse patient base and a broad range of medical conditions. We receive patient medical data through clinical collaborations with leading healthcare institutions. For our initial applications, we developed a highly selective approach to the choice of head CT studies that are used as training data for our platform. This allows us to favor cases with high algorithmic value for training efficiency while capturing a wide range of imaging OEMs and patient types. We enrich training data received from our clinical partners through a verification and annotation process, which is accelerated and optimized via the use of our proprietary purpose-built software. With each new set of training data entered into and processed by the platform, our algorithms can improve their accuracy and predictive value.

Our Strategy

Leverage Existing and Develop New Relationships with Channel Partners to Achieve Sales and Global Market Penetration

Commercial distribution of our products under our current contractual arrangements with GE Healthcare and IBM Watson Health is conditional on, and may only commence upon, the receipt of required regulatory approvals. We have not submitted any Accipio products for FDA approval, but we expect FDA 510(k) clearance in the fourth quarter of 2018. We were granted ISO 13485 certification and received CE mark approval for AccipioIx in May 2018. We expect CE mark approvals for AccipioAx and Dx in the first half of y 2019. As soon as any such regulatory approval is received with respect to any of our current applications, we plan to proceed immediately to commercial distribution of our products in the relevant geographic market via our channel partners. There is no assurance that the FDA will clear any Accipio products for distribution or sale, or that CE marks will be obtained for those products.

In addition to the existing contractual arrangements with the two channel partners mentioned above and the collaboration agreements we have with Samsung and Intel Corporation, we plan to continue working to establish new relationships with leading providers in the medical radiology market to develop additional distribution channels, generate revenues and grow our product offering. We also plan to establish a channel support team and develop encouragement programs for channel partners, as well as to invest in sales and marketing to drive greater awareness and adoption of our products in the medical imaging market.

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Integrate Accipio Applications into Channel Partners’ Medical Imaging Equipment and Software Platforms

Our initial product family, Accipio, is designed to be integrated into radiology equipment supporting universal software standards in radiology, including DICOM imaging, and routing and storage in PACS/RIS systems. We envisage growth of our product offering and addressable market by creating additional detection, workflow prioritization and decision making support tools for the integration into medical records software platforms. Our goal is to make our products available in every hospital and urgent care unit either on a scanner, in PACS/RIS or via medical records IT solutions. To provide additional flexibility to healthcare providers, we also plan to extend deployment options for our products.

Continue to Develop Scalable Platform and Continuous Learning Technologies; Move into Adjacent Detection and Decision Making Support Opportunities

We intend to continue to invest in enhancing our software and deep learning capabilities and extending our platform to bring the power of AI processing to a broader range of applications with expanded functionality and capabilities. Specifically, we plan to develop additional applications focusing on clinical areas featuring high physician variability and significant economic impact on the basis of our proprietary machine vision and deep learning platform. We believe that our platform will facilitate the development of new applications adjacent to our current product offering by utilizing shared input data, and by reapplying our AI platform, certain machine-trained algorithms and other features. In the area of ICH detection, we expect to develop detection, workflow prioritization and decision making support applications throughout the entire value chain of ICH care, including occlusion assessment and tissue viability analysis. Moving forward, we expect to develop additional products for the detection, workflow prioritization and decision making support applications for skull and spine fractures.

Engage Directly with Healthcare Industry Participants

We plan to seek to cooperate with major healthcare providers to facilitate market adoption of our products. We believe that such institutions are well positioned to directly benefit from improvements in patient outcomes and reduction of cost of care associated with the use of our products. We also believe that the marginal cost of our products compared to potential savings makes it economical for healthcare institutions to adopt our products regardless of whether or not additional costs of purchase of these products will be covered by third-party payors, such as government health care programs and commercial insurance companies. Through cooperation with healthcare providers, we aim to develop and prove an economic model of commercial use of our products in a timely manner. Thereafter, we plan to engage with private insurance plans to develop reimbursement programs encouraging the use of our products. We expect that adoption rates of our products will increase if hospitals and other medical institutions are compensated, in full or in part, for additional costs incurred when purchasing our products.

Expand to Additional Geographies

Our products are subject to regulatory approvals in each of the jurisdictions in which we intend to pursue commercial distribution. We believe that the United States and European Union have the highest potential as our initial geographic markets, and we received our first regulatory approval – in the European Union - in the second quarter of 2018, although there is no assurance that we will receive future clearances or approvals on a timely basis, if at all. We also believe that there is a significant opportunity for our products outside these initial markets. For example, there are approximately 60,000 CT scanners in the world, of which more than 55% are located outside the United States and European Union. If and when such approvals are granted, we expect to expand commercial distribution of our products to include such additional geographies. We plan to also work to customize our product offering to reflect clinical indications specific to particular geographies and/or regions.

Our Platform

Our proprietary AI platform is designed to interpret the entirety of patient data by reconstructing 2D medical images into 3D, and concurrently analyzing such images and other patient data, including genomic information, laboratory test results and medical history. It combines machine vision and deep learning technologies. The machine vision technology includes visual processing algorithms and related engineering tasks. It enables our platform “to see” medical images produced by radiology equipment. The deep learning technology attempts to replicate high-level abstraction of processed medical data. It also uses algorithms to build analytical models, meaning the computers “learn” from each new set of input data. We rely on third-party technologies for machine vision functionality of our platform, while all our deep learning algorithms are proprietary.

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The proprietary algorithms of our platform are the engines for identifying and extracting meaningful information from medical images and EMR (which we refer to as MaxQ AI Agent) and application software, which supports development with tools for data analysis and validation (MaxQ AI Engine). MaxQ AI Agent is used to identify patient studies that meet our product processing criteria, retrieve them from the relevant storage system, such as PACS, RIS or EMR systems, and extract useful data. MaxQ AI Agent can also dissect a study, create a temporary catalogue and produce an index for ease of search, discovery and analytics. Upon completion of these functions, MaxQ AI Agent transfers extracted and processed data to MaxQ AI Engine for further analyses. MaxQ AI Engine executes multiple computational steps, based on proprietary data processing methods and algorithms developed via machine learning, to identify targeted medical conditions and after processing of a case returns its results to the Agent. The Agent sends the results back to the data storage system for storage and presentation to the user. On the basis of our AI platform, we have developed and intend to continue to develop in the future SaaS-based applications that enable users to identify specific medical conditions by processing and managing patient studies within our platform, running cognitive processes against other data already entered into the platform, developing libraries of reference training sets and sharing results within their PACS/RIS/EMR-system.

Our platform is designed to process various types of medical images, including CT, X-ray, ultrasound and MRI and many structured patient medical records, including genomic information, laboratory test results and medical history. It enables simultaneous multi-task processing, such as real-time case selection, as well as concurrent processing and assessment of imaging and other patient attributes. It comprises shared learning data and other infrastructure for all our final applications.

We have secured access to large non-public third-party catalogues of clinical studies, including image data and EMR, covering a diverse patient base and a broad range of medical conditions. We use patient studies provided by partner healthcare institutions as input to train our platform. We receive patient medical data through clinical collaborations with leading healthcare institutions that generate, store and administer patient data. We have developed a highly selective approach to the choice of image studies for training purposes, favoring cases that can provide multiple learning points and ensuring a balanced ratio between image data produced using radiology equipment of several major medical equipment manufacturers. Data acquired from these collaborators is checked by multiple expert neuroradiologists with a process to resolve disagreements in assessment. These assessments are provided as both image annotations and as linguistic tags.

Our platform architecture allows it to be deployed on cloud computing and storage services as well as on premises. While cloud deployment provides customers with greater flexibility, the on-premises option is designed for users who want their content to remain on their secure network for security or transmission cost reasons. Over time, we expect to deploy our platform on a variety of cloud infrastructures and within varying geographic regions and countries, which will be necessary as we pursue our international sales in the future.

Our Products

Our initial product family, Accipio, comprises medical image processing software that uses machine vision and deep-learning algorithms to identify ICH caused by stroke or head trauma in acute care settings. It uses non-contrast CT images, the medical imaging format most commonly used in emergency departments for stroke assessment, as input data. Our Accipio family of products is designed to provide diagnostic and decision making support to qualified physicians in assessing cerebrovascular events for treatment of ICH or ruling it out before commencing thrombectomy or thrombolysis procedures to extract or dissolve a blockage causing ischemic stroke. Products in the Accipio family are designed to integrate into existing clinical workflow, both by leveraging our channel partner software systems already in wide use and by providing rapid results to clinicians, typically within five minutes. In addition, our Accipio products are designed to be used in pre-hospital settings, for example in vehicle-based CT scanning, which would allow for routing the patient to the most appropriate clinical center and commencing the required preparations (e.g., stroke team, thrombolytic preparation) before the patient arrives at a medical facility.

Once approved, we plan to offer our Accipio product family as distinct clinical applications depending on the form in which final results of image processing and assessment are delivered to clinicians:

AccipioDx. AccipioDx is our application with extended functionality intended to assist physicians in reliably ruling-out ICH in acute settings that is designed to provide physicians with the results of the analysis from our platform, supplementing the other tools available to the treating physician.

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AccipioIx. AccipioIx provides (i) workflow prioritization in the picture archiving and communication systems, or PACS, worklist, (ii) case-level signaling of a potential ICH to a reader and/or (iii) case-level signaling of a potential ICH and ROI location(s) to PACS or a reader.

AccipioAx. AccipioAx is our application that creates a duplicate, annotated 3D image series and a summary appended to the case with an overview of the case finding, which are provided to a PACS to supplement the original, unaltered CT scan series. AccipioAx is intended to serve as an adjunct to standard clinical practice for interpreting head CT examinations by focusing clinicians on specific ROIs for identification and further analysis of acute ICH. For example, Accipio can be used in a side-by-side comparison, allowing it to serve as a supplemental view to assist an emergency clinician or radiologist in accurately identifying or ruling out probable ICH.

The image below presents an example of a non-contrast head CT image of a patient with ICH before and after processing by AccipioAx:



Before		After

All Accipio product are developed under ISO13485 and/or FDA Quality System Regulation design control procedures. These include risk analyses, design reviews, code analysis and controlled verification and validation. Furthermore, all products undergo performance testing using access-controlled clinical data collected under protocols approved or exempted by Institutional Review Boards accredited by the Association for the Accreditation of Human Research Protection Programs and registered with the Office of Human Research Protections.

We are planning to commence a clinical trial in 2018 to support the approval of AccipioAx. The MaxQ-AI IntraCranial HemORrhage, or ICHOR, trial is expected to be a multi-site, multi-physician retrospective study designed to demonstrate statistically significant improvement in physician performance when AccipioAx is used. The study will include clinicians trained in both emergency medicine and general radiologists, as those specialists are the primary intended users for AccipioAx. The study design has two key benefits. First, as a retrospective reader study, we expect the trial to be exempt from prior Investigational Device Exemption by FDA. Second, by collecting historical cases from multiple sites to create an enriched case population and by conducting the clinician reads using an imaging core lab, we expect to be able to execute the active phase of the study in as little as four months.

A clinical trial is also planned to support the approval of AccipioDx. Based on the Breakthrough designation received for this product, we will design the trial in close consultation with FDA. While standard clinical trials require full demonstration of safety and efficacy prior to market entry, as part of the Breakthrough program, the FDA may allow us to defer acquisition of some data to the post-approval phase, pending an acceptable study design. This mechanism is intended to create an opportunity for Breakthrough products to reach the market more quickly than they would otherwise, based on a standard approval process.

Our AI platform is designed for continuous learning. While machine learning and other development activities are conducted at our R&D facilities on a continuing basis, the implementation and integration of the obtained results are performed in cycles. Each cycle comprises a learning and development stage, a freeze of the newly developed code, its validation and performance testing. When performance testing is completed, a new version of the relevant application is released to customers. All machine learning activities subsequent to the relevant code freeze are conducted in the lab and are to be reflected in the next release version of the product.

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R&D and New Product Development

We believe our strong research and development, capabilities are one of our principal competitive strengths. Our R&D activities are conducted at our facility in Tel Aviv, Israel. Our team is comprised of dedicated research employees, software engineers, quality engineers, system architects, data scientists and data engineers as well as regulatory experts, who are responsible for the design, development and testing of our platform. Our R&D efforts focus on visual processing algorithms and related engineering tasks, as well as on application software. This includes adding new features and expanding the core technologies that further enhance the usability, functionality, interoperability, reliability, performance and flexibility of our platform.

A critical component of our product development effort is our clinical research partnerships with top tier academic institutions. These collaborations span the range of our efforts and include identification of unmet needs, targeted collection of high-value clinical data, expert input on anatomic and clinical features of pathologies, real-world feedback on clinical workflow, and active participation in clinical research. We believe that forming these relationships and utilizing next-generation development tools to design, simulate and verify our products will help us remain at the forefront of medical image recognition for detection and decision making support in radiology. We believe in leveraging our significant research and development depth and scale to create differentiated products.

As of July 15, 2018, we had 14 employees engaged in research and development. We spent approximately $3.0 million and $0.8 million on research and development activities in the year ended December 31, 2017 and the three months ended March 31, 2018, respectively.

Competition

The market for AI healthcare based systems for clinical decision support is in its early stages of development, but competition in the market has grown rapidly and includes various large, well-capitalized technology companies as well as early stage entrants. It is our intent to initially focus on areas, including acute care, where we do not believe we will be in direct competition with the largest participants in the industry. Although our initial focus is on the development of ICH diagnostic solutions for the emergency room and acute care space, we expect to face increased competition in both this market and other markets where we may expand our platform application.

We believe that the principal competitive factors in these markets are performance, breadth of product offerings, access to customers and channel partners, support, conformity to industry standard format for image storage and transfer and compatibility with PACS/RIS, clear regulatory strategy, and total costs. Our ability to remain competitive will depend on the performance of our products and on how well we will be able to maintain, enhance and leverage our relationships with our channel partners. We believe that our platform, approach to the market and knowledge of the economics of the healthcare industry, combined with our strong management team, will enable us to compete effectively.

In addition, certain potential competitors of our have recently announced achieving progress on obtaining regulatory approval. Specifically, in April 2018, Viz.ai, Inc. announced that the FDA cleared its Viz CTP, which offers image processing software to view and analyze functional and dynamic CT perfusion images.

In March 2018, Zebra Medical Vision announced that it received CE regulatory approval of its newest algorithm that is capable of detecting intracranial hemorrhages of different kinds.

In November 2017, Aidoc announced that it received CE mark approval for its head and neck deep learning medical imaging solution.

Intellectual Property

We rely on a combination of patents, trade secrets, non-disclosure agreements, and other intellectual property to protect the proprietary technologies that we believe are important to our business. Our success will depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially important inventions and know-how, defend and enforce our patents, maintain our licenses, preserve our trade secrets, and operate without infringing valid and enforceable patents and other proprietary rights of third parties. We also rely on continuing technological innovation to develop, strengthen, and maintain our proprietary position in the field of diagnostic decision making support software devices.

In connection with our AI platform, we own two patents issued abroad as well as four pending applications, both in the United States and abroad, relating to the method for real-time analysis of medical imaging. The issued or allowed patents include: patent No. 2,913,286 (Canada), granted on July 25, 2016 and is renewable on May 25, 2019 and patent No. 242766 (Israel), granted on March 2, 2016 and renewable on May 25, 2020. The patent applications have been filed in the United States, Europe, India and Japan. The European patent application is renewable on May 31, 2019.

Agreements with Imagu and Mirada Medical

Imagu. Pursuant to an agreement, dated April 29, 2015, between us and Imagu Vision Technologies Ltd., Imagu developed customized medical imaging segmentation software for us. On May 17, 2016, we entered into another agreement with Imagu, which licensed Imagu’s software for segmentation, object detection and characterization in images that we use for our Accipio product. Pursuant to this agreement, Imagu provides us with technical programming services to customize the software for our needs and assists us in embedding Imagu’s software in our Accipio product. The term of this Agreement is one year with automatic one year renewals unless terminated in accordance with the agreement.

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The agreement was amended on December 22, 2016, to modify the amounts of the license and professional service fees.

Mirada Medical. Pursuant to a Software Reseller Agreement, dated December 30, 2016 between us and Mirada Medical Limited, which we refer to as the Mirada Reseller Agreement, we incorporated Mirada’s medical image registration products into our Accipio product and Mirada appointed us a non-exclusive worldwide reseller of their products. The term of this Agreement is two years with automatic one year renewals unless terminated in accordance with the agreement. Further, pursuant to a Software Development Agreement, also dated December 30, 2016 between us and Mirada Medical Limited, which we refer to as the Mirada Development Agreement, Mirada developed and licenses to us its proprietary image registration software for suitable use with our Accipio product.

Manufacturing

We do not currently own or operate, and do not currently plan to acquire or develop, any manufacturing facilities, as our products are software devices that do not require manufacturing facilities.

Distribution and Revenue Generation

Upon receipt of required regulatory approvals with respect to a product, we intend to distribute our Accipio family of products through our channel partners, who will distribute our products, integrated into their hardware and software products, to hospitals and other customers, to be utilized by physicians, the end-users of our products. We plan to offer our products on an annual subscription basis with unlimited use, and aim to generate revenues in the form of recurring annual licensing fees, with one license covering one application.

We operate in the highly concentrated market segment of medical imaging, with the top six OEMs dominating the market. Such OEMs offer a broad range of products and services, including radiology hardware and software, maintenance and repair, and have established relationships with healthcare providers and sophisticated distribution and customer support infrastructure. We believe that our products, once approved, will not be in competition with products currently offered by any major radiology equipment manufacturer, and therefore we believe that we are well positioned to partner with such OEMs and leverage on their existing relationships and distribution networks. We are working to develop mutually beneficial non-exclusive arrangements based on a revenue share model that would include the pre-installation of our software on medical imaging devices and PACS of OEMs with a free trial period followed by commercial use.

To date, we have entered into agreements with three major medical imaging equipment manufacturers (GE Healthcare, IBM Watson Health, Samsung Neurologica and Intel Corporation) and are engaged in ongoing negotiations with additional parties with respect to our Accipio family of products.

GE Healthcare. Pursuant to our Collaboration Agreement, dated November 27, 2017, between us and GE, our ICH detection applications will be integrated into GE’s CT imaging solutions as follows:

	●	integration of Accipio products into the GE platform, which includes integrating our intellectual property, and may include intellectual property created or developed by us or jointly with GE in performance of the collaboration;

	●	validation of performance of Accipio products on the GE platform;

	●	piloting the integrated Accipio products at select GE customer locations;

	●	securing required regulatory approvals for Accipio products; and

	●	introduction of the integrated Accipio products into the market.

After we receive regulatory approval from either CE or the FDA, whichever comes first, GE is required under the Collaboration Agreement to pay us a fee for initial license purchases with additional payments upon purchase of additional licenses. As we received CE mark approval for AccipioIx in May 2018, in July 2018, we invoiced one of our channel partners for the initial delivery of AccipioIx licenses.

Our agreement with GE is for an initial term of five years. After the initial term, the agreement will remain in effect until terminated. The agreement may also be terminated upon 30-days written notice in the event of a material breach that is not cured by the breaching party.

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IBM Watson Health. Pursuant to an OEM Agreement, dated February 9, 2017, between us and IBM, IBM Watson Health Imaging will distribute our ICH detection applications in North America, China and Europe through its vendor-neutral sales channels to IBM customers with the intention to expand globally to countries in which we obtain regulatory clearances for distribution. Under the OEM Agreement, we and IBM are required to co-operate in the development of a technological solution consisting of our applications, whether as a standalone offering or integrated or bundled with IBM’s and/or any of its third-party suppliers’ intellectual property, including in the building of any electronic interfaces required to permit data exchange between each party’s respective technologies. Further, we are required to collaborate with IBM to promote Accipio products, including development of sales plans, creation of marketing and collateral and meeting with prospective IBM customers.

We are required to support IBM in the evaluation and validation activities by collaborating in identifying and securing appropriate pilot sites and by sending qualified personnel to the pilot sites designated by IBM to assist with consultation and implementation. Prior to FDA approval of Accipio, IBM is entitled to deploy Accipio products at certain customer sites for purposes of validating functionality of and market demand, scoping optimal workflow configuration, and gathering study data to support IBM’s regulatory requirements.

Upon receipt of FDA approval for general marketing and distribution of the Accipio application, IBM is required to pay us a fee in exchange for a number of Accipio licenses, with additional payments upon purchase of additional licenses.

Our agreement with IBM is for an initial term of five years from the date that any Accipio product or other application is cleared by the FDA for marketing and sale to the general US market. After the initial term, the agreement will renew every year automatically unless one party notifies the other in writing 90 days before such renewal. The agreement may also be terminated upon 45-days written notice in the event of a material breach that is not cured by the breaching party. The agreement may be terminated immediately by either party if the other party (i) is insolvent or bankrupt, (ii) is subject of the appointment of a receiver or similar officer, and (iii) has made a general assignment for benefit of all its creditors.

Samsung Neurologica. Pursuant to an agreement, dated December 19, 2016, between us and Samsung Neurologica, we and Samsung agreed to collaborate regarding the integration of our applications into portable Samsung Neurologica CereTom® CT scanners used in ICUs and MSUs. The proof of concept activities include testing and enhancing the Accipio application’s performance on the Samsung Neurologica CT systems as well as the development of integration architectures. Samsung is obligated to pay us a fee for our activities under this agreement, a portion of which has already been paid and the balance of which is due upon completion of the baseline clinical trial and submissions to the FDA. The agreement contemplated that the parties will in good faith negotiate a commercial agreement which will address a “go-to-market” strategy that is consistent with our respective business strategies.

Intel Corporation. In July 2018 we entered into a Business Collaboration Agreement with Intel Corporation. Pursuant to this agreement, the Company and Intel Corporation are working together to optimize the Company’s artificial intelligence technology. The term of the agreement expires on December 31, 2019 unless earlier terminated by either party upon 30 days’ notice.

Concurrently with the entry into the Business Collaboration Agreement, we issued to Intel Corporation a warrant, which we refer to as the Intel Warrant, to purchase 29,245 ordinary shares at an exercise price of $0.01 per share. The Intel Warrant vests in various tranches, based on technical and commercial achievements and are exercisable until the earlier of (a) the lapse of seven years following the date of issue, and (b) immediately prior to a Change of Control Event (as defined in our articles of association at the time of the issue of the Intel Warrant). Notwithstanding the above, in the event that we terminate the Business Collaboration Agreement without cause, then any portion of the Intel Warrant not previously vested shall immediately vest and become exercisable.

Government Regulation

In the United States, medical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, or the FDCA, the Public Health Service Act, or the PHSA, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of medical products. Prior to marketing certain medical products, manufacturers are required to obtain permission from the FDA via a product approval or clearance. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to file submissions, refusal to approve or clear products, warning or untitled letters, product recalls, field actions, product seizures, total or partial suspension of production or distribution, refusal to permit the importation of product, injunctions, fines, civil penalties, and criminal prosecution.

International marketing of medical devices is also subject to foreign government regulations, which vary substantially from country to country. For example, the European Union has adopted directives that address regulation of the design, manufacture, labeling, clinical studies and post-market vigilance for medical devices

The following is a summary of regulatory requirements and procedures to which we may be subject.

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FDA Regulatory and Market Pathway Process

Class II and Class III Devices

The FDA regulates the development, testing, manufacturing, labeling, storage, recordkeeping, promotion, marketing, distribution, and service of medical devices in the U.S. to ensure that medical products distributed domestically are safe and effective for their intended uses. In addition, the FDA regulates the export of medical devices manufactured in the U.S. to markets outside of the U.S. and the importation of medical devices manufactured abroad.

Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to ensure safety and effectiveness. Our current products are expected to be classified as Class II and Class III medical devices.

Class II devices are those which are subject to general controls and most require premarket demonstration of adherence to certain performance standards or other special controls, as specified by the FDA, and clearance by the FDA. Premarket review and clearance by the FDA for these devices is accomplished through the 510(k) premarket notification process. Unless a Class II device is exempt from premarket review, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the device is “substantially equivalent” in intended use and technology to a “predicate device” that is either:

(i) a device that has grandfather marketing status because it was legally marketed prior to May 28, 1976, the date upon which the Medical Device Amendments of 1976 were enacted, or

(ii) a device that has previously been cleared through the 510(k) process.

If the FDA agrees that the device is substantially equivalent to a predicate device, it will grant clearance to commercially market the device in the U.S. The FDA has a statutory 90-day period to respond to a 510(k) submission, or a guidance-based 30-day period for “special” 510(k) submissions which have a more restrictive scope and generally involve more specific or very limited changes to a legally marketed device. As a practical matter, clearance often takes longer. The FDA may require further information, including clinical data, to make a determination regarding substantial equivalence. If the FDA determines that the device, or its intended use, is not “substantially equivalent,” the FDA may deny the request for clearance.

For products that would otherwise be automatically classified as Class III because the technology employed is sufficiently novel or there is no available predicate device enabling it to be classified as a Class I or Class II device, the de novo 510(k) classification process may be available. We would have to be able to describe why the device is low to moderate risk and would more appropriately be classified as Class I or II to be eligible for this regulatory pathway.

If the de novo process is not available for a product, the FDA may classify the device, or the particular use of the device, into Class III, and the device sponsor must then fulfill more rigorous pre-market approval, or PMA, requirements. A PMA application, which is intended to demonstrate that a device is safe and effective, must be supported by extensive data, including data from preclinical studies and human clinical trials. The FDA, by statute and regulation, has 180 days to review a PMA application, though the review more often occurs over a significantly longer period of time, and can take up to several years. In approving a PMA application or clearing a 510(k) submission, the FDA may also require some form of post-market surveillance when necessary to protect the public health or to provide additional safety and effectiveness data for the device. In such cases, the manufacturer might be required to follow certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients.

After a device receives FDA 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance or could require a PMA application approval. The FDA requires each manufacturer to make the determination of whether a modification requires a new 510(k) notification or PMA application in the first instance, but the FDA can review any such decision. If the FDA disagrees with a manufacturer’s decision not to seek a new 510(k) clearance or PMA approval for a particular change, the FDA may retroactively require the manufacturer to seek 510(k) clearance or PMA approval. The FDA also can require the manufacturer to cease U.S. marketing and/or recall the modified device until 510(k) clearance or PMA approval is obtained.

We have held two face-to-face pre-submission, or Qsub, meetings with the FDA related to the regulatory path for Accipio in 2015 and 2016. Based on the feedback received from the FDA at these meetings and other informal interactions with the FDA, we expect AccipioAx to be regulated as a Class III device and AccipioIx to be cleared as Class II under the traditional 510(k) pathway. We believe that the Class III designation for AccipioAx creates a precedent for devices of this type which will be a significant regulatory barrier to entry for competitor products.

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The FDCA also preempts state laws that impose requirements regarding the safety and effectiveness of an FDA-regulated medical device that are different from or more stringent than FDA requirements. The preemption provisions have been interpreted by courts to only apply to Class III devices that are subject to the PMA pathway. The FDCA’s preemption provisions may not preempt all state laws or prevent all product liability lawsuits or claims. For example, liability may arise from problems related to the manufacture or production of products, state warranty and consumer protection laws or noncompliance with FDA regulatory requirements. However, the preemption provision limits the scope and applicability of state laws, claims and theories of liability that impose legal or compliance obligations in excess of current FDA requirements related to labeling, approval and other safety and efficacy requirements. We expect that AccipioDx and Ax will be Class III devices and AccipioIx will be a Class II device.

Breakthrough Device Program

The FDA’s Breakthrough Device Program, a program that has grown out of and replaced the earlier Expedited Access Pathway program, is designed to expedite development, assessment and review of devices that “provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions; and that represent breakthrough technologies; for which no approved or cleared alternatives exist; that offer significant advantages over existing approved or cleared alternatives, or the availability of which is in the best interest of patients.”

This status confers a number of benefits on the development path of medical devices. These include:

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a dedicated FDA team, including senior management engagement, to facilitate development of the device;

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a defined process for resolving disputes that may arise between the sponsor and the FDA;

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a commitment to interactive and timely communication between the FDA and the sponsor;

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increased flexibility in clinical study design;

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options for data collection in the post-market setting, in place of a full clinical study prior to approval;

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priority review status, meaning that a sponsor’s submissions will be placed at the top of the relevant review queue and receive additional FDA resources as needed;

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expedited review and potential deferral of manufacturing and quality systems compliance audits;

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advance disclosure to the sponsor of the topics of any consultation between the FDA and external experts or an advisory committee;

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an opportunity for the sponsor to recommend external experts for such consultations;

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assignment of the FDA staff to address questions by institutional review committees concerning investigational use of the medical device; and

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any additional steps the FDA deems appropriate to expedite the development and review of the medical device.

Post-Market Compliance

In addition, after a device is placed on the market, numerous FDA and other regulatory requirements continue to apply. These include establishment registration and device listing with the FDA; compliance with medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and compliance with corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health. The FDA and the Federal Trade Commission, or FTC, also regulate the advertising and promotion of our products to ensure that the claims we make are consistent with our regulatory clearances, that there is scientific data to substantiate the claims and that our advertising is neither false nor misleading. In general, we may not promote or advertise our products for uses not within the scope of our intended use statement in our clearances or make unsupported safety and effectiveness claims. Many regulatory jurisdictions outside of the U.S. have similar regulations to which we may be subject.

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Clinical Trials

In addition to the above, we may seek to conduct clinical studies or trials in the U.S. or other countries on products that have not yet been cleared or approved for a particular indication. Additional regulations govern the approval, initiation, conduct, documentation and reporting of clinical studies to regulatory agencies in the countries or regions in which they are conducted. Such investigational use is generally also regulated by local and institutional requirements and policies which usually include review by an ethics committee or institutional review board, or IRB. Failure to comply with all regulations governing such studies could subject the company to significant enforcement actions and sanctions, including halting of the study, seizure of investigational devices or data, sanctions against investigators, civil or criminal penalties, and other actions. Without the data from one or more clinical studies, it may not be possible for us to secure the data necessary to support certain regulatory submissions, to secure reimbursement or demonstrate other requirements. We cannot assure that access to clinical investigators, sites and subjects, documentation and data will be available on the terms and timeframes necessary.

Products manufactured outside the U.S. by or for us are subject to U.S. Customs and Border Protection and FDA inspection upon entry into the U.S. We must demonstrate compliance of such products to U.S. regulations and carefully document the eventual distribution or re-exportation of such products. Failure to comply with all applicable regulations could prevent us from having access to products or components critical to the manufacture of finished products and lead to shortages and delays.

Reimbursement

To the extent that we adopt a market strategy which is in whole or in part reliant on third party reimbursement, commercial sales of our products will depend in part on the availability of reimbursement from such third-party payors, including government health administrative authorities, managed care providers, private health insurers and other organizations. Each third-party payor may have its own policy regarding what products it will cover, the conditions under which it will cover such products, and how much it will pay for such products. Third-party payors are increasingly examining the medical necessity and cost effectiveness of medical products and services in addition to safety and efficacy and, accordingly, significant uncertainty exists as to the reimbursement status of newly approved devices. Further, healthcare policy and payment reform models and medical cost containment models are being considered and/or adopted in the United States and other countries. Legislative and/or administrative reforms to applicable reimbursement systems may significantly reduce reimbursement for the services in which our products are used or result in the denial of coverage for such services outright. As a result, third-party reimbursement adequate to enable us to realize an appropriate return on our investment in research and product development may not be available for our products.

The Patient Protection and Affordable Care Act

In March 2010, President Obama signed into legislation the Patient Protection and Affordable Care Act, or the ACA, which resulted in sweeping changes across the health care industry. The ACA contained measures designed to promote quality and cost efficiency in health care delivery and to generate budgetary savings in the Medicare and Medicaid programs. Radiology examinations represent a significant portion of the cost of providing care, and have therefore been the subject of pricing negotiation, product selection and utilization review. The ACA includes significant provisions that encourage state and federal law enforcement agencies to increase activities related to preventing, detecting and prosecuting those who commit fraud, waste and abuse in federal healthcare programs, including Medicare, Medicaid and Tricare. The ACA continues to be implemented through regulation and government activity but is subject to possible repeal, amendment, additional implementing regulations and interpretive guidelines. The manner in which the ACA continues to evolve could materially affect the extent to which and the amount at which reimbursements are made by government programs such as Medicare, Medicaid and Tricare.

Anti-Kickback Statutes in the United States

The U.S. federal anti-kickback statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for or recommending of a good or service, for which payment may be made in whole or in part under a U.S. federal healthcare program such as the Medicare and Medicaid programs. The definition of “remuneration” has been broadly interpreted to include anything of value, including gifts, discounts, the furnishing of supplies or equipment, payments of cash and waivers of payments. Several courts have interpreted the statute’s intent requirement to mean that, if any one purpose of an arrangement involving remuneration is to induce referrals or otherwise generate business involving goods or services reimbursed in whole or in part under U.S. federal healthcare programs, the statute has been violated. Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other U.S. federal healthcare programs. The reach of the federal anti-kickback statute was broadened by the ACA, which, among other things, amends the intent requirement of the federal anti-kickback statute. Pursuant to the statutory amendment, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. The ACA further provides 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 U.S. False Claims Act or the Civil Monetary Penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

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The U.S. federal anti-kickback statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. Recognizing that the statute is broad and may technically prohibit many innocuous or beneficial arrangements, the Office of Inspector General of the Department of Health and Human Services, or OIG, has issued a series of regulations, known as the “safe harbors.” These safe harbors set forth provisions that, if all their applicable requirements are met, will assure healthcare providers and other parties that they will not be prosecuted under the anti-kickback statute. The failure of a transaction or arrangement to fit precisely within one or more safe harbors does not necessarily mean that it is illegal or that prosecution will be pursued. However, conduct and business arrangements that do not fully satisfy an applicable safe harbor may result in increased scrutiny by government enforcement authorities such as the OIG or the U.S. Department of Justice.

Many states have adopted laws similar to the U.S. federal anti-kickback statute. Some of these state prohibitions are broader than the U.S. federal statute, and apply to the referral of patients and recommendations for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs. Government officials have focused certain enforcement efforts on marketing of healthcare items and services, among other activities, and have brought cases against individuals or entities with sales personnel who allegedly offered unlawful inducements to potential or existing physician users in an attempt to procure their business.

U.S. Health Insurance Portability and Accountability Act of 1996

HIPAA imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program, including private payors, or making false statements relating to healthcare matters. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information and which can impose civil or criminal liability for violations of its provisions.

In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as amended by HITECH, and its implementing regulations, imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates” — independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government healthcare programs, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business.

Foreign Regulation

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

The European Commission is the legislative body responsible for directives with which manufacturers selling medical products in the European Union and the European Economic Area, or EEA, must comply. The European Union has adopted directives that address regulation of the design, manufacture, labeling, clinical studies and post-market vigilance for medical devices. Devices that comply with the requirements of a relevant directive will be entitled to bear the CE conformity marking, indicating that the device conforms to the essential requirements of the applicable directives and, accordingly, can be marketed throughout the European Union and EEA. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states.

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We were granted ISO 13485 certification and received CE mark approval for AccipioIx in May 2018. In addition, we believe that further implementations of AccipioIx as well as AccipioAx will be approved for CE marking as amendments to the initial AccipioIx approval. We expect CE mark approvals for AccipioAx and Dx in the first half of 2019. This pathway is designed to minimize the regulatory burden of these approvals and subsequent regulatory activities.

Compliance with Environmental Laws

Our compliance with applicable environmental requirements during the years ended December 31, 2017, 2016 and 2015 has not had a material effect upon our capital expenditures, earnings or competitive position.

Our Company

We were incorporated on October 2, 2013 as an Israeli company. Our principal executive office is located at 76 Yigal Alon Street, 5th Floor, Tel Aviv, Israel 6706701. Our telephone number is +972-3 620 0028. Our website address is www.maxq.ai. Information contained in, or accessible through, our website does not constitute a part of this prospectus or any prospectus supplement.

Employees

As of July 15, 2018, we had 21 total employees: 18 full-time employees and three part-time employees (14 of whom were engaged in research and development activities, 4 of whom were engaged in general administration and 3 of whom were engaged in selling and marketing activities). None of our employees are represented by any collective bargaining unit. We believe that we maintain good relations with our employees.

Properties

We currently lease office and storage space in Tel Aviv, Israel, which consists of approximately 1,750 square feet. The term of the current lease for our office facility extends through May 2019. Rent expense for the year ended December 31, 2017 was approximately $56,000. In April 2018, we entered into another lease for office space in Tel Aviv. which consists of approximately 4,950 square feet. The term of the lease is until May 2022 and we have the option to extend the lease for an additional two years. Base rent under this lease is approximately $13,900 per month.

Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to any legal proceedings, the adverse outcome of which, in our management’s opinion, individually or in the aggregate, would have a material adverse effect on the results of our operations or financial position. There are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial holder of more than 5% of our ordinary shares is an adverse party or has a material interest adverse to our interest.

MANAGEMENT

Directors and Executive Officers

The following table sets forth the name, age (as of July 31, 2018), position and start date of current term of service of each of our directors, director nominees and executive officers who will be serving as directors and executive officers upon the closing of the offering.

Name	Age	Position	Served as a Director or Officer Since
Eugene (Gene) Saragnese	61	Chairman of the Board and Chief Executive Officer	January 2016
Eitan Machover⁽³⁾	56	Director	December 2014
Sim Mann	41	Director	July 2015
Barak Avraham Salomon^{(1), (2)}	48	Director	January 2018
Samantha Allison^{(1), (2), (3)}	50	Director Nominee	-
Scott Snyder^{(1), (2), (3)}	53	Director Nominee	-
Robert Jonathan Mehler	48	Chief Operating Officer	January 2015
Michael Rosenberg	46	Chief Financial Officer	October 2013
Christopher Alan Schnee	47	Senior Vice President, Commercial Operations	May 2018

(1) Expected to be a member of the audit committee upon the listing of our ordinary shares on the NASDAQ Capital Market.

(2) Expected to be a member of the compensation committee upon the listing of our ordinary shares on the NASDAQ Capital Market.

(3) Expected to be a member of the nominating and corporate governance committee upon the listing of our ordinary shares on the NASDAQ Capital Market.

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We have set forth below biographical information with respect to our above-listed directors and executive officers, including business experience over the course of the past five years (and, in some instances, for prior years):

Directors

Eugene (Gene) Saragnese joined our company as chairman of the Board and chief executive officer in January 2016. Prior to joining us, Mr. Saragnese served as chief executive officer of Phillips Imaging System, and as a member of the executive team, at Philips Healthcare from April 2009 to May 2015. Previous to that time, he held various positions at G.E. Healthcare from December 1995 through April 2009, including, most recently, Vice President and general manager of Molecular Imaging and Computer Tomography from March 2005 to April 2009, following his role as Chief Technology Officer and Vice President - Global Technology from August 2000 to March 2005, following his roles as general manager global sourcing, general manager global magnetic resonance business, general manager global magnetic resonance engineering. Prior to his time at G.E., Mr. Saragnese served in the Aerospace industry as program director of I.N.T.E.L.S.A.T at Lockheed Martin, and as manager of spacecraft groups at R.C.A. Astrospace and G.E. Astrospace prior to that time. Mr. Saragnese serves as chairman of the Board of Mirada Medical since September 2015. He holds a BS degree in Mechanical Engineering from Rutgers University.

Eitan Machover has served as a director of our company since December 2014. Mr. Machover has been the Principal and Owner of EM Advisory Services since August 2011. Mr. Machover is a Partner at Ziegler Meditech Equity Partners, L.P., a fund specializing in the medical device space, since January 2006. He serves as the fund’s representative on the board of directors of numerous public and private companies, including: Brenmiller Energy, Ltd. (TASE:BNRG), since July 2017; WCG Properties, Ltd. (TASE:WCG.B2), since June 2017; Electra Real Estate (TASE:ELCRE), since October 2014; Related Commercial Portfolio, Ltd. (TASE:RLCM.B1), since July 2015; and Medigus, Ltd. (TASE:MDGS, NASDAQ:MDGS), since September 2016; and Epsilon Underwriting, Ltd., since December 2015. Mr. Machover served as chief executive officer at Enhanced Surface Dynamics Inc. (Wellsense) from January 2013 to April 2014. He was the VC Partner at Meditech Advisors LLC from January 2003 to August 2011. Mr. Machover previously held various business development and M&A positions at GE Capital in the U.S., Europe and Asia from 1989 until May 2010, and led integrations into GE’s Israeli operations, having been named the National Executive for General Electric Israel, overseeing all of GE’s activities in Israel. Mr. Machover holds a BS in Business Communications from Emerson College and MBA in Finance and Marketing from Boston College.

Sim Mann Sim Mann has served as a director of the Company since July 2015. Mr. Mann serves as a general partner and chief strategy officer at Exigent Capital, and is responsible for that firm’s private equity, venture capital, and Israel focused investments. Prior to joining Exigent in June 2015, Sim invested over $1b in distressed debt and special situation investments in Europe and Israel on behalf of York Capital Management, a global investment firm. During his time at York from 2008-2015, Sim played a key role in three of the largest corporate debt restructurings in Israel’s history and was also intimately involved in early to late stage technology investments and multi-jurisdictional European public and private credit opportunities. Sim serves as a director on multiple portfolio companies including InSightec, ARQ, and StorePower.

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Mr. Barak Salomon has served as a director of our Company since January 2018. Mr. Salomon has extensive experience in private equity investments in the technology and industrial sectors. Since 2014, Mr. Barak heads the activities of NTT DOCOMO Ventures (a Japanese company) related to its investments in Israel. Since 2017, Mr. Barak also serves as board member at Amir Marketing & Investments in Agriculture Ltd. (TASE: AMRK), an Israeli public company, where he is a member of the audit committee and the chairman of the compensation committee. In addition, since 2015, Mr. Barak has been a non-executive board member at Albert Technologies Ltd. (formerly Adgorithms Ltd.) (AIM: ALB.L), where he also serves on the audit committee and as chairman of the compensation committee. From 2007 to 2011, Mr. Barak was with Viola Private Equity, a technology growth capital and buyout fund, managing the investment team and executing investments in the technology and industrial sectors. Prior to Viola (from 2004 to 2006), Mr. Barak worked in the Technology group of Apax Partners in Israel. Mr. Barak holds an MBA from the MIT Sloan School of Management and a Bachelor’s degree in mathematics and computer science (cum laude) from Bar Ilan University in Israel.

Director Nominees

Dr. Scott Snyder will be appointed as a director of our Company upon the listing of our ordinary shares on the NASDAQ Capital Market. Since May 2018, Dr. Snyder has been a partner at Heidrick & Struggles, a global executive search, leader consulting and culture shaping firm, leading the digital transformation and innovation consulting practice. From August 2016 to March 2018, Dr. Snyder served as chief technology and innovation officer at Safeguard Scientifics, Inc. (NYSE:SFE). Dr. Snyder co-founded, and from 2011-2016, served as president and chief strategy officer at Mobiquity, Inc. Prior to that, Dr. Snyder held several executive positions with Fortune 500 companies. Dr. Snyder currently serves as chairman of the advisory board of Mobiquity, Inc. and as a member of the board of directors of the Fulton Financial Corporation. Dr. Snyder is a senior fellow in the management department at the Wharton School and adjunct faculty member in the School of Engineering and Applied Science at the University of Pennsylvania. Dr. Snyder earned a B.S., M.S. and Ph.D. in systems engineering from the University of Pennsylvania. Dr. Snyder has agreed to serve as a director upon appointment.

Samantha Allison will be appointed as a director of our Company upon the listing of our ordinary shares on the NASDAQ Capital Market. Ms. Allison is a seasoned business strategist with over 25 years’ experience as a business executive. Ms. Allison serves as a Principal at Leverage Advisors, which she co-founded in 2015. In addition, Ms. Allison serves as President of Top Floor Consulting, Inc. since 2008. Prior to that, Ms. Allison has served in multiple positions at General Electric Company (GE), including her most recent roles as Managing Director/General Manager of Healthcare Financial Services at GE Capital and General Manager/Director at GE HealthCare. Ms. Allison serves as the Chair of the Town Finance Committee, Winchester, Massachusetts and as a Chair of the board of Inner Explorer. Ms. Allison earned a B.S. in business administration from the University of Vermont. Ms. Allison has agreed to serve as a director upon appointment.

Executive Officers (who will not serve as Directors upon the Closing of the Offering)

Robert Jonathan Mehler, a cofounder of our Company, has served as a director of our company since October 2013 and as our chief operating officer since January 2015. He will step down from the board of directors upon the listing of our ordinary shares on the NASDAQ Capital Market. Mr. Mehler served as vice president, business operations at GENBAND fring (NASDAQ: RBBN), a global Over-the-Top (OTT) platform enabling Communications Service Providers (CSPs) to provide instant messaging, voice and video services to their subscribers, from Sept. 2012 until November 2015. Prior to that, Mr. Mehler served as Vice President, Customer Operations at ActivePath Inc. (formerly, PostalGuard Ltd.) from May 2009 until May 2012. Mr. Mehler has over 10 years of hi-tech business management experience primarily in the financial services industry. He held management positions at ObserveIT, Correlix (TSA Associates), Gotham Technology Group, and was a Venture Consultant at Genesis Partners, one of Israel’s leading Venture Capital funds, as well as a Senior Consultant at Arthur Andersen Business Consulting. Mr. Mehler holds a B.A. in Middle Eastern Studies and Languages from Columbia University.

Michael Rosenberg, a cofounder of our Company, has served as a director and chief financial officer of our company since October 2013. He will step down from the board of directors upon the listing of our ordinary shares on the NASDAQ Capital Market. Prior to joining our company, he served as CFO at Pursway, Ltd. (acquired by IPG Media Brands) a machine learning marketing management company from June 2010 until August 2014. Prior to that time, Mr. Rosenberg served as Executive Vice President at Telecontinuity, Inc. from August 2003 through October 2009. Prior to that time, Mr. Rosenberg served as Vice President of Professional Services and Corporate Development of Elcom International from June 1994 until July 2003. Mr. Rosenberg earned a BA in Economics from Yeshiva University.

Christopher Alan Schnee has served as our senior vice president commercial operations since May 2018. Prior to that time, Mr. Schnee served as Vice President of Global Marketing and International Sales at Centurion Medical from February 2015- November 2018, and before that, as General Manager of Christie Medical Holdings from October 2007- February 2015. Mr. Schnee received a Bachelor of Science in Chemistry from the University of Texas at Austin.

Arrangements Concerning Election of Directors; Family Relationships; Legal Proceedings

Our current board of directors consists of seven directors. Prior to closing of this offering, we expect that three of our current directors will resign and we will appoint two new directors, one of whom, Samantha Allison, will be an external director (together with Barak Salomon) in accordance with the Companies Law. The appointment of our external directors is subject to ratification at a shareholders meeting to be held within three months following the closing of this offering. Pursuant to our preexisting articles of association in effect prior to this offering, certain of our shareholders had rights to appoint members of our board of directors. All such rights to appoint directors will terminate upon the closing of this offering, although currently-serving directors (other than external directors) who were elected prior to this offering will continue to serve pursuant to their election until our 2018 annual general meeting of shareholders, at which their current term as directors will expire. Furthermore, the agreements among our shareholders pursuant to which certain of our directors (other than our external directors) were elected have been terminated prior to this offering.

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There are no family relationships among our executive officers and directors. To our knowledge, there have been no material legal proceedings as described in Item 401(f) of Regulation S-K promulgated by the Commission, that are material to an evaluation of the ability or integrity of any of our directors or executive officers (in the last ten years) or our control persons (in the last year).

Corporate Governance Practices

Under the Israeli Companies Law, 5759-1999, or the Companies Law, companies incorporated under the laws of the State of Israel whose shares are publicly traded, including companies with shares listed on the NASDAQ Capital Market, are considered public companies under Israeli law and are required to comply with various corporate governance requirements under Israeli law relating to such matters as external directors, the audit committee, the compensation committee and an internal auditor. This is the case even if our shares are not listed on the Tel Aviv Stock Exchange. These requirements are in addition to the corporate governance requirements imposed by the Listing Rules of the NASDAQ Stock Market, or the NASDAQ Listing Rules, and other applicable provisions of U.S. securities laws to which we will become subject upon the closing of this offering and the listing of our ordinary shares on the NASDAQ Capital Market. While we are incorporated under Israeli law, we do not qualify as a foreign private issuer as defined under the relevant U.S. securities laws. Therefore, we must comply with the rules generally applicable to U.S. domestic companies whose shares are listed on the NASDAQ Capital Market and are not eligible to opt out from certain corporate governance requirements under the NASDAQ Listing Rules and to instead comply with corresponding “home country” Israeli law requirements, as is often elected by NASDAQ-listed Israeli companies.

Board Practices

Board of Directors

Under the Companies Law, the management of our business is vested in our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and have individual responsibilities established by our board of directors. Our chief executive officer is appointed by, and serves at the discretion of, our board of directors, subject to the employment agreement that we have entered into with him. Because our chief executive officer also serves as the chairman of the Board, his service in both of those capacities simultaneously requires the approval of our shareholders, at an extraordinary meeting that we will need to hold within three months following the closing of this offering. At that meeting, the service of our chief executive officer and chairman of the Board in those two capacities can be approved for a period of up to three years. We may, at the conclusion of that three-year period, and again in the future, seek further shareholder approval for the renewal of that approval for up to an additional three years at a time. All other executive officers are also appointed by our board of directors, and are subject to the terms of any applicable employment agreements that we may enter into with them.

Under our amended and restated articles of association that will be effective prior to the closing of this offering, our board of directors must consist of not less than four but no more than 11 directors, including two external directors, to the extent that we are then required to appoint external directors under the Companies Law. At any time the minimum number of directors (other than the external directors, if then required) shall not fall below two. We elected two external directors prior to the closing of this offering. The election of the external directors will be subject to ratification at a meeting of our shareholders to be held no later than three months following the closing of this offering. Assuming that we are required to maintain their service on the board, our external directors will serve for a period of three years pursuant to the requirements of the Companies Law. Under our amended and restated articles of association, all of our other directors will be elected on an annual basis, to serve until the next annual meeting of shareholders, and until their successors are elected and duly qualified. External directors (if required to serve) must be elected by a special majority of shareholders, while other directors may be elected by an ordinary majority of the voting power present and voting, in person or by proxy, at each annual meeting.

All directors (other than external directors) may be removed by a vote of 65% of the voting power of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and our amended and restated articles of association. External directors may be removed from office only under the limited circumstances set forth in the Companies Law. See “—External Directors.”

In addition to election by our shareholders, our amended and restated articles of association allow our board of directors to appoint directors to fill vacancies on our board, for a term of office equal to the remaining term of office of the director(s) whose office(s) was vacated.

Under the NASDAQ Listing Rules, we are required to have a majority of the directors on our board of directors qualifying as “independent directors.” Prior to the approval of listing on NASDAQ Capital Market, our board of directors will consist of a majority of directors who are independent. The definitions of “independent director” under the NASDAQ Listing Rules and “external director” under the Companies Law overlap to a certain extent such that we would generally expect the two directors who will serve as external directors to satisfy the independence requirements under the NASDAQ Listing Rules. The definition of external director under the Companies Law includes a set of statutory criteria that must be satisfied, including criteria whose aim is to ensure that there is no factor that would impair the ability of the external director to exercise independent judgment, which is similar to the corresponding standard for an independent director under the NASDAQ Listing Rules.

In accordance with the requirement under the NASDAQ Listing Rules, an independent nominating committee—our nominating and governance committee, which is described below—will recommend, and our board of directors as a whole will approve, the identity of nominees for director who are subject to election by our shareholders at annual general shareholder meetings.

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Under the Companies Law and our amended and restated articles of association, nominees for directors may also be proposed by any shareholder holding at least 1% of our outstanding voting power. However, any such shareholder may make such a nomination only if a written notice of such shareholder’s intent to make such nomination (together with certain documentation required under the Companies Law) has been delivered to our registered Israeli office within seven days after we publish notice of an upcoming annual general meeting (or within 14 days after we publish a preliminary notification of an upcoming annual general meeting).

Under the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. See “—External Directors” below. In determining the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that the minimum number of directors of our company who are required to have accounting and financial expertise is one.

External Directors

Under the Companies Law, the boards of directors of companies whose shares are publicly traded, including companies with shares traded in the United States, are generally required to include at least two members who qualify as external directors. The Companies Law regulations exempt certain companies from appointing external directors and from complying with the Companies Law requirements related to the composition of the audit committee and compensation committee of the board of directors. A company’s eligibility for that exemption is conditioned upon: (i) the continued listing of its ordinary shares on the NASDAQ Stock Market (or one of a few select other non-Israeli stock exchanges); (ii) there not being a controlling shareholder (as defined below) of the company under the Companies Law; and (iii) a company’s compliance with the NASDAQ Listing Rules requirements as to the composition of (a) the board of directors and (b) the audit and compensation committees of the board.

Because entities affiliated with Exigent Capital are collectively expected to meet the definition of a controlling shareholder under the Companies Law following the closing of this offering, we are not currently eligible for the foregoing exemption from the requirement to elect external directors. Consequently, we intend to elect two external directors (Barak Salomon and Samantha Allison) prior to the closing of this offering, which election will be subject to ratification at a meeting of our shareholders to be held no later than three months following the closing of this offering. Upon such ratification, both external directors will serve on each of our audit committee and compensation committee, and one of them will serve on our nominating and governance committee.

The provisions of the Companies Law set forth special approval requirements for the election of external directors. External directors must be elected by a majority vote of the shares present and voting at a meeting of shareholders, provided that either:

●

such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a conflict of interest (referred to under the Companies Law as a “personal interest”) in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) that are voted at the meeting, excluding abstentions, to which we refer as a disinterested majority; or

●

the total number of shares voted by non-controlling shareholders and by shareholders who do not have a personal interest in the election of the external director against the election of the external director does not exceed 2% of the aggregate voting rights in the company.

The term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds (within the meaning of the Companies Law) 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its chief executive officer. With respect to certain matters, a controlling shareholder is deemed to include a shareholder that holds 25% or more of the voting rights in a public company if no other shareholder holds more than 50% of the voting rights in the company, but excludes a shareholder whose power derives solely from his or her position as a director of the company or from any other position with the company.

The initial term of an external director is three years. Thereafter, an external director may be reelected by shareholders to serve in that capacity for two additional three-year terms if nominated by the board and reelected by the shareholders in accordance with the same special majority described above for purposes of initial election. In addition, for companies such as ours (prospectively) whose shares are listed on certain foreign stock exchanges, including the NASDAQ Capital Market, external directors may be reelected for an unlimited number of additional terms of three-years each, provided that the audit committee and the board of directors of the company confirm that, in light of the external director’s expertise and special contribution to the work of the board of directors and its committees, the reelection for such additional period(s) is beneficial to the company, and provided that the external director is reelected subject to the same shareholder vote requirements as if elected for the first time (as described above). Prior to the reelection of the external director at a general meeting of shareholders, the company’s shareholders must be informed of the term previously served by him or her and of the reasons why the board of directors and audit committee recommended the extension of his or her term.

External directors may be removed from office by a special general meeting of shareholders called by the board of directors, which approves such dismissal by the same shareholder vote percentage required for their election or by a court, in each case, only under limited circumstances, including ceasing to meet the statutory qualifications for appointment, or violating their duty of loyalty to the company.

If an external directorship becomes vacant and there are fewer than two external directors on the board of directors at the time, the board of directors is required under the Companies Law to call a shareholders’ meeting as soon as practicable to appoint a replacement external director.

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Each committee of the board of directors that exercises powers of the board of directors must include at least one external director, except that the audit committee and the compensation committee must include all external directors then serving on the board of directors. Under the Companies Law, external directors of a company are prohibited from receiving, directly or indirectly, any compensation from the company other than for their services as external directors pursuant to the Companies Law and the regulations promulgated thereunder. Compensation of an external director is determined prior to his or her election and may not be changed during his or her term subject to certain exceptions.

The Companies Law provides that a person is not qualified to serve as an external director if (i) the person is a relative of a controlling shareholder of the company, or (ii) if that person or his or her relative, partner, employer, another person to whom he or she was directly or indirectly subordinate, or any entity under the person’s control, has or had, during the two years preceding the date of appointment as an external director: (a) any affiliation or other disqualifying relationship with the company, with any person or entity controlling the company or a relative of such person, or with any entity controlled by or under common control with the company; or (b) in the case of a company with no shareholder holding 25% or more of its voting rights, had at the date of appointment as an external director, any affiliation or other disqualifying relationship with a person then serving as chairman of the board or chief executive officer, a holder of 5% or more of the issued share capital or voting power in the company or the most senior financial officer.

The term “relative” is defined under the Companies Law as a spouse, sibling, parent, grandparent or descendant; spouse’s sibling, parent or descendant; and the spouse of each of the foregoing persons.

Under the Companies Law, the term “affiliation” and the similar types of disqualifying relationships include (subject to certain exceptions):

	●	an employment relationship;

	●	a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships);

	●	control; and

	●	service as an office holder, excluding service as a director in a private company prior to the initial public offering of its shares if such director was elected as a director of the private company in order to serve as an external director following the initial public offering.

The term “office holder” is defined under the Companies Law as the chief executive officer (referred to in the law as a general manager), chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of that person’s title, a director and any other manager directly subordinate to the general manager.

In addition, a person may not serve as an external director if that person’s position or professional or other activities create, or may create, a conflict of interest with that person’s responsibilities as a director or otherwise interfere with that person’s ability to serve as a director or if the person is an employee of the Israel Securities Authority or an Israeli stock exchange. A person may furthermore not continue to serve as an external director if he or she received direct or indirect compensation from the company, including amounts paid pursuant to indemnification or exculpation contracts or commitments and insurance coverage for his or her service as an external director, other than as permitted by the Companies Law and the regulations promulgated thereunder.

Following the termination of an external director’s service on a board of directors, such former external director and his or her spouse and children may not be provided with a direct or indirect benefit by the company, its controlling shareholder or any entity under its controlling shareholder’s control. This includes engagement as an office holder or director of the company or a company controlled by its controlling shareholder or employment by, or provision of services to, any such company for consideration, either directly or indirectly, including through a corporation controlled by the former external director. This restriction extends for a period of two years with regard to the former external director and his or her spouse or child and for one year with respect to other relatives of the former external director. The restriction does not apply to the service of the former external director as an ordinary director to the extent that a company is then exempt from the external director requirement and elects to be governed by that exemption.

If at the time at which an external director is appointed all members of the board of directors who are not controlling shareholders or relatives of controlling shareholders of the company are of the same gender, the external director to be appointed must be of the other gender. That dual gender requirement for the board applies even if a company opts out from the external director requirement. A director of one company may not be appointed as an external director of another company if a director of the other company is acting as an external director of the first company at such time.

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According to regulations promulgated under the Companies Law, a person may be appointed as an external director only if he or she has professional qualifications or if he or she has accounting and financial expertise (each, as defined below). In addition, at least one of the external directors must be determined by our board of directors to have accounting and financial expertise. However, if at least one of our other directors (i) meets the independence requirements under the Exchange Act, (ii) meets the standards of the NASDAQ Listing Rules for membership on the audit committee, and (iii) has accounting and financial expertise as defined under the Companies Law, then neither of our external directors is required to possess accounting and financial expertise as long as each possesses the requisite professional qualifications.

A director with accounting and financial expertise is a director who, due to his or her education, experience and skills, possesses an expertise in, and an understanding of, financial and accounting matters and financial statements, such that he or she is able to understand the financial statements of the company and initiate a discussion about the presentation of financial data. A director is deemed to have professional qualifications if he or she has any of (i) an academic degree in economics, business management, accounting, law or public administration, (ii) an academic degree or has completed another form of higher education in the primary field of business of the company or in a field which is relevant to his/her position in the company, or (iii) at least five years of experience serving in one of the following capacities, or at least five years of cumulative experience serving in two or more of the following capacities: (a) a senior business management position in a company with a significant volume of business; (b) a senior position in the company’s primary field of business; or (c) a senior position in public administration or service. The board of directors is charged with determining whether a director possesses financial and accounting expertise or professional qualifications.

Of the two external directors whom we elected prior to the closing of this offering, one possesses accounting and financial expertise and the other possesses professional qualifications.

Board Committees

Audit Committee

We have appointed each of Barak Salomon (chair), Samantha Allison and Scott Snyder to serve on the audit committee of our board of directors, effective upon the listing of our ordinary shares on the NASDAQ Capital Market.

Companies Law Composition Requirements

Under the Companies Law, the board of directors of a public company is required to appoint an audit committee. The audit committee must be comprised of at least three directors, including all of the external directors (to the extent we are then required to have them serving on the board), one of whom must serve as chairman of the committee. The audit committee may not include the chairman of the board, a controlling shareholder of the company, a relative of a controlling shareholder, a director employed by or providing services on a regular basis to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder, or a director who derives most of his or her income from a controlling shareholder. In addition, under the Companies Law, the majority of the directors serving on the audit committee of a publicly traded company must be unaffiliated directors. In general, an “unaffiliated director” under the Companies Law is defined as either an external director or as a director who meets the following criteria:

	●	he or she meets the qualifications for being appointed as an external director, except for the requirements that the director (i) be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed for trading outside of Israel) and (ii) possess accounting and financial expertise or professional qualifications; and

	●	he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of less than two years in the service shall not be deemed to interrupt the continuation of the service.

None of the foregoing Companies Law-based composition requirements for the audit committee applies to the extent that we are eligible, and have elected, to exempt our company from the external director requirements.

NASDAQ Composition Requirements

Under the NASDAQ Listing Rules, we will be required to maintain an audit committee consisting of at least three independent directors, each of whom is financially literate and one of whom has accounting or related financial management expertise.

All of the prospective members of our audit committee are independent directors in accordance with Rule 10A-3(b)(1) under the Exchange Act and satisfy the independent director requirements under the NASDAQ Listing Rules.

All members of our audit committee meet the requirements for financial literacy under the NASDAQ Listing Rules. is an audit committee financial expert as such term is defined in the rules of the Commission.

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Audit Committee Role

Our board of directors intends to adopt an audit committee charter effective upon listing of our ordinary shares on the NASDAQ Capital Market, that sets forth the responsibilities of the audit committee consistent with the rules and regulations of the Commission and the NASDAQ Listing Rules, as well as the requirements for such committee under the Companies Law, including the following:

	●	oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law;

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

Our audit committee provides assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by pre-approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our audit committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent of management.

Under the Companies Law (and, in certain cases, the NASDAQ Listing Rules as well), our audit committee will be responsible for:

(i)

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;

(ii)

determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under the Companies Law) (see “—Approval of Related Party Transactions under Israeli Law”);

	(iii)	establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest;

	(iv)	where the board of directors approves the work plan of the internal auditor, examining such work plan before its submission to the board of directors and proposing amendments thereto;

(v)

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

(vi)

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

(vii)

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

Our audit committee may not approve any actions requiring its approval (see “—Approval of Related Party Transactions under Israeli Law”), unless at the time of the approval a majority of the committee’s members are present, which majority consists entirely of unaffiliated directors, including at least one external director (to the extent then required).

Compensation Committee

We have appointed each of (chair), and to serve on the compensation committee of our board of directors, effective upon the listing of our ordinary shares on the NASDAQ Capital Market.

Companies Law Composition Requirements

Under the Companies Law, the board of directors of a public company must appoint a compensation committee. The compensation committee must be comprised of at least three directors, including all of the external directors (to the extent then required to serve on the board), who must generally (including in the case of our company, which has a controlling shareholder) constitute a majority of the members of the compensation committee. Each compensation committee member who is not an external director must be a director whose compensation does not exceed an amount that may be paid to an external director. The compensation committee is subject to the same limitations as the audit committee under the Companies Law as to who may be a member of the committee. The prospective composition of our compensation committee meets the foregoing Companies Law requirements.

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NASDAQ Composition Requirements

Under the NASDAQ Listing Rules, we will be required to maintain a compensation committee consisting of at least two members, each of whom is an independent director. In affirmatively determining the independence of any director who will serve on the compensation committee of the board of directors, the board must consider all factors relevant to determining whether a director has a relationship to the company that is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (i) the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the Company to such director; and (ii) whether such director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.

All of the prospective members of our compensation committee are independent directors in accordance with the foregoing standard under the NASDAQ Listing Rules (which reflects the requirements of Rule 10C-1(b)(1) under the Exchange Act).

Compensation Committee Role

Our board of directors intends to adopt a compensation committee charter effective upon our listing of our ordinary shares on the NASDAQ Capital market, setting forth the responsibilities of the compensation committee, which include:

	●	the responsibilities to be set forth in our compensation policy (as described below under “—Compensation Policy”);

	●	reviewing and approving the granting of options and other incentive awards to the extent such authority is delegated by our board of directors; and

	●	reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors.

Compensation Policy

Under the Companies Law, the duties of the compensation committee include recommending to the company’s board of directors a policy regarding the terms of engagement of office holders, which we refer to as a compensation policy. Such policy must be adopted by the company’s board of directors, after considering the recommendations of the compensation committee, and will need to be brought for approval by the company’s shareholders, which approval requires what we refer to as a Special Majority Compensation Approval. A Special Majority Compensation Approval requires shareholder approval by a majority vote of the shares present and voting at a meeting of shareholders called for such purpose, provided that either: (a) such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such compensation arrangement; or (b) the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation arrangement and who vote against the arrangement does not exceed 2% of the company’s aggregate voting rights. Under the Companies Law, subject to certain conditions, the board of directors may adopt the compensation policy even if it is not approved by the shareholders. Prior to the closing of this offering, we will adopted a compensation policy, as described below, which policy serves as an exhibit to the registration statement of which this prospectus forms a part.

The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation policy must relate to certain factors, including the advancement of the company’s objectives, the company’s business plan and its long-term strategy, and the creation of appropriate incentives for office holders. It must also consider, among other things, the company’s risk management, size and the nature of its operations. The compensation policy must furthermore consider additional factors, including:

	●	the education, skills, expertise and accomplishments of the relevant office holder;

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

	●	the relationship between the cost of the terms offered and the cost of the compensation of the other employees of the company, including those employed through manpower companies;

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	●	the impact of disparities in salary upon work relationships in the company;

	●	the possibility of reducing variable compensation at the discretion of the board of directors;

	●	the possibility of setting a limit on the exercise value of non-cash variable share-based compensation; and

	●	as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.

The compensation policy must also include the following principles:

	●	the link between variable compensation and long-term performance and measurable criteria;

	●	the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation;

	●	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, share-based compensation; and

	●	maximum limits for severance compensation.

The compensation committee is responsible for (a) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by its shareholders) and (b) duties related to the compensation policy and to the compensation of a company’s office holders, including:

	●	recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years);

	●	recommending to the board of directors periodic updates to the compensation policy;

	●	assessing implementation of the compensation policy; and

	●	determining whether the compensation terms of the chief executive officer of the company need not be brought to approval of the shareholders.

MaxQ AI Compensation Policy

Our compensation policy, which will become effective immediately after the closing of this offering, is designed to grant proper, fair and well-considered compensation to our office holders. The compensation policy is intended to promote retention and motivation of our executives, incentivize superior individual excellence, align the interests of our executives with our long-term performance and serve as a tool for risk management. To that end, a portion of an executive’s compensation package is targeted to reflect our short and long-term goals, as well as the executive’s individual performance. On the other hand, our compensation policy includes measures designed to reduce the executive’s incentives to take excessive risks that may harm us in the long-term, such as limits on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of an executive and minimum vesting periods for equity-based compensation. As the compensation policy will become effective only after the closing of this offering, compensation of our office holders serving prior to this offering (including our current executive officers) or coming into office at this offering which compensation was approved prior to this offering is not subject to the limitations and requirements set forth in the compensation policy.

Our compensation policy also addresses our executive’s individual characteristics (such as his or her respective position, education, scope of responsibilities and contribution to the attainment of our goals) as the basis for compensation variation among our executives, and considers the internal ratios between compensation of our executives and other employees. Pursuant to our compensation policy, the compensation that may be granted to an executive may include: base salary (up to NIS 125,000 or $38,000 per month for a chief executive officer based in Israel or the U.S./Europe, respectively; and up to NIS 100,000 or $30,000 per month for all other executives based in Israel or the U.S./Europe, respectively); annual bonuses and other cash bonuses (such as a signing bonus and special bonuses with respect to any special achievements, such as outstanding personal achievement, outstanding personal effort or outstanding company performance), equity-based compensation, benefits and retirement and termination of service arrangements. All cash bonuses are limited to a maximum of six months’ of the executive’s base salary (including for our chief executive officer). Our non-employee directors who are not affiliated with a controlling shareholder (as defined in the Companies Law) are entitled to annual cash compensation at a set level of $36,000, except for “expert” external directors (as defined in compensation regulations under the Companies Law) who may receive increased amounts. Non-employee directors are not entitled to cash bonuses.

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An annual cash bonus may be awarded to executives upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may be granted to our executives other than our chief executive officer will be based on performance objectives and a discretionary evaluation of the executive’s overall performance by our chief executive officer and subject to minimum thresholds. The annual cash bonus that may be granted to executives other than our chief executive officer may be based entirely on a discretionary evaluation. Furthermore, our chief executive officer will be entitled to recommend performance objectives, and such performance objectives will be approved by our compensation committee (and, if required by law, by our board of directors).

The performance measurable objectives of our chief executive officer will be determined annually by our compensation committee and board of directors, will include the weight to be assigned to each achievement in the overall evaluation. A less significant portion of the chief executive officer’s annual cash bonus may be based on a discretionary evaluation of the chief executive officer’s overall performance by the compensation committee and the board of directors based on quantitative and qualitative criteria.

The equity-based compensation under our compensation policy for our office holders (including members of our board of directors) is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the alignment between the office holders’ interests with our long-term interests and those of our shareholders and to strengthen the retention and the motivation of office holders in the long term. Our compensation policy provides for office holders compensation in the form of share options or other equity-based awards, such as restricted shares and restricted share units, in accordance with our share incentive plan then in place. All equity-based incentives granted to executives shall be subject to vesting periods in order to promote long-term retention of the awarded executives. The maximum fair value of equity compensation granted to an executive in a given year, calculated as of the grant date, will not exceed 200% of the executive’s fixed compensation (i.e., base salary plus benefits). Our non-employee directors (including external directors but excluding directors affiliated with a controlling shareholder) will be entitled to annual equity grants valued at $50,000 except for “expert” external directors (as defined in compensation regulations under the Companies Law) who may receive increased amounts.

In addition, our compensation policy contains compensation recovery provisions which allow us under certain conditions to recover bonuses paid in excess, enables our chief executive officer to approve an immaterial change in the terms of employment of an office holder who reports to the chief executive officer (provided that the changes of the terms of employment are in accordance our compensation policy) and allows us to exculpate, indemnify and insure our executive officers and directors subject to the following policy limits: $40 million per occurrence and for the entire insurance period, with an annual premium limit of $400,000 and a maximum deductible (other than certain extraordinary matters) of $75,000 per occurrence.

Our compensation policy, which was approved by our board of directors and our shareholders in June 2018, will become effective upon the closing of this offering, will apply to compensation granted following the closing of this offering and is filed as an exhibit to the registration statement of which this prospectus forms a part. The brief overview above is qualified in its entirety by reference to the full text of our compensation policy.

Nominating and Governance Committee

In accordance with the requirements of the NASDAQ Listing Rules, we have appointed each of (chair), and to serve on the nominating and governance committee of our board of directors, effective upon the listing of our ordinary shares on the NASDAQ Capital Market. Each of the foregoing prospective members of this committee is an independent director under the NASDAQ Listing Rules. As further required under those rules, our board of directors intends to adopt a nominating and governance committee charter, effective upon listing of our ordinary shares on the NASDAQ Capital Market that sets forth the responsibilities of the nominating and governance committee, which include:

●

overseeing and assisting our board in reviewing and recommending nominees for election as directors;

●

assessing the performance of the members of our board; and

●

establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending to our board a set of corporate governance guidelines applicable to our company.

Internal Auditor

Under the Companies Law, the board of directors of an Israeli public company must appoint an internal auditor recommended by the audit committee. An internal auditor may not be:

	●	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;

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	●	an office holder (including a director) of the company (or a relative thereof); or

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

The role of the internal auditor is to examine, among other things, our compliance with applicable law and orderly business procedures. The audit committee is required to oversee the activities and to assess the performance of the internal auditor as well as to review the internal auditor’s work plan. We intend to appoint an internal auditor following the closing of this offering.

Approval of Related Party Transactions under Israeli Law

Fiduciary Duties of Directors and Executive Officers

The Companies Law codifies the fiduciary duties that office holders owe to a company. Each person listed above in the table under “—Directors and Executive Officers” is an office holder under the Companies Law.

An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of loyalty requires that an office holder act in good faith and in the best interests of the company.

The duty of care includes a duty to use reasonable means to obtain:

	●	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.

The duty of loyalty includes a duty to:

	●	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.

Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions

The Companies Law requires that an office holder promptly disclose to the company any conflict of interest (referred to under the Companies Law as a personal interest) that he or she may be aware of and all related material information or documents concerning any existing or proposed transaction with the company. An interested office holder’s disclosure must be made promptly and in any event no later than the first meeting of the board of directors at which the transaction is considered. A personal interest includes an interest of any person in an action or transaction of a company, including a personal interest of such person’s relative or of a corporate body in which such person or a relative of such person is a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint at least one director or the general manager, but excluding a personal interest stemming from one’s ownership of shares in the company.

A personal interest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy or the personal interest of the office holder with respect to his or her vote on behalf of a person for whom he or she holds a proxy even if such person has no personal interest in the matter. An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction is defined as any of the following:

	●	a transaction other than in the ordinary course of business;

	●	a transaction that is not on market terms; or

	●	a transaction that may have a material impact on a company’s profitability, assets or liabilities.

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If it is determined that an office holder has a personal interest in a transaction, approval by the board of directors is required for the transaction, unless the company’s articles of association provide for a different method of approval. Further, so long as an office holder has disclosed his or her personal interest in a transaction, the board of directors may approve an action by the office holder that would otherwise be deemed a breach of his or her duty of loyalty. However, generally, a company may only approve a transaction or action in which an office holder has a personal interest that is in the best interests of the company. An extraordinary transaction in which an office holder has a personal interest requires approval first by the company’s audit committee and subsequently by the board of directors. The compensation of, or an undertaking to indemnify or insure, an office holder who is not a director requires approval first by the company’s compensation committee, then by the company’s board of directors. If such compensation arrangement or an undertaking to indemnify or insure is inconsistent with the company’s stated compensation policy, or if the office holder is the chief executive officer (apart from a number of specific exceptions), then such arrangement is further subject to a Special Majority Compensation Approval. Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the compensation committee, board of directors and, subject to certain exceptions, shareholders by ordinary majority, in that order, and under certain circumstances, a Special Majority Compensation Approval. If shareholders of a company do not approve the compensation terms of office holders, other than directors, the compensation committee and board of directors may override the shareholders’ decision, subject to certain conditions.

Generally, a person who has a personal interest in a matter that is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting or vote on that matter unless the chairman of the board of directors or audit committee (as applicable) determines that he or she should be present in order to present the transaction that is subject to approval. If a majority of the members of the audit committee or the board of directors (as applicable) has a personal interest in the approval of a transaction, then all directors may participate in discussions of the audit committee or the board of directors (as applicable) on such transaction and the voting on approval thereof, but shareholder approval is also required for such transaction.

Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions

Pursuant to the Companies Law, the disclosure requirements regarding personal interests that apply to directors and executive officers also apply to a controlling shareholder of a public company. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includes a shareholder who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company. For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated. The approval of the audit committee or the compensation committee (as applicable), the board of directors and the shareholders of the company, in that order, is required for (a) extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, (b) the engagement of a controlling shareholder or his or her relative, directly or indirectly, for the provision of services to the company, (c) the terms of engagement and compensation of a controlling shareholder or his or her relative who is not an office holder or (d) the employment of a controlling shareholder or his or her relative by the company, other than as an office holder. In addition, the shareholder approval requires one of the following, which we refer to as a Special Majority:

	●	at least 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 at the meeting are voted in favor of 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.

To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required once every three years, unless, with respect to certain transactions, the audit committee determines that the duration of the transaction is reasonable given the circumstances related thereto.

Arrangements regarding the compensation, indemnification or insurance of a controlling shareholder in his or her capacity as an office holder require the approval of the compensation committee, board of directors and shareholders by a Special Majority and the terms thereof may not be inconsistent with the company’s stated compensation policy.

Pursuant to regulations promulgated under the Companies Law, certain transactions with a controlling shareholder or his or her relative, or with directors or the chief executive officer, that would otherwise require approval of a company’s shareholders may be exempt from shareholder approval upon certain determinations of the audit committee or the compensation committee, as the case may be, and board of directors.

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Shareholder Duties

Pursuant to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at a general meeting and at shareholder class meetings with respect to the following matters:

	●	an amendment to the company’s articles of association;

	●	an increase of the company’s authorized share capital;

	●	a merger; or

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

A shareholder also has a general duty to refrain from discriminating against other shareholders.

In addition, certain shareholders have a duty of fairness toward the company. These shareholders include a controlling shareholder, a shareholder who knows that he or she has the power to determine the outcome of a shareholder vote and a shareholder who has the power to appoint or to prevent the appointment of an office holder of the company or other power towards the company. The Companies Law does not define the substance of the duty of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty of fairness.

Exculpation, Insurance and Indemnification of Directors and Officers

Under the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty. An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our amended and restated articles of association which are effective prior to the closing of this offering include such a provision. A company may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders.

Under the Companies Law, a company may indemnify an office holder in respect of the following liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:

	●	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; and

	●	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.

Under the Companies Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder, if and to the extent provided in the company’s articles of association:

	●	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 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; and

	●	a financial liability imposed on the office holder in favor of a third party.

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Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:

	●	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 harm the company;

	●	a breach of 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 or forfeit levied against the office holder.

Under the Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders. See “—Approval of Related Party Transactions under Israeli Law.”

Our amended and restated articles of association that are effective prior to the closing of this offering permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Companies Law.

We have obtained directors and officers liability insurance for the benefit of our office holders and intend to continue to maintain such coverage and pay all premiums thereunder to the fullest extent permitted by the Companies Law. In addition, we have entered into agreements with each of our directors and executive officers exculpating them from liability to us for damages caused to us as a result of a breach of duty of care and undertaking to indemnify them, in each case, to the fullest extent permitted by our amended and restated articles of association and the Companies Law, including with respect to liabilities resulting from this offering to the extent that these liabilities are not covered by insurance. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

Code of Business Conduct and Ethics

We intend to adopt a Code of Business Conduct and Ethics effective upon listing of our ordinary shares on the NASDAQ Capital Market, applicable to all of our directors and employees, including our chief executive officer, chief financial officer, controller or principal accounting officer, or other persons performing similar functions, which is a “code of ethics” as defined in Item 406 of Regulation S-K promulgated by the Commission. Upon closing of this offering, the full text of the Code of Business Conduct and Ethics will be posted on our website at www.maxq.ai. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. If we make any amendment to, or grant any waiver, including any implicit waiver, from, a provision of the Code of Business Conduct and Ethics, we will disclose the required information concerning such amendment or waiver on our website to the extent required by Item 5.05 of Form 8-K, including the extent that such amendment or waiver applies to our chief executive officer, chief financial officer, controller or principal accounting officer, or other persons performing similar functions, and relates to standards promoting any of the values described in the foregoing definition of “code of ethics.” We will provide a copy of our code of ethics without charge upon written request to MaxQ AI Ltd., Attention: chief financial officer, 76 Yigal Alon Street, 5^th Floor, Tel Aviv, Israel 6706701.

Compensation Committee Interlocks and Insider Participation

None of our executive officers has served as a member of a compensation committee (or other committee serving an equivalent function) of any other entity whose executive officers served as one of our directors.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information concerning the total compensation received by, or earned by, our named executive officers, Gene Saragnese, our chairman and chief executive officer, Michael Rosenberg, our chief financial officer and Robert Jonathan Mehler, our chief operating officer, during the years ended December 31, 2017 and 2016. Messrs. Rosenberg and Mehler are compensated in NIS. Amounts paid to those executives for Salary, Bonus and All Other Compensation were originally denominated in NIS and were translated into U.S. Dollars at the following exchange rates: NIS 3.997 per $1 for the year ended December 31, 2016 in accordance with the rate published by the IRS and an exchange rate of NIS 3.746 per $1 for the year ended December 31, 2017 in accordance with the rate published by the IRS.

Name and Principal Position	Fiscal Year	Salary ($)⁽¹⁾		Bonus ($)⁽¹⁾		Share Awards ($)⁽²⁾			Option Awards ($)⁽³⁾			All other Compensation ($)			Total ($)
Gene Saragnese Chairman of the Board and	2017	$	250,000	$	100,000	$	8,044,106	⁽⁴⁾	$	462,723	⁽⁵⁾	$	22,188	⁽⁶⁾	$	8,879,017
Chief Executive Officer	2016	$	250,000	$	100,000	$	—		$	—		$	12,983	⁽⁶⁾	$	362,983

Michael Rosenberg	2017	$	219,897	$	—	$	1,608,826	⁽⁷⁾	$	177,728	⁽⁸⁾	$	45,889	⁽⁹⁾	$	2,052,340
Chief Financial Officer	2016	$	186,481	$	—	$	—		$	—		$	33,925	⁽⁹⁾	$	220,406

Robert Jonathan Mehler	2017	$	209,052	$	—	$	1,608,826	⁽¹⁰⁾	$	177,728	⁽¹¹⁾	$	54,812	⁽¹²⁾	$	2,050,418
Chief Operating Officer	2016	$	181,833	$	—	$	—		$	—		$	37,945	⁽¹²⁾	$	219,778

(1)	The amounts shown in these columns reflect salary and annual performance-based bonus for performance during the relevant period irrespective of when such salary and bonus was paid. For more information, see “— Narrative Disclosure Regarding Summary Compensation Table — Management Bonus Awards.”

(2)	The amounts shown in this column reflect the aggregate grant date fair value of restricted share awards computed in accordance with FASB ASC Topic 718. See Note 2 of the Notes to our Financial Statements included elsewhere in this prospectus.

(3)

The amounts shown in this column reflect the value of options to purchase ordinary shares granted to the named executive officers during the relevant periods. The values represent the grant date fair value of each equity award calculated in accordance with FASB ASC Topic 718. See Note 2 of the Notes to our Financial Statements included elsewhere in this prospectus.

(4)

Consists of the value of 73,684 RSUs as of December 31, 2017 (the number of RSUs granted in 2017 was predicated on an assumed split of 10:1 prior to our initial public offering and the number above assumes a 9:1 split; such number of RSUs may be subject to adjustment prior to the initial public offering depending on the actual stock split ratio implemented) and an additional 5,249 RSUs subsequently granted that all vest upon the later of the following: (a) one-third when the trading price per ordinary share reaches a multiple of 1.25 of $4.63, one-third when the trading price per ordinary share reaches a multiple of 1.75 of $4.63, and one-third when the trading price per ordinary share reaches a multiple of 2.25 of $4.63 (with the price per share of $4.63 utilized under the RSU vesting terms subject to adjustment depending on the actual number of shares outstanding immediately prior to this offering); and (b) the Commission having declared effective a resale registration statement with respect to the ordinary shares underlying these RSUs, which we refer to as the “Resale Prospectus”. To the extent they are unvested, these RSUs will fully vest upon a change of control (including an acquisition) of our Company.

(5)	Consists of options to purchase 38,147 ordinary shares granted to Mr. Saragnese during the year ended December 31, 2017. Such options are currently exercisable.

(6)	The amount set forth represents reimbursement to Mr. Saragnese for health insurance premiums.

(7)

Consists of the value of 14,737 RSUs as of December 31, 2017 (the number of RSUs granted in 2017 was predicated on an assumed split of 10:1 prior to our initial public offering and the number above assumes a 9:1 split; such number of RSUs may be subject to adjustment prior to the initial public offering depending on the actual stock split ratio implemented) and an additional 1,050 RSUs subsequently granted that all vest upon the later of the following: (a) one-third when the trading price per ordinary share reaches a multiple of 1.25 of $4.63, one-third when the trading price per ordinary share reaches a multiple of 1.75 of $4.63, and one-third when the trading price per ordinary share reaches a multiple of 2.25 of $4.63 (with the price per share of $4.63 utilized under the RSU vesting terms subject to adjustment depending on the actual number of shares outstanding immediately prior to this offering); and (b) the Commission having declared effective a Resale Prospectus. To the extent they are unvested, these RSUs will fully vest upon a change of control (including an acquisition) of our Company.

(8)	Consists of options to purchase 14,652 ordinary shares granted to Mr. Rosenberg during the year ended December 31, 2017. 6,105 of those options are currently exercisable or will be exercisable within sixty days of July 31, 2018.

(9)	See “All Other Compensation Table” below.

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(10)

Consists of the value of 14,737 RSUs as of December 31, 2017 (the number of RSUs granted in 2017 was predicated on an assumed split of 10:1 prior to our initial public offering and the number above assumes a 9:1 split; such number of RSUs may be subject to adjustment prior to the initial public offering depending on the actual stock split ratio implemented) and an additional 1,050 RSUs subsequently granted that all vest and become available for cash exercises upon the later of the following: (a) one-third when the trading price per ordinary share reaches a multiple of 1.25 of $4.63, one-third when the trading price per ordinary share reaches a multiple of 1.75 of $4.63, and one-third when the trading price per ordinary share reaches a multiple of 2.25 of $4.63 (with the price per share of $4.63 utilized under the RSU vesting terms subject to adjustment depending on the actual number of shares outstanding immediately prior to this offering); and (b) the Commission having declared effective a Resale Prospectus. To the extent they are unvested, these RSUs will fully vest upon a change of control (including an acquisition) of our Company.

(11)	Consists of options to purchase 14,652 ordinary shares granted to Mr. Mehler during the year ended December 31, 2017. 6,105 of those options are currently exercisable or will be exercisable within sixty days of July 31, 2018.

(12)	See “All Other Compensation Table” below.

All Other Compensation Table

The “All Other Compensation” amounts set forth in the Summary Compensation Table above consist of the following:

		Pension Fund ($)		Education Fund ($)⁽¹⁾		Severance Fund ($)		Disability ($)		Social Security ($)		Total
Michael Rosenberg	2016	$	6,883	$	9,423	$	10,466	$	584	$	6,568	$	33,925
	2017	$	8,987	$	12,213	$	13,565	$	1,598	$	9,527	$	45,889

Robert Mehler	2016	$	7,479	$	10,470	$	11,629	$	1,581	$	6,784	$	37,945
	2017	$	10,844	$	14,896	$	16,544	$	2,893	$	9,636	$	54,812

(1)	Education fund is a customary benefit provided to employees based in Israel. An education fund is a savings fund of pre-tax contributions to be used after a specified period of time for educational or other permitted purposes.

Narrative Disclosure Regarding Summary Compensation Table

Employment Agreements

Prior to the consummation of this offering, we will enter into written employment arrangements with each of our named executive officers. A description of each of these arrangements follows.

Gene Saragnese. In connection with the offering, we are entering into an executive employment agreement with Gene Saragnese, effective as of January 1, 2016. Mr. Saragnese’s employment agreement has no specific term and provides that Mr. Saragnese is an at-will employee. Consequently, we may terminate Mr. Saragnese’s employment at any time, for any reason or for no reason, with or without cause, upon immediate notice. Mr. Saragnese may similarly resign his employment at any time upon immediate notice to us.

Under the employment agreement, the terms of which are subject to approval by our shareholders prior to the closing of this offering, Mr. Saragnese’s annual base salary is $250,000, which increases to $350,000 upon the closing of this offering and subject to the approval of the shareholders of the Company. In the event that Mr. Saragnese transitions to the single role of chairman he will be entitled to an annual salary of $120,000. In addition to base salary, Mr. Saragnese is entitled to receive customary benefits under our health and dental, and other benefit plans. Pursuant to the agreement, if we meet certain annual corporate objectives, Mr. Saragnese will be eligible for a prorated annual bonus of up to $100,000, which increases to up to $150,000 upon the closing of this offering and subject to the approval of the shareholders of the Company, payable in cash and/or stock options, to be paid at such time, and in accordance with such terms and conditions, as are set by our board each year. The actual bonus amount for each year is determined based upon the extent to which we and/or Mr. Saragnese achieve performance goals mutually agreed to by Mr. Saragnese and the board for that year.

In addition to cash compensation, Mr. Saragnese has also been awarded options to purchase 38,147 ordinary shares, which have fully vested, and 22,100 shares of restricted stock, more than one-half of which have vested as of the current time based on the four-year vesting schedule that began on January 1, 2016. The terms of those grants are governed by our 2015 Plan. Mr. Saragnese will furthermore be granted 78,933 RSUs upon the closing of this offering. The vesting of those RSUs is contingent on Mr. Saragnese remaining an employee, consultant, advisor or director of our company, and is furthermore conditioned upon (i) our share price achieving certain levels post-offering and (ii) the effectiveness of a resale registration statement that enables Mr. Saragnese to resell the ordinary shares underlying the RSUs.

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In the event that we terminate his engagement as our chairman without cause (as defined in the employment agreement) or he terminates his engagement for good reason, then upon execution of a customary separation agreement and general release of claims satisfactory to our company, Mr. Saragnese will be entitled to six months of salary continuation at his then-current rate of base compensation, will retain any vested restricted ordinary shares, and will have the right to exercise his vested options and receive shares underlying settled RSUs for six months post-termination.

In the event of a change of control (as defined in the employment agreement), so long as Mr. Saragnese remains an employee, consultant, advisor or director of our company immediately prior to the change of control, all of the remaining then-unvested RSUs (of the 78,933 RSUs granted to Mr. Saragnese upon the closing of the offering) shall vest immediately.

As part of his employment agreement, Mr. Saragnese will be party to standard employee non-disclosure, unfair competition and ownership of inventions undertakings in our favor.

Robert Jonathan Mehler. Pursuant to an amended and restated employment agreement between the Company, its wholly-owned U.S. subsidiary, MaxQ AI, Inc., and Robert Jonathan Mehler, which will be effective upon the closing of this offering, Mr. Mehler serves as the Company’s chief operating officer. The agreement will provide for a monthly gross salary of NIS 65,000 (increasing to NIS 81,500 upon consummation of this offering), including a travel benefit of NIS 3,000. In addition, the Company will contribute certain amounts towards certain pension, severance, disability and tax-advantaged savings for Mr. Mehler (including contributions to a manager’s insurance policy or pension fund, and a study fund). Mr. Mehler may also be eligible for an annual bonus in an amount equal to up to three months’ of gross salary, subject to achievement of certain objectives to be set forth in a personal bonus policy to be applied to Mr. Mehler. The agreement contains, among other things, a confidentiality obligation, a covenant not to compete, and an assignment of inventions.

Either party will be permitted to terminate the agreement at its discretion upon 90 days’ notice. In addition, the Company will be permitted to terminate the agreement without notice upon Mr. Mehler’s (a) breach of fiduciary duties, misappropriation of company property, breach of his confidentiality obligation or covenant not to compete, (b) material breach of any provision of agreement which, if curable, is not cured within seven days of receiving notice from the Company, or (c) indictment for a criminal violation (other than a violation punishable only by fine or non-custodial penalty) or involvement in sexual harassment in connection with his work at the Company, or under any other circumstance in which an employee can be terminated under applicable law without notice.

Michael Rosenberg. Pursuant to an amended and restated employment agreement between the Company, its wholly-owned U.S. subsidiary, MaxQ AI, Inc. and Michael Rosenberg, which will be effective upon the closing of this offering, Mr. Rosenberg serves as the Company’s chief financial officer. The agreement will provide for a monthly gross salary of NIS 65,000 (increasing to NIS 81,500 upon consummation of this offering), including a travel benefit of NIS 3,000. In addition, the Company will contribute certain amounts towards certain pension, severance, disability and tax-advantaged savings for Mr. Rosenberg (including contributions to a manager’s insurance policy or pension fund, and a study fund). Mr. Rosenberg may also be eligible for an annual bonus in an amount equal to up to three months’ of gross salary, subject to achievement of certain objectives to be set forth in a personal bonus policy to be applied to Mr. Rosenberg. The agreement also contains, among other things, a confidentiality obligation, a covenant not to compete, and an assignment of inventions.

Either party will be permitted to terminate the agreement at its discretion upon 90 days’ notice. In addition, the Company will be permitted to terminate the agreement without notice upon Mr. Rosenberg’s (a) breach of fiduciary duties, misappropriation of company property, breach of his confidentiality obligation or covenant not to compete, (b) material breach of any provision of agreement which, if curable, is not cured within seven days of receiving notice from the Company, or (c) indictment for a criminal violation (other than a violation punishable only by fine or non-custodial penalty) or involvement in sexual harassment in connection with his work at the Company, or under any other circumstance in which an employee can be terminated under applicable law without notice.

2015 Share Incentive Plan

In October 2015, we adopted our 2015 Share Incentive Plan, or the 2015 Plan. The 2015 Plan permits the grant of options, restricted shares and other share-based awards to our directors, employees, officers, consultants, advisors and service providers, among others.

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As of July 31, 2018, the total option pool under our 2015 Plan was 179,210 ordinary shares. As of July 31, 2018, we had granted, and there remained outstanding, (i) options under the 2015 Plan with respect to 136,405 ordinary shares, and (ii) RSUs with respect to an additional 110,507 ordinary shares, which RSUs will become effective upon the closing of this offering. There are 42,805 ordinary shares available for future equity award grants under the 2015 Plan and an additional 47,360 ordinary shares available for future grant of RSUs under the 2015 Plan. No grants may be made under the 2015 Plan after October 2025, although the 2015 Plan will remain in effect until the expiration of all outstanding awards granted prior to that time. The 2015 Plan is administered by our board of directors or a committee designated by our board of directors, which determines, subject to Israeli law, the grantees of options, the terms of the options, including exercise prices, vesting schedules, acceleration of vesting, the type of option and the other matters necessary or desirable for, or incidental to the administration of the 2015 Plan. The 2015 Plan provides for the issuance of options under various tax regimes including, without limitation, pursuant to Sections 102 and 3(i) of the Israeli Income Tax Ordinance (New Version) 1961, or the Ordinance.

The 2015 Plan also contains an “evergreen” provision, effective upon the consummation of this offering, which provides for an automatic allotment of ordinary shares to be added every year to the pool of ordinary shares available for grant under the 2015 Plan. Under the evergreen provision, on January 1 of each year (beginning January 1, 2019), the number of ordinary shares available under the 2015 Plan will automatically increase by the lesser of the following: (i) two percent (2%) of our outstanding ordinary shares on the last day of the immediately preceding year; and (ii) an amount determined in advance of January 1 by the board.

The 2015 Plan provides that options granted to our employees, directors and officers who are not controlling shareholders and who are considered Israeli residents are intended to qualify for special tax treatment under the “capital gains track” provisions of Section 102(b)(2) of the Ordinance. Our Israeli non-employee service providers and controlling shareholders may only be granted options under Section 3(i) of the Ordinance, which does not provide for similar tax benefits.

Options granted under the 2015 Plan generally vest over four years commencing on the date of grant (other than options granted to directors pursuant to our compensation policy, which vest over one year), such that 25% vests on the first anniversary of the date of grant and an additional 6.25% vests at the end of each subsequent three-month period thereafter for 36 months. Under the 2015 Plan, in the event of termination of employment or services for reasons of disability or death, the grantee, or in the case of death, his or her legal successor, may exercise options that have vested prior to termination within a period of one year after the date of termination. If a grantee’s employment or service is terminated for cause, all of the grantee’s vested and unvested options expire on the date of termination. If a grantee’s employment or service is terminated for any other reason, the grantee may exercise his or her vested options within 90 days after the date of termination. Any expired or unvested options are returned to the pool for reissuance.

The 2015 Plan provides that in the event of a merger or consolidation of our company, or a sale of all, or substantially all, of our shares or assets or other transaction having a similar effect on us, then without the consent of the option holder, our board of directors or its designated committee, as applicable, may but is not required to (i) cause any outstanding award to be assumed or an equivalent award to be substituted by such successor corporation, or (ii) in case the successor corporation refuses to assume or substitute the award (a) provide the grantee with the option to exercise the award as to all or part of the shares or (b) cancel the options against payment in cash in an amount determined by the board of directors or the committee as fair in the circumstances. Notwithstanding the foregoing, our board of directors or its designated committee may upon such event amend or terminate the terms of any award, including conferring the right to purchase any other security or asset that the board of directors shall deem, in good faith, appropriate. In the case of a share split (forward or revenue), share dividend, recapitalization or similar adjustment affecting our outstanding share capital, the exercise price and the number and/or type of shares issuable upon exercise of options under the 2015 Plan shall be adjusted accordingly.

Options granted under the 2015 Plan to U.S. residents may qualify as incentive stock options within the meaning of Section 422 of the Code, or may be non-qualified. The exercise price for “incentive stock options” must not be less than the fair market value on the date on which an option is granted, or 110% of the fair market value if the option holder holds more than 10% of our share capital.

The following table presents certain data for our 2015 Plan as of December 31, 2017.

Plan

Total ordinary
shares reserved
under plan

Shares available
for future grants
under plan

Aggregate
number of
options
exercised

Aggregate
number of
options
outstanding

Weighted average
exercise price of
options
outstanding

2015 Share Incentive Plan

312,054

96,636

⁽¹⁾

109,312

⁽²⁾

11.05

(1)	70,110 ordinary shares are available for future equity award grants and 47,360 ordinary shares are available for future grant of RSUs.

(2)	In addition to the 109,312 shares underlying outstanding options under the 2015 Plan as of December 31, 2017, RSUs with respect to an additional 110,507 ordinary shares will become effective upon the closing of this offering.

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Outstanding Equity Awards at Fiscal Year End

The following table provides information on the current holdings of restricted shares and options by our named executive officers at December 31, 2017.

Option Awards⁽¹⁾										Share Awards
Name	Option Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Shares That Have Not Vested (#)			Market Value of Shares or Units of Shares That Have Not Vested⁽⁵⁾ ($)
Gene Saragnese	1/1/2016	⁽²⁾		38,147		0	$	12.13	12/31/2026		—			—
	—			—		—		—	—		66,316	⁽³⁾	$	1
Michael Rosenberg	1/1/2017	⁽⁴⁾		3,358		11,294	$	12.13	12/31/2027		—			—
	—			—		—		—	—		13,263	⁽³⁾	$	1
Robert Jonathan Mehler	1/1/2017	⁽⁴⁾		3,358		11,294	$	12.13	12/31/2027		—			—
	—			—		—		—	—		13,263	⁽³⁾	$	1

(1)	All of the option awards were granted under the 2015 Plan, the terms of which plan are described above under “— Narrative Disclosure Regarding Summary Compensation Table — 2015 Share Incentive Plan.”

(2)	The shares subject to this option grant vested in 720 equal parts daily over the course of the two-year period following the grant date, and are fully vested as of December 31, 2017.

(3)

The RSUs vest and become available for cash exercise upon the later of the following: one-third when the trading price per ordinary share reaches a multiple of 1.25 of $4.63, one-third when the trading price per ordinary share reaches a multiple of 1.75 of $4.63, and one-third when the trading price per ordinary share reaches a multiple of 2.25 of $4.63 (with the price per share of $4.63 utilized under the RSU vesting terms subject to adjustment depending on the actual number of shares outstanding immediately prior to this offering); and (b) the Commission having declared effective a Resale Prospectus. To the extent they are unvested, these RSUs will fully vest upon a change of control (including an acquisition) of our Company.

(4)	The shares subject to this option grant vest in 48 equal parts monthly over the course of a four-year period, subject to continued service to us, following the grant date, and accordingly, one-quarter of the grant vested as of December 31, 2017.

(5)	There was no market for the ordinary shares at December 31, 2017.

Potential Payments upon Termination or Change-in-Control

Our agreements with our named executive officers provide for certain change in control and severance payments, which require us to make specific payments and benefits in connection with the termination of such named executive officers’ employment under certain circumstances. With respect to Mr. Saragnese, see “– Employment Agreements.”

In the event of a Merger/Sale as those terms are defined in the 2015 Plan, any unvested RSUs and options granted to Messrs. Rosenberg and Mehler will vest upon the consummation of the Merger/Sale. As of December 31, 2017, each of Messrs. Rosenberg and Mehler held 15,787 unvested RSUs and unvested options to purchase 11,294 ordinary shares. In June 2018, each of Messrs. Rosenberg and Mehler was granted options to purchase up to 2,837 ordinary shares, which vest in 48 equal monthly increments over the four years from the date of grant.

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Director Compensation

The following table shows the compensation earned by persons who served on our board of directors during the year ended December 31, 2017, who are not one of our executive officers.

Name		Fees Earned or Paid in Cash ($)				Option Awards ($)				All Other Compensation ($)				Total ($)
Eitan Machover		$	42,000	⁽¹⁾		$	72,780	⁽²⁾		$	—			$	114,780

(1)	Amounts represent payments for consulting services. For more information, see “— Agreements with our Directors” below.

(2)	On March 16, 2017, Mr. Machover was granted options to purchase up to 6,000 ordinary shares, which vest as follows: 1,500 ordinary shares vested on January 1, 2018 and 375 ordinary shares vest at the end of each subsequent three-month period thereafter over the course of the subsequent three years. In June, 2018, Mr. Machover was granted options to purchase up to 2,837 ordinary shares, which vest in 48 equal monthly increments over the four years from the date of grant.

Our board of directors intends to approve compensation for our non-employee directors (including external directors but excluding directors affiliated with a controlling shareholder) for the fiscal year ending December 31, 2018, effective upon the closing of this offering. The following table summarizes the anticipated annual cash compensation to such non-employee directors for the fiscal year ending December 31, 2018:

Cash Compensation

Position		Cash retainer amount*
Member of Board of Directors		$	36,000

*	Board committee chairmen and committee members are not entitled to additional compensation in respect of serving as a chairman or member of such committees, provided that “expert” external directors (as defined in compensation regulations under the Companies Law) may receive increased amounts.

Equity Compensation

For the year ending December 31, 2018 and for each year subsequent thereto, each non-employee director (excluding directors affiliated with a controlling shareholder) will receive, upon election, an equity grant valued at $50,000 as of the grant date (provided that “expert” external directors (as defined in compensation regulations under the Companies Law) may receive increased amounts), which will vest annually in equal amounts, for serving on our board of directors. Following the closing of this offering, the exercise price of these equity grants will be equal to the 10 trading day volume weighted average price of our ordinary shares following the date of grant. These equity awards will be reviewed annually by our compensation committee and are subject to change following such review. On , 2018, our board of directors authorized the grant of options to our non-employee directors (which grant was approved by our shareholders on , 2018) (excluding directors affiliated with a controlling shareholder), pursuant to the terms of the 2015 Plan and subject to compliance with all applicable federal and state securities laws, such that following the closing of this offering, our non-employee directors will have received in the aggregate equity grants equal to the amounts set forth above for the initial election as a member of our board of directors or chairman of our board of directors, as/if applicable. See “— 2015 Share Incentive Plan — 2018 Awards” above.

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Each member of our board of directors will be indemnified for his or her actions associated with being a director to the fullest extent permitted under Israeli law and our articles of association.

In addition, we have entered, and intend to continue to enter, into indemnification agreements with each of our executive officers and directors. These indemnification agreements provide, among other things, the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under Israeli law.

Agreements with our Directors

Eitan Machover. On December 1, 2014, we entered into a consulting agreement with Eitan Machover with respect to his serving as a member of our board of directors and providing certain consulting services to us. Machover’s consulting agreement provides for payments of $3,500 monthly for serving as a member of our board of directors, and for his providing certain consulting services. This agreement will terminate upon the consummation of this offering.

Equity Compensation Plan Information

The table below sets forth certain information as of December 31, 2017 regarding our ordinary shares available for grant or granted under share option plans and other compensation arrangements that (i) were adopted by our shareholders and (ii) were not adopted by our shareholders.

Plan Category

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights

Weighted
average
exercise
price of
outstanding
options,
warrants,
and rights

Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (a))

(a)

(b)

(c)

Equity Compensation plans approved by security holders

109,312

⁽¹⁾

11.05

96,636

⁽²⁾

Equity Compensation plans not approved by security holders

—

(1)	Does not include RSUs, with respect to an additional 110,507 ordinary shares that will become effective on the closing of this offering.

(2)	Includes 47,360 ordinary shares underlying reserved and unallocated RSUs under the 2015 Plan (the number of RSUs remaining available under the 2015 Plan is predicated on an assumed split of 9:1; such number of RSUs may be subject to adjustment prior to the initial public offering depending on the actual stock split ratio implemented).

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Other than compensation agreements and other arrangements which are described as required under “Executive Compensation” and the transactions described below, since January 1, 2016, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed the lesser of $120,000 or the average of our total assets at year-end for the last two completed fiscal years and in which any director, executive officer, holder of 5% or more of any class of our share capital, or any member of their immediate family had or will have a direct or indirect material interest. In accordance with the requirements of the Companies Law, our audit committee (or, in the case of compensatory arrangements, our compensation committee) is responsible for approving all future transactions between us and our officers, directors and principal shareholders and their affiliates, subject to subsequent approval by our board of directors and, in certain cases, our shareholders as well. See “— Management— Approval of Related Party Transactions under Israeli Law— Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions” and “—Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions” above.

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Promissory Note

In December 2014, the Company issued a promissory note, or the 2014 Note, to Netanel Peri, one of the Company’s founders, chief innovation officer (through February 2018) and director (through June 2018), for a total amount of $79,000. The 2014 Note bore annual interest at a rate of 3.23%. During 2016 and 2015, the Company paid a portion of the 2014 Note. In January 2018, the Company repaid in full the balance of the 2014 Note in the amount of $85,000.

Convertible Note Financings and Preferred Shares Financing

Series Seed Preferred Share Financing

In July 2015, we entered into a share purchase agreement with several investors, including Exigent Total Return Master Fund Ltd. and G-TEN Partners LLC, pursuant to which we issued and sold 77,387 Series Seed Preferred Shares for total consideration of $1.25 million (we refer to this as the 2015 Series Seed Financing). In addition, pursuant to the 2015 Series Seed Financing, convertible loans we obtained from certain lenders in an aggregate principal amount of $290,000 were converted into 22,528 Series Seed Preferred Shares.

In January 2016, we entered into joinders to the share purchase agreement for the 2015 Series Seed Financing with certain investors, including Exigent Total Return Master Fund Ltd., pursuant to which we sold an additional 21,666 Series Seed Preferred Shares for an aggregate of $350,000, upon the terms and subject to the same conditions governing the 2015 Series Seed Financing.

All outstanding Series Seed Preferred Shares will convert into an equivalent number of ordinary shares immediately prior to the closing of this offering. After the closing of this offering, no Series Seed preferred shares will remain outstanding.

Convertible Note Financings

In 2016 and 2017, in various closings in each such year, we issued and sold to Exigent Capital, a beneficial owner of more than 5% of our share capital, convertible promissory notes, which we refer to as the Exigent Notes, in an aggregate principal amount of $5.9 million, together with warrants, which we refer to as Exigent Warrants, to purchase shares of the most senior class of shares in the Company being issued in a qualified financing (as defined in the notes issued in such financings and which we refer to as a Exigent Notes Qualified Financing). The Exigent Notes carried payment-in-kind interest at a rate of 12% per annum and were automatically convertible into the shares to be issued in an Exigent Notes Qualified Financing, or the Exigent Notes Qualified Offering Shares, at the lowest price per share for the Exigent Notes Qualified Offering Shares. The Exigent Warrants issued in conjunction with these Notes were convertible into the most senior class of Exigent Notes Qualified Offering Shares at an exercise price per share equal to 110% of the lowest issue price per share for an Exigent Notes Qualified Financing Share and were amended in connection with the 2017 Series Preferred Share Financing discussed below. The Exigent Notes were secured by a first ranking security interest by way of a floating pledge in all of our right, title, and interest in or to any and all assets of our Company. In addition, these Notes were payable upon the occurrence of customary events of default.

Our chairman and chief executive officer, Gene Saragnese, also participated in the foregoing convertible note financings, purchasing from us an Exigent Note in a principal amount of $250,000 and receiving from us the related warrants described above.

Series A Preferred Share Financing

Simultaneously with the December 2017 Financing, existing investors, including Exigent Capital and our chairman and chief executive officer, Gene Saragnese, converted convertible notes, including the Exigent Notes, in an aggregate principal amount and accrued interest of approximately $7.0 million, into Series A Preferred Shares. In connection with that transaction, we amended the terms of the Exigent Warrants and issued additional warrants to the other investors, so there are issued and outstanding warrants to purchase 110,632 Series A Preferred Shares at an exercise price of $31.40. Immediately prior to the consummation of a Qualified Offering, the Series A Preferred Shares will be converted into, and the warrants will be exercised for, our ordinary shares as described elsewhere in this prospectus.

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Indemnification Agreements

We have entered into indemnification agreements with each of our current directors and executive officers. These agreements require us to exculpate and indemnify these individuals to the fullest extent permitted under Israeli law against liabilities that may arise by reason of their service to us and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with our future directors and executive officers.

Mirada Agreements

Mr. Gene Saragnese, our chairman and chief executive officer, is also the chairman of the board of Mirada Medical. Under the Mirada Development Agreement, during the year ended December 31, 2017, we have paid to Mirada Medical an aggregate of approximately $180,000. In addition, under the Mirada Reseller Agreement, we are obligated to pay Mirada Medical royalties upon the sale of products that integrate Mirada Medical’s software.

Review, Approval or Ratification of Transactions with Related Parties

Because we are governed by Israeli law, we utilize the requirements for approval of related party transactions under Israeli law in lieu of a formal written policy as a basis for evaluating and, if appropriate, approving such transactions. Generally, under the Companies Law, any transaction that we enter into with our office holders (which includes both our directors and executive officers), or a transaction in which an office holder has a personal interest (as defined under the Companies Law) requires prior disclosure by the relevant office holder and special approval by the appropriate corporate body or bodies. Such bodies consist of the audit committee or, in the case of a compensatory matter, the compensation committee, followed by the board of directors as a whole (without the participation of an interested director, if applicable) and, in certain cases, the company’s shareholders (with a special, disinterested majority excluding a controlling shareholder required for approval in certain cases). Similar disclosure and approval requirements apply to an extraordinary transaction with a controlling shareholder. The roles of the audit committee and compensation committee in the approval of related party transactions is recorded in the charter for each such committee, which we have adopted effective as of the closing of this offering.

For a description of the required process for review and approval of related party transactions under the Companies Law, please see “— Management— Approval of Related Party Transactions under Israeli Law— Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions” and “—Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions” above in this prospectus.

Under Israeli law, whether or not a related party transaction requires certain approvals generally depends on the nature of the transaction and/or the significance for the company’s profitability, assets and liabilities, rather than an absolute dollar amount size for the transaction, such as $120,000. In certain instances, authority for determining the nature of the transaction and the requisite approval process is vested in the audit committee, as reflected in the audit committee charter.

All of the transactions described above were entered into in accordance with the requisite corporate approvals under the Companies Law, while our company was still a private company and did not yet have board committees. In lieu of special board committee approvals, we have had all related-party transactions (including the transactions described above) reviewed and approved by a majority of the disinterested members of our board of directors, and, where required, by our shareholders. Prior to approving each such transaction, the material facts as to a director’s or officer’s relationship or interest as to the agreement or transaction were disclosed to our board of directors. Our board of directors took this information into account when evaluating the transaction and in determining whether such transaction was fair to us and in the best interest of all of our shareholders.

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PRINCIPAL SHAREHOLDERS

The following table sets forth the beneficial ownership of our ordinary shares as of July 31, 2018 by:

	●	each person, or group of affiliated persons, whom we know to beneficially own more than 5% of our ordinary shares;

	●	each of our named executive officers;

	●	each of our directors; and

	●	all of our executive officers and directors as a group.

The percentage ownership information shown in the column labeled “Percentage of Shares Outstanding” as of July 31, 2018 is based upon 640,856 ordinary shares that are outstanding as of that date, which includes 338,537 ordinary shares that are issuable upon conversion of an equivalent number of outstanding Series Seed Preferred Shares, Series A Preferred Shares and ordinary shares as of that date.

The percentage ownership information shown in the column labeled “After the Offering, as adjusted”—“Percentage of Shares Outstanding” assumes that there is no exercise of the underwriters’ option to purchase additional ordinary shares, and is based upon ordinary shares to be outstanding immediately after the offering, including shares to be outstanding due to the following:

	●	the sale of newly-issued ordinary shares in this offering (which number of shares is based on the price per share set forth on the cover page of this prospectus);

	●	the automatic conversion of approximately $5.8 million in principal amount of the December 2017 Notes and August 2018 Notes, together with all accrued and unpaid interest thereon as of the closing of this offering, into ordinary shares in accordance with the terms of the December 2017 Notes and August 2018 Notes at a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in the qualified offering, based on an assumed initial public offering price of $ ;

	●	the automatic conversion of approximately $1.5 million principal amount of the March 2018 Notes together with all accrued and unpaid interest thereon as of the closing of this offering, into ordinary shares in accordance with the terms of the March 2018 Notes at a conversion price equal to $27.30, subject to adjustment for share splits and other recapitalization events;

	●	the conversion of 338,537 outstanding Series Seed Preferred Shares and Series A Preferred Shares into an equivalent number of ordinary shares under the terms of our existing articles of association, as amended;

	●	the issuance of ordinary shares to Palladium upon the closing of this offering, representing two percent of our outstanding ordinary shares on a fully-diluted basis (excluding 157,867 ordinary shares reserved for issuance in connection with RSUs allocated for our executives) immediately following the closing of this offering (assuming that we issue ordinary shares in this offering, based on the price per share set forth on the cover of this prospectus);

	●	the issuance of 110,632 ordinary shares, which represents the maximum number of ordinary shares issuable upon exercise of outstanding Series A Preferred Shares warrants, at an exercise price of $31.40 per share, and automatic conversion of the underlying Series A Preferred Shares into ordinary shares, which warrants will expire upon the closing of this offering; and

	●	the -for-1 forward share split of our ordinary shares that was effected on 2018.

We have determined beneficial ownership in accordance with the rules of the Commission. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include ordinary shares issuable pursuant to the exercise of share options or warrants or upon conversion of a security that is either exercisable or convertible on or before September 29, 2018, which is 60 days after July 31, 2018. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Except as otherwise noted below, the address for persons listed in the table is c/o MaxQ AI Ltd., 76 Yigal Alon Street, 5^th Floor, Tel Aviv, Israel 6706701.

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As of July 31, 2018

After the Offering,
as adjusted

Name of Beneficial Owner

Number of Shares
Beneficially Owned

Percentage of
Shares
Outstanding

Number of
Shares
Beneficially
Owned

Percentage of
Shares
Outstanding

Directors, Director Nominees and Executive Officers:

Gene Saragnese

72,669

⁽¹⁾

Eitan Machover

11,252

⁽²⁾

Sim Mann

347,683

(3)

Barak Avraham Salomon

Robert Jonathan Mehler

20,130

⁽⁴⁾

Michael Rosenberg

20,130

⁽⁴⁾

Samantha Allison

Scott Snyder

Christopher A. Schnee

⁽⁵⁾

All Executive Officers, Directors and Director Nominees as a Group (11 persons)

472,044

^{(1)(2)(3)(4)(5)}

5% Shareholders

Exigent Capital ⁽⁶⁾

347,683

⁽⁷⁾

South Florida Biotech Ventures, LLC ⁽⁸⁾

⁽⁹⁾

Palladium Capital Advisors, LLC ⁽¹⁰⁾

⁽¹¹⁾

⁽¹²⁾

G-TEN Partners LLC and affiliated entities⁽¹³⁾

60,849

⁽¹⁴⁾

Netanel Peri

96,043

*	denotes less than 1%

(1)	Includes (i) 8,000 ordinary shares issuable upon conversion of Series A preferred shares, (ii) 7,827 unvested restricted ordinary shares, (iii) 4,422 ordinary shares issuable pursuant to the exercise of currently exercisable warrants (and assuming the conversion of any preferred shares issuable under the warrants into ordinary shares), and (iv) 38,147 ordinary shares issuable pursuant to the exercise of share options that will become exercisable within sixty (60) days of July 31, 2018. Excludes 78,933 ordinary shares issuable upon vesting of RSUs that will be granted upon the closing of this offering.

(2)	Comprised of 11,252 ordinary shares issuable pursuant to the exercise of share options that will become exercisable within sixty (60) days of July 31, 2018. Excludes an additional 6,410 ordinary shares underlying options that vest more than 60 days after July 31, 2018.

(3)	Comprised of the ordinary shares beneficially owned by Exigent Capital, as described in footnote (7) below, over which Mr. Mann may be deemed to possess beneficial ownership due to his serving as a general partner and chief strategy officer thereof.

(4)	Includes 6,282 ordinary shares issuable pursuant to the exercise of share options that will become exercisable within sixty (60) days of July 31, 2018. Excludes 15,787 ordinary shares issuable upon vesting of RSUs that will be granted upon the closing of this offering and an additional 11,207 ordinary shares underlying options that vest more than 60 days after July 31, 2018.

(5)	Excludes an additional 9,456 ordinary shares underlying options that vest more than 60 days after July 31, 2018 (besides those ordinary shares underlying options that vest more than 60 days after July 31, 2018 that are identified in footnotes (1), (2) and (4) above.

(6)	The address for Exigent Capital is 5 Wyndham Deedes St., Jerusalem, Israel, 9310633.

(7)	The shareholding of Exigent Capital consists of: (i) 166,315 ordinary shares issuable upon conversion of an equivalent number of Series A Preferred Shares, and up to 85,516 ordinary shares issuable upon exercise of Series A Preferred Warrants (and conversion of underlying Series A Preferred Shares into an equivalent number of ordinary shares), held by Executives Holdings LP, a Delaware limited partnership, or Executives Holdings; (ii) 73,392 ordinary shares, in the aggregate, issuable upon conversion of an equivalent number of Series A Preferred Shares and Series Seed Preferred Shares, and up to 18,925 ordinary shares issuable upon exercise of Series A Preferred Warrants (and conversion of underlying Series A Preferred Shares into an equivalent number of ordinary shares) held by Exigent Total Return Master Fund Ltd., a Cayman Islands limited liability company, or Exigent Total Return; and (iii) 3,715 ordinary shares issuable upon conversion of an equivalent number of Series Seed Preferred Shares held by Lightbulb Partners LP, a Delaware limited partnership, or Lightbulb. The general partner of each of Executives Holdings and Lightbulb is Baxter One LLC, a Delaware limited liability company, or Baxter One. The manager of Exigent Total Return is Exigent Management Ltd., an Israeli company, or Exigent Management. Both Baxter One and Exigent Management are controlled by Eliezer Brender, Eric Davis and Simcha Mann.

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(8)	Mark E. Groussman as the manager has sole voting and dispositive power over the ordinary shares held for the account of this shareholder. The address for South Florida Biotech Ventures, LLC is 445 W. 40th Street Miami Beach, FL 33140.

(9)	Includes ordinary shares issuable upon conversion of the convertible promissory note issued to this shareholder in December 2017 in a principal amount of $4,000,000, plus interest accrued through the closing of this offering, at a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in the qualified offering, based on an assumed initial public offering price of $ , and ordinary shares issuable upon conversion of the convertible promissory note issued to this shareholder in March 2018 in a principal amount of $125,000, plus interest accrued through the closing of this offering, at a conversion price equal to $27.30.

(10)	Joel Padowitz, as the managing member, has voting and dispositive power over the ordinary shares held for the account of this shareholder. The address for Palladium Capital Advisors, LLC is 10 Rockefeller Plaza, Suite 909, New York, NY 10020.

(11)	Comprised of ordinary shares issuable upon conversion of the convertible promissory note issued to this shareholder in December 2017 in a principal amount of $320,000 and of ordinary shares issuable upon conversion of the convertible promissory note issued to this shareholder in August 2018 in a principal amount of $120,000, plus interest accrued through the closing of this offering, at a conversion price equal to the lesser of (i) a share price reflecting a pre-offering valuation of $42.5 million for our company, and (ii) 85% of the public offering price in the qualified offering, based on an assumed initial public offering price of $ .

(12)	Includes ordinary shares, which constitutes two percent of our outstanding ordinary shares on a fully-diluted basis (excluding 157,867 ordinary shares reserved for issuance in connection with RSUs allocated for our executives) immediately following the closing of this offering.

(13)	The address for G-TEN Partners LLC is 1212 Avenue of the Americas, 19th floor, New York, NY, 10036.

(14)	Comprised of 60,849 ordinary shares issuable upon conversion of an equivalent number of Series Seed Preferred Shares.

DESCRIPTION OF SHARE CAPITAL

The following descriptions of share capital and provisions of our amended articles of association are summaries and are qualified by reference to the amended articles of association to be effective upon the closing of this offering. Copies of these documents will be filed with the Commission as exhibits to our registration statement, of which this prospectus forms a part. The description of the ordinary shares reflects changes to our capital structure that will occur prior to the closing of this offering.

Share Capital

Upon the closing of this offering, our authorized share capital will consist solely of ordinary shares, par value NIS 0.01 per share, of which shares will be issued and outstanding (assuming that the underwriters do not exercise their option to purchase additional ordinary shares).

All of our outstanding ordinary shares will be validly issued, fully paid and non-assessable. Our ordinary shares are not redeemable and do not have any preemptive rights.

Registration Number and Purposes of the Company

Our registration number with the Israeli Registrar of Companies is 51-497278-5. Our purpose as set forth in our amended articles of association is to engage in any lawful activity.

Voting Rights

All ordinary shares will have identical voting and other rights in all respects.

Transfer of Shares

Our fully paid ordinary shares are issued in registered form and may be freely transferred under our amended articles of association, unless the transfer is restricted or prohibited by another instrument, applicable law or the rules of a stock exchange on which the shares are listed for trade. The ownership or voting of our ordinary shares by non-residents of Israel is not restricted in any way by our amended articles of association or the laws of the State of Israel, except for ownership by nationals of some countries that are, or have been, in a state of war with Israel.

Election of Directors

Our ordinary shares do not have cumulative voting rights for the election of directors. As a result, the holders of a majority of the voting power represented at a shareholders meeting have the power to elect all of our directors, subject to the special approval requirements for external directors described under “Management — External Directors.”

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Under our amended articles of association, our board of directors must consist of not less than four but no more than 11 directors, including two external directors (to the extent they are required to serve under the Companies Law). Pursuant to our amended articles of association, other than the external directors, for whom special election requirements apply under the Companies Law, the vote required to appoint a director is a simple majority vote of holders of our voting shares, participating and voting at the relevant meeting. All of our directors, other than external directors, are elected annually for one year terms at our annual general shareholder meetings, unless they are removed by a vote of 65% of the voting power of our shareholders at a general or special meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and our amended articles of association. In addition, our amended articles of association allow our board of directors to appoint directors to fill vacancies on the board of directors to serve for a term of office equal to the remaining period of the term of office of the directors(s) whose office(s) have been vacated. External directors are elected for an initial term of three years, may be elected for additional terms of three years each under certain circumstances, and may be removed from office pursuant to the terms of the Companies Law. See “Management — Board Practices — External Directors.”

Dividend and Liquidation Rights

We may declare a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings. Under the Companies Law, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company unless the company’s articles of association provide otherwise. Our amended articles of association do not require shareholder approval of a dividend distribution and provide that dividend distributions may be determined by our board of directors.

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

In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our ordinary shares in proportion to their shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.

Exchange Controls

There are currently no Israeli currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of the shares or interest or other payments to non-residents of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with Israel.

Shareholder Meetings

Under Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year and no later than 15 months after the date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to in our amended articles of association as extraordinary general meetings. Our board of directors may call extraordinary general meetings whenever it sees fit, at such time and place, within or outside of Israel, as it may determine. In addition, the Companies Law provides that our board of directors is required to convene an extraordinary general meeting upon the written request of (i) any two of our directors or one-quarter of the members of our board of directors or (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares and 1% of our outstanding voting power or (b) 5% or more of our outstanding voting power.

Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the board of directors, which may be between four and 40 days prior to the date of the meeting. Furthermore, the Companies Law requires that resolutions regarding the following matters must be passed at a general meeting of our shareholders:

	●	amendments to our articles of association;

	●	appointment or termination of our auditors;

	●	appointment of external directors;

	●	approval of certain related party transactions;

	●	increases or reductions of our authorized share capital;

	●	a merger; 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 required for our proper management.

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The Companies Law and our amended articles of association require that notice of any annual general meeting or extraordinary general meeting be provided to shareholders at least 21 days prior to the meeting and if the agenda of the meeting includes, among other matters, the appointment or removal of directors, the approval of transactions with office holders or interested or related parties, approval of the company’s general manager to serve as the chairman of its board of directors or an approval of a merger, notice must be provided at least 35 days prior to the meeting.

The Companies Law allows one or more of our shareholders holding at least 1% of the voting power of a company to request the inclusion of an additional agenda item for an upcoming shareholders meeting, assuming that it is appropriate for debate and action at a shareholders meeting. Under the Companies Law regulations, such a shareholder request must be submitted within three or, for certain requested agenda items, seven days following our publication of notice of the meeting. If the requested agenda item includes the appointment of director(s), the requesting shareholder must comply with particular procedural and documentary requirements. If our board of directors determines that the requested agenda item is appropriate for consideration by our shareholders, we must publish an updated notice that includes such item within seven days following the deadline for submission of agenda items by our shareholders. The publication of the updated notice of the shareholders meeting does not impact the record date for the meeting. In lieu of this process, we may opt to provide pre-notice of our shareholders meeting at least 21 days prior to publishing official notice of the meeting. In that case, our 1% shareholders are given a 14-day period in which to submit proposed agenda items, after which we must publish notice of the meeting that includes any accepted shareholder proposals.

Under the Companies Law and under our amended articles of association, shareholders are not permitted to take action by way of written consent in lieu of a meeting.

Voting Rights

Quorum requirements

Pursuant to our amended articles of association, holders of our ordinary shares have one vote for each ordinary share held on all matters submitted to a vote before the shareholders at a general meeting. Pursuant to the requirements of the NASDAQ Capital Market, the quorum required for our general meetings of shareholders consists of at least two shareholders present in person, by proxy or written ballot who hold or represent between them at least 33% of the total outstanding voting rights. A meeting adjourned for lack of a quorum is generally adjourned to the same day in the following week at the same time and place or to a later time or date if so specified in the notice of the meeting. At the reconvened meeting, any two or more shareholders present in person or by proxy shall constitute a lawful quorum.

Vote Requirements

Our amended articles of association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required by the Companies Law or by our amended articles of association. Under the Companies Law, each of (i) the approval of an extraordinary transaction with a controlling shareholder and (ii) the terms of employment or other engagement of the controlling shareholder of the company or such controlling shareholder’s relative (even if such terms are not extraordinary) require the approval described above under “Management — Approval of Related Party Transactions under Israeli Law.” Additionally, (i) the approval and extension of a compensation policy and certain deviations therefrom require the approvals described above under “Management — Compensation Policy” (other than to the approval of our compensation policy prior to this offering which policy becomes effective upon the closing of this offering), (ii) the terms of employment or other engagement of the chief executive officer of the company require the approvals described above under “Management — Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions” and (iii) the chairman of a company’s board of directors also serving as its chief executive officer require the approvals described above under “Management— Board Practices— Board of Directors.” Under our amended articles of association, the alteration of the rights, privileges, preferences or obligations of any class of our shares requires a simple majority of the class so affected (or such other percentage of the relevant class that may be set forth in the governing documents relevant to such class), in addition to the ordinary majority vote of all classes of shares voting together as a single class at a shareholder meeting. Our amended articles of association also require that the removal of any director from office (other than our external directors) requires the vote of 65% of the voting power of our shareholders. Another exception to the simple majority vote requirement is a resolution for the voluntary winding up, or an approval of a scheme of arrangement or reorganization, of the company pursuant to Section 350 of the Companies Law, which requires the approval of holders of 75% of the voting rights represented at the meeting, in person or by proxy and voting on the resolution.

Access to Corporate Records

Under the Companies Law, shareholders are provided access to: minutes of our general meetings; our shareholders register and principal shareholders register, articles of association and annual audited financial statements; and any document that we are required by law to file publicly with the Israeli Companies Registrar or the Israel Securities Authority. In addition, shareholders may request to be provided with any document related to an action or transaction requiring shareholder approval under the related party transaction provisions of the Companies Law. We may deny this request if we believe it has not been made in good faith or if such denial is necessary to protect our interest or protect a trade secret or patent.

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Modification of Class Rights

Under the Companies Law and our amended articles of association, the rights attached to any class of share, such as voting, liquidation and dividend rights, may be amended by adoption of a resolution by the holders of a majority of the shares of that class present at a separate class meeting, or otherwise in accordance with the rights attached to such class of shares, as set forth in our amended articles of association.

Registration Rights

For a discussion of registration rights we have granted to certain of our existing shareholders and convertible note holders prior to this offering, please see “Shares Eligible for Future Sale — Registration Rights.”

Acquisitions under Israeli Law

Full Tender Offer. A person wishing to acquire shares of an Israeli public company and who would as a result hold over 90% of the target company’s issued and outstanding share capital is required by the Companies Law to make a tender offer to all of the company’s shareholders for the purchase of all of the issued and outstanding shares of the company. A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of the issued and outstanding share capital of a certain class of shares is required to make a tender offer to all of the shareholders who hold shares of the relevant class for the purchase of all of the issued and outstanding shares of that class. If the shareholders who do not accept the offer hold less than 5% of the issued and outstanding share capital of the company or of the applicable class, and more than half of the shareholders who do not have a personal interest in the offer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the applicable class of shares. The foregoing also applies to the acquisition of voting rights.

Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not, may, within six months from the date of acceptance of the tender offer, petition an Israeli court to determine whether the tender offer was for less than fair value and that the fair value should be paid as determined by the court. However, under certain conditions, the offeror may include in the terms of the tender offer that an offeree who accepted the offer will not be entitled to petition the Israeli court as described above.

If (a) the shareholders who did not respond or accept the tender offer hold at least 5% of the issued and outstanding share capital of the company or of the applicable class or the shareholders who accept the offer constitute less than a majority of the offerees that do not have a personal interest in the acceptance of the tender offer, or (b) the shareholders who did not accept the tender offer hold 2% or more of the issued and outstanding share capital of the company (or of the applicable class), the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company’s issued and outstanding share capital or of the applicable class.

Special Tender Offer. The Companies Law provides that, subject to certain exceptions, an acquisition of shares of an Israeli public company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of 25% or more of the voting rights in the company. This requirement does not apply if there is already another holder of at least 25% of the voting rights in the company. Similarly, the Companies Law provides that, subject to certain exceptions, an acquisition of shares in a public company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of more than 45% of the voting rights in the company, if there is no other shareholder of the company who holds more than 45% of the voting rights in the company.

A special tender offer must be extended to all shareholders of a company. A special tender offer may be consummated only if (i) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by the offeror and (ii) the offer is accepted by a majority of the offerees who notified the company of their position in connection with such offer (excluding the offeror controlling shareholders, holders of 25% or more of the voting rights in the company or anyone on their behalf, or any person having a personal interest in the acceptance of the tender offer). If a special tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser or such controlling person or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender offer.

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Merger. The Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements described under the Companies Law are met, by a majority vote of each party’s shareholders, and, in the case of the target company, also a majority vote of each class of its shares.

For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the votes of shares represented at the shareholders meeting that are held by parties other than the other party to the merger, or by any person (or group of persons acting in concert) who holds (or hold, as the case may be) 25% or more of the voting rights or the right to appoint 25% or more of the directors of the other party, vote against the merger. If, however, the merger involves a merger with a company’s own controlling shareholder or if the controlling shareholder has a personal interest in the merger, then the merger is instead subject to the same Special Majority approval that governs all extraordinary transactions with controlling shareholders (as described under “Management — Approval of Related Party Transactions under Israeli Law — Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions”).

If the transaction would have been approved by the shareholders of a merging company but for the separate approval of each class or the exclusion of the votes of certain shareholders as provided above, a court may still approve the merger upon the petition of holders of at least 25% of the voting rights of a company. For such petition to be granted, the court must find that the merger is fair and reasonable, taking into account the value of the parties to the merger and the consideration offered to the shareholders.

Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of the merging entities, and may further give instructions to secure the rights of creditors.

In addition, a merger may not be consummated unless at least 50 days have passed from the date on which a proposal for approval of the merger is filed by each party with the Israeli Registrar of Companies and at least 30 days have passed from the date on which the merger was approved by the shareholders of each party.

Anti-takeover Measures under Israeli Law

The Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including shares providing certain preferred rights with respect to voting, distributions or other matters and shares having preemptive rights. As of the closing of this offering, no preferred shares will be authorized under our amended articles of association. In the future, if we do authorize, create and issue a specific class of preferred shares, such class of shares, depending on the specific rights that may be attached to it, may have the ability to frustrate or prevent a takeover or otherwise prevent our shareholders from realizing a potential premium over the market value of their ordinary shares. The authorization and designation of a class of preferred shares will require an amendment to our amended articles of association, which requires the prior approval of the holders of a majority of the voting power attaching to our issued and outstanding shares at a general meeting. The convening of the meeting, the shareholders entitled to participate and the majority vote required to be obtained at such a meeting will be subject to the requirements set forth in the Companies Law as described above in “— Voting Rights.”

Borrowing Powers

Pursuant to the Companies Law and our amended articles of association, our board of directors may exercise all powers and take all actions that are not required under law or under our amended articles of association to be exercised or taken by our shareholders, including the power to borrow money for company purposes.

Changes in Capital

Our amended articles of association enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the Companies Law and must be approved by a resolution duly passed by our shareholders at a general meeting by voting on such change in the capital. For example, the declaration and payment of dividends in the absence of sufficient retained earnings or profits requires the approval of both our board of directors and an Israeli court.

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Options

As of July 31, 2018, we had options to purchase 136,405 ordinary shares outstanding pursuant to the 2015 Plan with a weighted average exercise price of $13.39 per share.

Warrants

As of July 31, 2018, we had outstanding warrants to purchase 110,632 Series A Preferred Shares convertible into ordinary shares, with an exercise price per share equal to $31.40, which we issued in connection with certain past preferred share financings, all of which expire immediately prior to the closing of this offering.

As of July 31, 2018, we also had outstanding warrants to purchase 14,899 ordinary shares issuable at an exercise price per share equal to the par value, which we issued to various consultants. These additional warrants will remain outstanding following the closing of this offering.

In addition, as of July 31, 2018, we also had outstanding Bridge Financing Warrants issued as part of the August 2018 Financing to purchase ordinary shares in an amount equal to 100% of the shares issuable to investors upon conversion of the August 2018 Notes and to purchase ordinary shares in an amount equal to 25% of the shares issuable to such investors upon conversion of the December 2017 Notes and the March 2018 Notes, respectively. The Bridge Financing Warrants are exercisable at an exercise price equal to the public offering price in the qualified offering at any time on or after the date which is six months after the consummation of a qualified offering under the Bridge Notes until the 42 month anniversary of the qualified offering, unless terminated earlier in connection with a Fundamental Transaction in which we are not the surviving entity. For purposes of the Bridge Financing Warrants, a Fundamental Transaction includes the following: (i) our company, directly or indirectly, in one or more related transactions effects any merger or consolidation with or into another person or of another person with or into our company so long as the shareholders of our company immediately prior to such merger or consolidation will, immediately after such merger or consolidation, hold less than fifty percent (50%) of the voting power of the surviving or acquiring entity, (ii) we effect any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of our assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer is completed pursuant to which holders of our Ordinary Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and such offer has been accepted by the holders of 50% or more of our outstanding Ordinary Shares, (iv) any reclassification, reorganization or recapitalization of our Ordinary Shares or any compulsory share exchange pursuant to which our Ordinary Shares are effectively converted into or exchanged for other securities, cash or property, or (v) we consummate a stock or share purchase agreement or other business combination with another person or group of persons whereby such other person or group acquires more than 50% of our outstanding Ordinary Shares. In the event of a Fundamental Transaction prior to the six month anniversary of a qualified offering the Bridge Financing Warrants are exercisable at an exercise price equal to the public offering price in the qualified offering.

Bridge Notes

As of July 31, 2018, we had outstanding an aggregate amount of December 2017 Notes, plus accrued and unpaid interest thereon, of approximately $4.4 million. As of July 31, 2018, we had outstanding an aggregate amount of March 2018 Notes, plus accrued and unpaid interest thereon, of approximately $1.5 million. As of August 1, 2018, we had outstanding an aggregate amount of August 2018 Notes, plus accrued and unpaid interest thereon, of approximately $1.4 million.

The Bridge Notes carry interest at a rate of 5% per annum. Interest accrues on the Bridge Notes at the rate of 5% per annum. The Bridge Notes mature on the one year anniversary of the original issuance date of the December 2017 Notes, unless earlier converted into equity or otherwise repaid. The repayment of the Bridge Notes is subject to acceleration upon the occurrence of certain customary events of default described in the Bridge Notes and the related security agreements. Immediately prior to the consummation of a Qualified Offering (as defined in the Bridge Notes), all outstanding principal under the Bridge Notes and unpaid accrued interest thereon will be converted into our ordinary shares, as described elsewhere in this prospectus.

The repayment of the Bridge Notes is subject to acceleration upon the occurrence of certain customary events of default described in the Bridge Notes and the related security agreements. Immediately prior to the consummation of a Qualified Offering (as defined in the Bridge Notes), all outstanding principal under the Bridge Notes and unpaid accrued interest thereon will be converted into our ordinary shares, as described elsewhere in this prospectus.

Listing

We have applied to have our ordinary shares listed on the NASDAQ Capital Market under the symbol “MQAI.”

Transfer Agent and Registrar

Worldwide Stock Transfer, LLC will serve as our transfer agent and registrar. Its address is One University Plaza, Suite 505, Hackensack, NJ 07601, and its telephone number is (201) 820-2008.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our ordinary shares. Future sales of our ordinary shares in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. Although we have applied to have our ordinary shares listed on the NASDAQ Capital Market, we cannot assure you that there will be an active public market for our ordinary shares. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of a substantial number of our ordinary shares in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to raise equity-related capital at a time and price we deem appropriate.

Sales of Restricted Shares

Upon the closing of this offering, ordinary shares will be outstanding, assuming that the underwriters do not exercise their option to purchase additional ordinary shares and that no outstanding options have been exercised. Of these shares, all of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless the shares are held by any of our “affiliates” as such term is defined in Rule 144 under the Securities Act.

of our ordinary shares held by existing shareholders will be deemed “restricted securities” as such term is defined under Rule 144. The restricted securities were issued and sold by us in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act which rules are summarized below.

As a result of the lock-up agreements described below and the provisions of Rule 144 and Rule 701 under the Securities Act approximately of our outstanding ordinary shares will be available for sale in the public market upon the expiration of certain lock-up agreements, beginning six months, ten months or twelve months (as applicable) after the closing of this offering and when permitted under Rule 144 or Rule 701.

These lock-up agreements (some of which contain additional “leak out” periods during which sales are limited following the lock-up periods) are more fully described below under “— Lock-up Agreements” and in the section titled “Underwriting — Lock-up Agreements.”

Rule 144

In general, under Rule 144 as currently in effect, once we have been a reporting company subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act for 90 days, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.

Once we have been a reporting company subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act for 90 days, a person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

	●	one percent of the then-outstanding ordinary shares, which will equal approximately shares immediately after this offering (assuming the underwriters do not exercise their option to purchase additional ordinary shares); and

	●	the average weekly trading volume of our ordinary shares reported through NASDAQ during the four calendar weeks preceding the filing of notice of the sale.

Such sales by affiliates are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.

Rule 701

Employees, directors, officers, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written compensatory agreement in accordance with Rule 701 before the effective date of the registration statement are entitled to sell such shares 90 days after the effective date of the registration statement in reliance on Rule 144 without having to comply with the holding period requirement of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, volume limitation or notice filing provisions of Rule 144. The Securities and Exchange Commission has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act along with the shares acquired upon exercise of such options, including exercises after the date of this prospectus.

However, substantially all Rule 701 shares are subject to lock-up agreements as described below and under the section titled “Underwriting” included elsewhere in this prospectus and will become eligible for sale only upon the expiration of the restrictions set forth in those agreements.

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Lock-up Agreements

Upon the closing of this offering, approximately of our outstanding ordinary shares, including shares that are issuable on exercise or conversion of other securities, will be beneficially owned by certain shareholders and are subject to lock-up agreements, each of which, subject to limited exceptions, restricts transfer of the shareholder’s ordinary shares for certain periods following this offering, in each case without the underwriters’ prior written consent. The length of the restricted periods under these lock-up agreements (which, as described below, sometime include “leak out” periods during which transfers of shares are limited, but not prohibited outright) are as follows:

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six months with respect to ordinary shares held by investors in the Bridge Financings (including ordinary shares issuable upon conversion of the Bridge Notes and the Bridge Financing Warrants, as well as ordinary shares acquired by certain such investors from Exigent Capital), followed by a four-month “leak out” period during which the Bridge Financing investors can only sell up to 5% of those ordinary shares per month of the lock-up (that is, 30% of their holdings, in the aggregate), unless the closing trading price per share of our ordinary shares rises to at least double the price per share at which they are sold in this offering for 30 consecutive trading days, in which case the leak-out restrictions will no longer apply;

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10 months with respect to 328,367 ordinary shares held by Exigent Capital, followed by a two-month “leak out” period during which Exigent Capital can only sell up to 4% of those ordinary shares per month of the lock-up (that is, 40% of its holdings, in the aggregate), unless the closing trading price per share of our ordinary shares rises to at least double the price per share at which they are sold in this offering, in which case the leak-out restrictions will no longer apply; and

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365 days with respect to other holders of our ordinary shares.

Registration Rights

We are currently party to two registration rights agreements, each dated as of December 24, 2014, which we entered into at the time of our December 2017 convertible note financing. These agreements were amended in connection with our March 2018 and/or August 2018 convertible note financings. We describe the terms of each such agreement, as amended, below.

Registration Rights Agreement with Holders of Convertible Notes and Privately-Purchased Shares

We have entered into a registration rights agreement with South Florida Biotech Ventures, LLC, several additional purchasers, and Palladium Capital Advisors LLC, which collectively hold the Bridge Notes and/or ordinary shares purchased from other existing shareholders, including ordinary shares that will be released from escrow upon the closing of this offering. Under the registration rights agreement, we have committed to register, under the Securities Act, the resale, by those holders, of (a) all ordinary shares issuable to them upon the automatic conversion of the $7.2 million principal amount plus accrued interest outstanding under the Bridge Notes upon the closing of this offering, as well as (b) all 107,900 ordinary shares purchased by the holders from other existing shareholders, which shares will be released from escrow upon the closing of this offering (we refer to all such categories of shares collectively as the purchasers’ registrable shares).

As amended in connection with August 2018 Financing, this registration rights agreement requires us to effect that registration via the filing of registration statements from time to time following the closing of this offering (subject to applicable lock-up limitations on the sale of the purchasers’ registrable shares), and to use our commercially reasonable efforts to ensure that such registration statements become effective. We have agreed to pay all fees and expenses related to the filing of such registration statements. We have also agreed to file additional registration statement(s) to register for resale any additional shares issuable with respect to the purchasers’ registrable shares as a result of any share split, share dividend, recapitalization or other similar event. Any such registration statement must remain effective until the earlier of: (i) the date that is two years from the date on which the Bridge Notes are converted into underlying ordinary shares; or (ii) the time at which all remaining purchasers’ registrable shares may be sold pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement for us to be in compliance with the current public information requirement under Rule 144.

Under the registration rights agreement, we are required to pay liquidated damages to the extent that we miss a filing deadline or an effectiveness deadline, or if there is any day following effectiveness on which sales cannot be made (subject to allowable grace periods described below), in each case, for or under a required registration statement. The effectiveness deadline for any required registration statement varies depending on whether there is a review of the registration statement by the Commission. Liquidated damages do not accrue post-effectiveness during allowable grace periods of up to 15 consecutive trading days each, provided that (i) they do not exceed 50 trading days in any 365 day period, and (ii) they do not follow upon the end of the preceding grace period for at least five trading days.

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The amount of liquidated damages that we are required to pay under the circumstances described above equals 1% of the subscription amount paid by any holder of purchasers’ registrable shares in purchasing the Bridge Notes under which those shares were issued, upon each of the following days: (i) the first day on which a filing deadline is missed; (ii) the first day on which the relevant effectiveness deadline for a required registration statement is missed; (iii) the initial day post-effectiveness of a registration statement on which effectiveness lapses (other than during an allowable grace period); (iv) the 30^th day following the date on which a filing deadline is missed, and each 30^th day thereafter, until the filing is made (prorated for partial periods); (v) the 30^th day following the date on which a registration effectiveness deadline is missed, and each 30^th day thereafter, until effectiveness is achieved (prorated for partial periods); and (vi) the 30^thday post-effectiveness during which an effectiveness lapse continues, until the lapse is cured (prorated for partial periods). Liquidated damages are limited, however, to (a) 1% of each holder’s subscription amount, in the aggregate, at any given time, if there are multiple failures occurring simultaneously, and (b) 7% of a holder’s subscription amount, in the aggregate, for all failures under the agreement until the period of time under which our registration obligations expire under the agreement. We are required to pay liquidated damages to each holder who purchased Bridge Notes regardless of whether his, her or its shares were included, or are to be included, in the subject registration statement.

Under this registration rights agreement, we may not file another registration statement prior to the time that is 180 days after the closing of this offering.

Registration Rights Agreement with Certain Existing Shareholders

We are party to a second registration rights agreement (as amended) with certain existing shareholders of our company, consisting of

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Exigent Capital, a significant shareholder of our company that holds together with certain affiliated entities, immediately prior to the closing of this offering, % of our issued and outstanding ordinary shares (assuming conversion of all outstanding preferred shares into an equivalent number of ordinary shares);

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Mr. Gene Saragnese, our chairman and chief executive officer; and

●

Mr. Reuven Raz.

Under this second registration rights agreement, we have provided certain demand, piggyback and Form S-3 registration rights to the shareholders party thereto concerning the ordinary shares that they held, or that were issuable upon conversion or exercise of other securities that they held, as of the date of the agreement, as well as any additional ordinary shares issuable with respect to the foregoing due to a share dividend, share split, reverse share split, recapitalization or other similar event after the date of the agreement. We refer to all of these shares as registrable securities for purposes of our description of this agreement. The registration rights under this agreement remain in effect until the 5th anniversary of the closing of this offering, but expire earlier with respect to any shares (i) upon the sale of such shares either pursuant to the registration rights under the agreement or pursuant to Rule 144 under the Securities Act, or (ii) at the time at which all ordinary shares held by the shareholder may be sold pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement for us to be in compliance with the current public information requirement under Rule 144. We have summarized the registration rights under this agreement immediately below.

Demand Registration Rights

The demand registration rights under the agreement become effective immediately following the closing of this offering (subject to the terms of the lock-up agreement to which the shareholders party to the agreement are subject), provided that the Company will not be obligated to file a registration statement until after 180 days following the closing of this offering regardless of when a demand for registration under this agreement is made. The demand registration rights under this agreement are subject to certain minimums regarding number and value of shares included. In order to meet those minimums, a demand must always be made by shareholders holding at least thirty five percent (35%) of the registrable securities then outstanding. In the case of the first public offering of our company after our initial public offering, the demand must also cover at least 20% of the requesting shareholders’ registrable securities then outstanding or any lesser percentage that yields an anticipated aggregate offering price, net of underwriting discounts and commissions, in excess of $5 million. For a later offering, a demand may cover all or any portion of the requesting shareholders’ registrable securities, regardless of percentage or value. Any registration that is demanded need not be effected by us to the extent that (i) it would not be expected to yield at least $5 million in aggregate proceeds, (ii) it could instead be effected on a Form S-3 (as described below), or (iii) if the preceding registration pursuant to a demand under this agreement was effected within the previous 90 days.

Piggyback Registration Rights

If we propose to register any of our securities under the Securities Act other than (i) certain customary excluded registrations or (ii) a registration to be effected under our other registration rights agreement, holders of registrable securities will be entitled to certain “piggyback” registration rights allowing them to include their shares in such registration, subject to certain marketing and other limitations. The underwriters of any underwritten offering may, subject to specified conditions, limit the number of shares having registration rights to be included in the registration statement. Furthermore, any disposition by any shareholder of registrable securities pursuant to a piggyback registration may not occur until 180 days have elapsed from the completion of this offering (or the elapse of 270 days from the completion of this offering, in the case of Messrs. Saragnese and Raz).

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S-3 Registration Rights

At any time beginning one year after our initial public offering, if we are then eligible to effect a registration on Form S-3, holders of registrable securities will have the right to demand that we register the offer and sale of their shares on a registration statement on Form S-3 or to sell shares via a takedown under such shelf registration, so long as the request covers securities the anticipated aggregate price to the public of at least $3 million, subject to specified exceptions, conditions and limitations. However, we will not be required to effect a takedown under a Form S-3 if we have effected two such takedowns within the 12-month period preceding the date of the request, or have effected a demand registration, a piggyback registration in which no more than 33% of the registrable securities requested for inclusion were excluded, or a previous takedown, in each case within the last ninety (90) days prior to the request.

Registration Statements

As soon as practicable after the completion of this offering, we intend to file a Form S-8 registration statement under the Securities Act to register the issuance of our ordinary shares that are reserved for issuance under our 2015 Plan and agreements. That registration statement will become effective immediately upon filing, and shares covered by that registration statement will thereupon be eligible for sale in the public markets, subject to vesting restrictions, the lock-up agreements described above and Rule 144 limitations applicable to affiliates.

TAXATION

The following is a discussion of the material U.S. and Israeli tax consequences relevant to an investment decision by a U.S. Holder, as defined below, with respect to our ordinary shares. It is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of our ordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

Israeli Tax Consequences

This section contains a discussion of material Israeli tax consequences concerning the ownership and disposition of our ordinary shares purchased by investors in this offering. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of such investors include residents of Israel or traders in securities who are subject to special tax regimes not covered in this discussion. Because parts of this discussion are based on new tax legislation that has not yet been subject to judicial or administrative interpretation, we cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion below is subject to change, including due to amendments under Israeli law or changes to the applicable judicial or administrative interpretations of Israeli law, which change could affect the tax consequences described below.

Taxation of Our Shareholders

Capital Gains Taxes Applicable to Non-Israeli Resident Shareholders. Generally, a non-Israeli resident (whether an individual or a corporation) who derives capital gains from the sale of shares in an Israeli resident company that were purchased after the company was listed for trading on a recognized stock exchange outside of Israel should be exempt from Israeli capital gains tax so long as the shares were not held through a permanent establishment that the non-resident maintains in Israel and that such shareholders are not subject to the Israeli Income Tax Law (Inflationary Adjustments) 5745-1985. However, non-Israeli corporations will not be entitled to the foregoing exemption if Israeli residents: (i) have a controlling interest of more than 25% in such non-Israeli corporation or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly. Such exemption is not applicable to a person whose gains from selling or otherwise disposing of the shares are deemed to be business income.

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Additionally, a sale of shares by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under the Convention Between the Government of the United States of America and the Government of the State of Israel with respect to Taxes on Income, as amended, or the United States-Israel Tax Treaty, the sale, exchange or other disposition of shares by a shareholder who (i) is a U.S. resident (for purposes of the treaty), (ii) holds the shares as a capital asset, and (iii) is entitled to claim the benefits afforded to such person by the treaty, is generally exempt from Israeli capital gains tax. Such exemption will not apply if (i) the capital gain arising from such sale, exchange or disposition can be attributable to a permanent establishment of the shareholder maintained in Israel, under certain terms; (ii) the shareholder holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period preceding such sale, exchange or disposition subject to certain conditions; (iii) such U.S. resident is an individual and was present in Israel for a period or periods aggregating to 183 days or more during the relevant taxable year; (iv) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel; or (v) the capital gain arising from such sale, exchange or disposition is attributed to royalties. In each case, the sale, exchange or disposition of our ordinary shares would be subject to Israeli tax, to the extent applicable; however, under the United States-Israel Tax Treaty, the taxpayer would be permitted to claim a credit for such taxes against the U.S. federal income tax imposed with respect to such sale, exchange or disposition, subject to the limitations under U.S. law applicable to foreign tax credits. The United States-Israel Tax Treaty does not relate to U.S. state or local taxes.

In some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale. Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise, the Israel Tax Authority may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by this authority or obtain a specific exemption from the Israel Tax Authority to confirm their status as non-Israeli resident, and, in the absence of such declarations or exemptions, may require the purchaser of the shares to withhold taxes at source.

In addition, with respect to mergers involving an exchange of shares, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions in which the sellers receive shares in the acquiring entity that are publicly traded on a stock exchange, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of such shares has occurred. In order to benefit from the tax deferral, a pre-ruling from the Israel Tax Authority might be required only with respect to shareholders which cannot demonstrate that they are exempt from tax on their capital gains from such transaction.

Taxation of Non-Israeli Shareholders on Receipt of Dividends. Non-Israeli residents (whether individuals or corporations) are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25%, unless a relief is provided in a treaty between Israel and the shareholder’s country of residence (provided that a certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance). With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30%. A “substantial shareholder” is generally a person who alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means of control” generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. Dividends paid on publicly traded shares, like our ordinary shares, to non-Israeli residents, although subject to the same tax rates applicable to dividends paid for non-publicly traded shares, are generally subject to Israeli withholding tax at a rate of 25%, so long as the shares are registered with a nominee company (whether the recipient is a substantial shareholder or not), unless a lower rate is provided under an applicable tax treaty (provided that a certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance). However, a distribution of dividends to non-Israeli residents is subject to withholding tax at source at a rate of 15% if the dividend is distributed from income attributed to an Approved Enterprise or a Benefited Enterprise (and 20% if the dividend is distributed from income attributed to a Preferred Enterprise) (as such terms are defined under the Law for the Encouragement of Capital Investments, 5719-1959), unless a reduced tax rate is provided under an applicable tax treaty (provided that a certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance). We cannot assure you that we will designate the profits that we may distribute in a way that will reduce shareholders’ tax liability.

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For example, under the United States-Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary shares who is a U.S. resident (for purposes of the United States-Israel Tax Treaty) is 25%. However, for dividends not generated by an Approved Enterprise or a Benefited Enterprise and paid to a U.S. corporation holding 10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, the maximum rate of withholding tax is generally 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. Notwithstanding the foregoing, dividends distributed from income attributed to an Approved Enterprise or a Benefited Enterprise are subject to withholding tax at the rate of 15% for such a United States corporate shareholder, provided that the condition related to our gross income for the previous year (as set forth in the previous sentence) is met.

If the dividend is attributable partly to income derived from an Approved Enterprise, Benefited Enterprise or Preferred Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. U.S. residents who are subject to Israeli withholding tax on a dividend may be entitled to a credit or deduction for Untied States federal income tax purposes in the amount of the taxes withheld, subject to detailed rules contained in U.S. tax legislation.

A non-Israeli resident who receives dividends from which tax was withheld is generally exempt from the obligation to file tax returns in Israel in respect of such income, provided that (i) such income was not derived from a business conducted in Israel by the taxpayer, and (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed.

Excess Tax

Individuals who are subject to tax in Israel are also subject to an additional tax at a rate of 3% on annual income exceeding NIS 640,000 for 2017, which amount is linked to the annual change in the Israeli consumer price index, including, but not limited to, dividends, interest and capital gain.

Estate and Gift Tax

Israeli law presently does not impose estate or gift taxes.

U.S. Federal Income Tax Consequences

The following is a description of the material U.S. federal income tax consequences to U.S. Holders (as defined below) under present law of the acquisition, ownership and disposition of our ordinary shares. This description addresses only the U.S. federal income tax consequences of beneficial ownership of the ordinary shares purchased pursuant to this offering and that are held as capital assets. This description does not address tax considerations applicable to holders that may be subject to special tax rules, including, without limitation:

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banks, financial institutions or insurance companies;

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real estate investment trusts, regulated investment companies or grantor trusts

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dealers or traders in securities, commodities or currencies;

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tax-exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of the U.S. Internal Revenue Code;

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

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persons that received our shares as compensation for the performance of services;

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persons that will hold our shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes;

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partnerships (including entities classified as partnerships for U.S. federal income tax purposes) or other pass-through entities, or holders that will hold our shares through such an entity;

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S corporations;

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holders that acquire ordinary shares as a result of holding or owning our preferred shares;

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U.S. Holders (as defined below) whose “functional currency” is not the U.S. Dollar; and

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holders that own or have owned directly or indirectly or by attribution 10.0% or more of the voting power or value of our shares.

Moreover, this description does not address any U.S. federal tax consequences other than U.S. federal income tax consequences. It does not address the U.S. federal estate, gift or alternative minimum tax consequences, or any state, local or foreign tax consequences, of the acquisition, ownership and disposition of our ordinary shares.

This description is based on the Internal Revenue Code of 1986, as amended, (the “Code”), applicable U.S. Treasury Regulations and judicial and administrative interpretations thereof, in each case as in effect and available on the date hereof, each of which is subject to change (possibly with retroactive effect). Any such change could affect the tax consequences described below. There can be no assurances that the U.S. Internal Revenue Service, (the “IRS”), will not take a different position concerning the tax consequences of the acquisition, ownership and disposition of our ordinary shares or that such a position would not be sustained. Holders should consult their tax advisers concerning the U.S. federal, state, local and foreign tax consequences of purchasing, owning and disposing of our ordinary shares in their particular circumstances.

For purposes of this description, a “U.S. Holder” is a beneficial owner of our ordinary shares that, for U.S. federal income tax purposes, is:

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a citizen or resident of the United States;

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a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia; or

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an estate the income of which is subject to U.S. federal income taxation regardless of its source; or a trust if such trust has validly elected to be treated as a United States person for U.S. federal income tax purposes or if (1) a court within the United States is able to exercise primary supervision over its administration and (2) one or more U.S. persons have the authority to control all of the trust’s substantial decisions. If you are a partner in a partnership, or other entity taxable as a partnership for U.S. federal income tax purposes, that holds ordinary shares, your tax treatment generally will depend on your status and the activities of the partnership. Prospective purchasers that are entities treated as partnerships for U.S. federal income tax purposes should consult their tax advisers concerning the U.S. federal income tax consequences to their partners of the acquisition, ownership and disposition of ordinary shares by the partnership.

Unless otherwise indicated, this discussion assumes that the Company is not, and will not become, a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes. See “—Passive Foreign Investment Company Considerations” below.

You should consult your tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, owning and disposing of our ordinary shares.

Distributions

We do not intend to pay cash dividends in the foreseeable future. However, if any distribution of property is made on our ordinary shares and you are a U.S. Holder, then, subject to the discussion below under “—Passive Foreign Investment Company Considerations,” the gross amount of any distribution made to you with respect to our ordinary shares (before reduction for any Israeli taxes withheld therefrom) will generally be includible in your income as dividend income to the extent such distribution is paid out of our current or accumulated earnings and profits as determined under U.S. federal income tax principles. To the extent such distribution exceeds our current and accumulated earnings and profits as determined under U.S. federal income tax principles, it will be treated first as a tax-free return of your adjusted tax basis in our ordinary shares and thereafter as either long-term or short-term capital gain depending upon whether your holding period for our ordinary shares exceeds one year as of the time such distribution is received. However, we do not expect to maintain calculations of our earnings and profits under U.S. federal income tax principles. Therefore, if you are a U.S. Holder, you should expect that the entire amount of any distribution generally will be reported as ordinary dividend income to you. Non-corporate U.S. Holders may qualify for the lower rates of taxation with respect to dividends on ordinary shares applicable to long-term capital gains (i.e., gains from the sale of capital assets held for more than one year) if certain conditions are met, including certain holding period requirements and the absence of certain risk reduction transactions. Such lower rate of taxation shall not apply if the Company is a PFIC with respect to the U.S. Holder for the taxable year in which it pays a dividend, or was a PFIC for the preceding taxable year. Finally, the dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders.

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If you are a U.S. Holder, dividends paid to you with respect to our ordinary shares will be treated as foreign source income, which may be relevant in calculating your foreign tax credit limitation. Subject to certain conditions and limitations, Israeli tax withheld on dividends may be deducted from your taxable income or credited against your U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends that we distribute generally should constitute “passive category income.” A foreign tax credit for foreign taxes imposed on distributions may be denied if you do not satisfy certain minimum holding period requirements. The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisor to determine whether and to what extent you will be entitled to this credit.

Sale, Exchange or Other Disposition of Ordinary Shares

Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” if you are a U.S. Holder, you generally will recognize gain or loss on the sale, exchange or other taxable disposition of our ordinary shares equal to the difference between the amount realized on such sale, exchange or other taxable disposition and your adjusted tax basis in our ordinary shares, and such gain or loss will generally be capital gain or loss. If any Israeli tax is imposed on the sale, exchange or other taxable disposition of our ordinary shares, a U.S. Holder’s amount realized will include the gross amount of the proceeds of such disposition before deduction of the Israeli tax. The adjusted tax basis in an ordinary share generally will be equal to the cost of such ordinary share. If you are a non-corporate U.S. Holder, capital gain from the sale, exchange or other taxable disposition of our ordinary shares will generally be eligible for a preferential rate of taxation applicable to capital gains if your holding period for such ordinary shares exceeds one year. The deductibility of capital losses for U.S. federal income tax purposes is subject to limitations under the Code.

Any gain or loss that a U.S. Holder recognizes on the sale, exchange or other taxable disposition of our ordinary shares generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes. Because you may use foreign tax credits to offset only the portion of U.S. federal income tax liability that is attributed to foreign source income in the same category, you may be unable to claim a foreign tax credit with respect to Israeli tax, if any, imposed on any such U.S.-source gain.

Passive Foreign Investment Company Considerations

If we were to be classified as a PFIC for any taxable year, a U.S. Holder would be subject to special rules generally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. Holder could derive from investing in a non-U.S. company that does not distribute all of its earnings on a current basis.

In general, a non-U.S. corporation is considered to be a passive foreign investment company for any taxable year if either:

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at least 75% of its gross income is passive income; or

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