Core Viewpoint - XTL Biopharmaceuticals Ltd. has received a notification from Nasdaq indicating that it does not meet the minimum bid price requirement of $1 per share for continued listing [1][2]. Group 1: Nasdaq Notification Details - The notification does not lead to immediate delisting, and the company's American Depositary Shares (ADSs) will continue to trade under the symbol "XTLB" [2]. - XTL has a compliance period of 180 calendar days, until June 22, 2026, to regain compliance by achieving a closing bid price of at least $1 for a minimum of ten consecutive business days [3]. - If compliance is not regained, XTL may qualify for additional time by meeting other listing requirements and may need to consider a reverse stock split [4]. Group 2: Company's Response and Future Plans - The company is currently evaluating options to regain compliance and intends to make reasonable efforts to meet Nasdaq's continued listing requirements [5]. - XTL holds 100% of The Social Proxy Ltd., a web data company, and has sublicensed an IP portfolio for the treatment of Lupus disease [6].

Financial Health and Concerns - Management has expressed substantial doubt about the company's ability to continue as a going concern, which could hinder obtaining new financing [26]. - The company expects to continue incurring losses for the foreseeable future and may never achieve profitability [26]. - The company has incurred significant losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern [31]. - The company reported a net cash used in operating activities of $1,618 thousand for the year ended December 31, 2024, indicating a need for significant additional financing to continue operations [101]. - The company may face challenges in raising capital if political and military instability in Israel continues or escalates [126]. Market and Competitive Landscape - The data collection and proxy services markets are rapidly evolving, and if the industry does not develop as anticipated, sales growth may be slower than expected [26]. - The company faces intense competition from larger data collection service providers, which may impact its market position [27]. - The company operates in a rapidly evolving industry with intense competition from established players, making revenue growth uncertain [38]. - The company's success depends on acquiring new customers and retaining existing ones, which is challenged by fierce competition [52][53]. - Any slowdown in AI adoption or budget constraints in data-intensive industries could reduce demand for the company's services [55]. Regulatory and Compliance Risks - There is increasing regulatory scrutiny of web data collection, which could adversely affect the company's business and financial results [39]. - Compliance with evolving regulations may require significant investments, increasing operational complexity and costs [42]. - The company is subject to U.S. and Israeli export control and economic sanctions laws, which could impair its ability to compete in international markets and adversely affect its business [87]. - The unpredictability of the cyber insurance market may result in coverage limitations and increased premiums, impacting the company's ability to manage risk effectively [79]. Operational and Strategic Initiatives - The company is engaged in ongoing development of current and future products, with plans to introduce improved and new products as working capital allows [27]. - The company is engaged in ongoing research and development efforts, but there is no assurance that these will result in successful products or significant revenue [49]. - The company is focusing on the development of hCDR1, a potential treatment for systemic lupus erythematosus and Sjogren's syndrome, under a license from Yeda Research and Development Company Ltd. [152]. - The company aims to enhance scalability, efficiency, and market reach through strategic acquisitions and operational excellence [182]. - The company is investing in R&D to maintain leadership in the proxy, AI data extraction, and business intelligence markets [184]. Acquisition and Integration - The company has acquired The Social Proxy in 2024, which may dilute existing equity and require significant cash resources [71]. - The acquisition of The Social Proxy involved issuing 1,864,790 unregistered American Depositary Shares and 2,896,142 warrants, resulting in previous shareholders owning approximately 20% of the current issued share capital [74]. - The company completed the acquisition of The Social Proxy in August 2024 for a total consideration of approximately $430,000 and 5,292,153 unregistered ADSs, representing 44.6% of the issued and outstanding share capital of the company [149]. - The company is in the process of integrating The Social Proxy into its internal controls over financial reporting, which will be included in the evaluation for the year ended December 31, 2025 [142]. Cybersecurity and Operational Risks - The company is increasingly vulnerable to cybersecurity threats, which could adversely affect its operations and reputation [75]. - The company has implemented information security measures, but cannot guarantee their effectiveness against evolving cyber threats [77]. - The company relies on third-party vendors for data collection and proxy network services, which introduces additional risks related to security breaches and regulatory compliance [80]. - The company is dependent on third-party ISPs and proxy network providers, which poses risks if agreements are terminated or services are restricted [59]. Political and Economic Risks - The company’s offices are located in Israel, which may expose it to political, economic, and military instability risks [26]. - The company is currently facing economic uncertainty and capital market disruptions due to geopolitical instability, particularly the ongoing military conflict between Russia and Ukraine, which could materially affect its financial condition and results [81]. - Political instability in Israel, including recent elections and judicial changes, may adversely affect the company's operations and financial condition [132]. Shareholder and Market Dynamics - The concentration of ownership among principal stockholders, particularly Mr. Alexander Rabinovitch holding approximately 29.99% of ordinary shares, may prevent new investors from influencing significant corporate decisions [106]. - Future issuances or sales of ADSs could depress the market for the company's shares, making it more difficult to raise funds through equity sales [105]. - The trading volume of the company's American Depositary Shares (ADSs) has historically been low, which may limit shareholders' ability to sell their shares at a desirable price [102]. - The company's stock price is likely to be highly volatile, influenced by various factors including technological innovations, market conditions, and geopolitical instabilities [103]. Technology and Innovation - The Social Proxy's proprietary technology offers unlimited Internet Protocol addresses, enhancing data collection workflows significantly compared to traditional solutions [160]. - The demand for ethical and compliant proxy solutions is increasing due to complex privacy regulations like GDPR and CCPA, emphasizing the need for transparency and cybersecurity resilience [158]. - The Social Proxy's services are designed to ensure data accuracy and compliance with relevant laws, addressing the growing need for ethical data collection practices [168]. - The company believes its proprietary technologies and commitment to ethical data collection position it favorably against competitors like Bright Data and Oxylabs [177]. - The company aims to strengthen its market share by continuously enhancing its infrastructure and developing innovative AI-driven data extraction solutions [177].

Company Overview - XTL Biopharmaceuticals Ltd. has appointed Noam Band as the new Chief Executive Officer, with Shlomo Shalev continuing as Chairman of the Board [2][4] - The company holds 100% of The Social Proxy Ltd., a web data company, and has sublicensed an IP portfolio related to hCDR1 for Lupus treatment [5] Leadership Experience - Noam Band has extensive managerial experience, having served as CEO of Gix Internet Ltd. and Dotomi, and as a board advisor to 7digital Group plc [3] - His background includes expertise in strategic business development, market expansion, and operational leadership, which is expected to benefit XTL's growth and innovation [4] Strategic Direction - The Board of Directors expresses confidence in Band's leadership to drive XTL towards new opportunities and continued success, emphasizing a commitment to innovation and operational excellence [4]

Collaboration and Partnerships - XTL Biopharmaceuticals Ltd. is exploring collaboration with strategic partners for clinical trials related to hCDR1 for the treatment of Lupus disease (SLE) and Sjögren's Syndrome (SS) [4] Intellectual Property and Asset Expansion - The company is actively seeking to expand its IP portfolio by identifying additional assets [4] Financial Activities - A private placement of US$1.5 million has been approved, conditional upon the acquisition of The Social Proxy Ltd. [7]

Financial Position and Capital Requirements - As of December 31, 2023, the company had approximately $1,401 thousand in cash and cash equivalents and working capital of approximately $1,840 thousand[33]. - The accumulated deficit stood at approximately $158,246 thousand, indicating substantial operating losses since inception[33]. - The company expects to continue incurring losses in drug development activities for the foreseeable future and may never achieve profitability[30]. - Future capital requirements will depend on various factors, including the need for additional financing to support clinical trials and product development[35]. - The company estimates that existing cash balances will finance activities for at least 12 months from the report date, but additional financing will be necessary for ongoing clinical trials[33]. - The company may seek additional capital through private and public equity offerings, debt financings, and strategic partnerships, which could dilute existing shareholders[36]. - If the company fails to raise additional capital under acceptable terms, it may have to reduce development activities or sell rights to its technologies[33]. - The company reported a net cash used in operating activities of $707 thousand for the year ended December 31, 2023, indicating a need for significant additional financing[98]. - The company may not be able to continue operations if additional capital is not available, which could lead to a complete discontinuation of operations[98]. Regulatory and Clinical Trial Risks - The company faces risks related to the success of clinical trials and regulatory approvals, which are critical for product commercialization[31]. - Clinical trials are subject to delays due to factors such as patient recruitment rates and regulatory requirements[41]. - Regulatory approvals are necessary for the commercialization of products, and failure to obtain them could severely impact the company's business strategy[42]. - The company may incur additional costs and delays if clinical trials do not meet regulatory requirements or if negative results are obtained[46]. - The regulatory approval process for drug candidates is lengthy and expensive, requiring extensive pre-clinical and clinical data submissions to the FDA[210]. - The FDA requires a comprehensive NDA submission that includes pre-clinical and clinical data, manufacturing specifications, and proposed labeling for product approval[216]. - Unacceptable toxicity or side effects during trials can lead to interruptions or termination of drug development[215]. - The duration of clinical trials can vary significantly, and delays may arise from slow patient enrollment, inadequate site personnel, or adverse medical events[215]. Market and Competitive Landscape - Market acceptance of the company's products is uncertain and will depend on factors such as safety, efficacy, and competitive advantages over existing treatments[58]. - The pharmaceutical industry is highly competitive, with competitors potentially developing products that are less expensive, more effective, or safer, which could harm revenues and commercial opportunities[64]. - The company is aware of competitive clinical trials that may affect patient enrollment in its studies[41]. Operational and Management Challenges - As of April 30, 2024, the company has no employees and only four part-time service providers, which may impair performance and technological capabilities[66]. - The Chief Financial Officer devotes approximately 6 hours a week to the company's operations, which may impact timely completion of financial statements[67]. - The company has identified a material weakness in internal control over financial reporting related to the improper classification of warrants as equity instead of non-current liabilities[141]. - The company may face substantial litigation costs related to intellectual property claims, which could divert management's attention from business operations[94]. Intellectual Property and Licensing - The company actively files patent applications but faces uncertainty regarding the breadth and enforceability of these patents, which could affect competitive advantage[90]. - The company relies on third-party licenses for drug candidates, and failure to meet obligations could result in termination of these agreements, adversely affecting business[84]. - The company has not yet met the second milestone under the license agreement with Yeda, which may lead to termination of the agreement[87]. - The company is responsible for a total patent expense reimbursement to Yeda of $382,989, with the first two installments paid in shares valued at approximately $38,000 and $84,000 respectively[191]. Geopolitical and Economic Factors - The company’s operations may be adversely affected by political, economic, and military instability in Israel and the Middle East[30]. - The company is currently operating in a period of economic uncertainty due to geopolitical instability, which may adversely affect financial condition and results of operations[79]. - Political instability in Israel, including the potential for escalated conflicts, may adversely affect the company's business conditions and financial results[125]. - The company holds most of its cash in U.S. dollars, exposing it to risks from currency fluctuations against the New Israeli Shekel (NIS) and inflation in Israel[131]. Future Plans and Developments - The drug candidate hCDR1 is Phase II-ready for the treatment of systemic lupus erythematosus (SLE), with an estimated 1.5 million Americans affected by the disease[150][166]. - The company plans to reduce research and development expenditures for hCDR1 until full funding or strategic partnerships are secured[151][157]. - The company has entered into a binding term sheet to acquire The Social Proxy, which will represent 44.6% of the issued and outstanding share capital post-transaction[160]. - The company is exploring the expansion of its intellectual property portfolio surrounding hCDR1 while seeking additional assets for its portfolio[155][157]. - The company plans to consider a small Phase 2 clinical trial for hCDR1 in pSS, subject to adequate financing or collaboration[181].

Financial Position and Capital Requirements - As of December 31, 2022, the company had approximately $2,094 thousand in cash and cash equivalents and working capital of approximately $3,619 thousand[36]. - The accumulated deficit was approximately $156,467 thousand, indicating substantial operating losses since inception[36]. - The company expects to continue incurring losses in the foreseeable future due to ongoing drug development activities[33]. - Future capital requirements will depend on various factors, including the success of clinical trials and regulatory approvals[38]. - The company estimates that its current cash and cash equivalents will finance activities for at least 12 months from the report date[36]. - Additional financing will be necessary to continue product development and commercialization efforts[35]. - The company may need to raise additional capital through public or private equity or debt financings[37]. - If the company fails to raise additional capital, it may have to reduce development activities or sell technologies[36]. - The net cash used in operating activities for the year ended December 31, 2022, was $901 thousand, indicating a need for significant additional financing to continue operations[98]. Product Development and Commercialization Risks - The company has not yet commercialized any products or technologies, which poses a risk to achieving profitability[29]. - The company faces risks related to the timing and costs of clinical trials and regulatory approvals, which could impact its business strategy[28]. - The company is currently not seeking regulatory approval for any drug candidates, including hCDR1, and will need to conduct significant additional research and human testing[44]. - The company faces risks related to the completion of clinical trials, including potential delays in patient enrollment and the need for additional clinical data[43][48]. - The company relies on third-party manufacturers for the production of drug candidates and may face challenges if these manufacturers do not meet quality or delivery standards[61][62]. - The company anticipates that market acceptance of its products will depend on their demonstrated advantages over existing therapies, which is uncertain[60]. - The company faces significant competition from larger pharmaceutical and biotechnology firms, which may hinder its ability to develop and market products effectively[67]. - The company has licensed all its drug candidates and technologies, and failure to meet obligations under these agreements could result in loss of rights[83]. - The company is seeking a strategic partner for Phase 2 of its drug development, and failure to secure this could lead to termination of its license agreement[86]. Regulatory and Compliance Challenges - The company is subject to ongoing regulatory scrutiny, and any changes in regulations could impact its ability to market products[50][64]. - The company must establish and maintain strategic partnerships for drug development and marketing, which may not always be successful[58]. - The company may incur significant costs related to clinical trials, regulatory approvals, and commercialization activities[39]. - The company must maintain stockholders' equity of at least $2.5 million and a market value of listed securities of $35 million to comply with Nasdaq listing requirements[115]. - If the company fails to comply with Nasdaq's continued listing standards, it risks delisting, which could impair its ability to raise capital and depress the price of its ADSs[116]. Shareholder and Market Considerations - Approximately 23.54% of the company's ordinary shares are beneficially held by one shareholder, which may significantly influence corporate decisions[103]. - The trading price of the ADSs is likely to be highly volatile, influenced by factors such as developments concerning drug candidates and market conditions[100]. - Future issuances of a substantial number of ADSs could depress the market price of the ordinary shares or ADSs, making it difficult to raise funds through equity sales[102]. - The company has never declared or paid any cash dividends on its ordinary stock and does not anticipate doing so in the foreseeable future[111]. - The ADS holders do not have the same rights as shareholders, including voting rights and rights to receive dividends directly[110]. - The concentration of ownership may depress the market price of the ordinary shares or ADSs, limiting new investors' influence over corporate decisions[103]. Operational and Economic Risks - The company is significantly affected by political, economic, and military conditions in Israel, which may harm operations and results[119]. - The company holds most cash and equivalents in U.S. dollars, while a significant portion of expenses is in New Israeli Shekels (NIS), exposing it to currency fluctuation risks[122]. - The company is monitoring the impact of the COVID-19 pandemic, which has not materially affected operations or financial results to date[68]. - The ongoing military conflict between Russia and Ukraine has created economic uncertainty and could adversely affect the company's financial condition and results[78]. - The company is subject to economic boycotts and restrictive laws from several countries, which may adversely impact operating results and business expansion[121]. - The company may face challenges in enforcing non-competition agreements with employees, potentially allowing competitors to benefit from former employees' expertise[128]. - The company is exposed to inflation risks in Israel, which could exceed the rate of devaluation of the NIS against the U.S. dollar, affecting financial results[122]. Legal and Tax Considerations - The company has identified a material weakness in internal control over financial reporting related to the classification of warrants, which could impact financial statement accuracy[132]. - Israeli law may delay or impede mergers and acquisitions, requiring specific approvals and timeframes that could hinder potential beneficial transactions[123]. - The company may encounter difficulties in enforcing U.S. judgments or securities law claims in Israel, complicating legal recourse[126]. - The Israeli tax law may make potential transactions less appealing, as it does not recognize tax-free share exchanges to the same extent as U.S. tax law[124]. Management and Operational Structure - The company has no employees as of March 22, 2023, relying on four part-time service providers for operations[70]. - The Chief Financial Officer devotes approximately 6 hours a week to the company's operations, which may impact timely completion of financial statements[71]. - The company may pursue acquisitions or in-licensing transactions that could dilute equity or require significant cash, posing operational risks[72]. - The company has developed new controls to address previously identified material weaknesses, involving key management and legal counsel to ensure proper financial reporting[132].

Financial Performance - The company reported a total profit of $221,000 for the six months ended June 30, 2022, compared to a loss of $865,000 for the same period in 2021, indicating a significant turnaround[10] - The company recorded finance income of $672,000 for the six months ended June 30, 2022, compared to finance expenses of $(330,000) for the same period in 2021, indicating a positive shift in financial performance[10] - The basic and diluted earnings per share improved from $(0.002) in the six months ended June 30, 2021, to $0.000 in the same period of 2022[10] - The company recognized a loss of $1,289 thousand in finance income (expense), net, during the six months ended June 30, 2021[35] - The company disposed of warrants resulting in a loss of $512 thousand during the six months ended June 30, 2021[35] Assets and Liabilities - Total assets decreased from $6,618,000 as of December 31, 2021, to $5,757,000 as of June 30, 2022, representing a decline of approximately 13%[6] - Cash and cash equivalents decreased from $2,969,000 at the beginning of the period to $2,346,000 at the end of the period, a reduction of about 21%[16] - Marketable securities decreased from $3,158,000 as of December 31, 2021, to $2,810,000 as of June 30, 2022, a decline of approximately 11%[28] - The warrant liability decreased significantly from $1,054,000 as of December 31, 2021, to $22,000 as of June 30, 2022, a reduction of approximately 98%[6] - The balance of warrant liability increased from $2,637 thousand at the beginning of 2021 to $3,414 thousand by June 30, 2021, before decreasing to $22 thousand by June 30, 2022[35] Equity and Deficit - The company’s accumulated deficit improved slightly from $(155,133,000) as of December 31, 2021, to $(154,903,000) as of June 30, 2022[6] - Total equity attributable to equity holders of the company increased from $5,333,000 as of December 31, 2021, to $5,563,000 as of June 30, 2022, an increase of about 4%[6] Research and Development - Research and development expenses increased to $21,000 for the six months ended June 30, 2022, from $18,000 in the same period of 2021, reflecting a growth of approximately 17%[10] Warrants - As of June 30, 2022, the company had outstanding warrants totaling 1,797,500, which could potentially convert into 179,750,000 shares[32] - The company recorded finance income of $1,032 thousand and $495 thousand for the six and three months ended June 30, 2022, respectively, related to warrant liability revaluation[33] - A total of 60,000,000 warrants from the February 23, 2017 round expired on August 23, 2022[36] - The company expects the life of the warrants to be based on their expiration dates[34] - The expected volatility for the warrants was calculated based on actual historical share price movements over the contractual term[34] Dividends - The company has not paid dividends in the past and does not expect to pay dividends in the future[34]

Financial Position - As of December 31, 2021, the company had approximately $2,969 thousand in cash and cash equivalents, working capital of approximately $6,006 thousand, and an accumulated deficit of approximately $155,133 thousand[36]. - The company estimates that its outstanding cash and cash equivalent balances will allow it to finance its activities for at least 12 months from the date of the report[36]. - The net cash used in operating activities for the year ended December 31, 2021, was $1,049 thousand, indicating a need for significant additional financing[99]. - The company is required to maintain stockholders' equity of at least $2.5 million and a market value of listed securities of $35 million to comply with Nasdaq listing standards[116]. - Future issuances of a substantial number of ADSs could depress the market price of the ordinary shares or ADSs, making it more difficult to raise funds through equity sales[103]. - The company has never declared or paid any cash dividends on its ordinary stock and does not anticipate paying any cash dividends in the foreseeable future[112]. Operating Losses and Financing Needs - The company expects to continue incurring operating losses for the foreseeable future due to ongoing drug development activities[33]. - The company will require substantial additional financing to achieve its goals, and failure to obtain necessary capital could delay or terminate product development efforts[35]. - The company may need to raise additional financing by issuing securities to continue its clinical trials aimed at obtaining marketing approval for its products[36]. - The company may seek additional capital due to favorable market conditions or strategic considerations even if it believes it has sufficient funds for current operations[37]. - The company may seek additional capital through various means, which could dilute existing shareholders' interests[39]. Clinical Trials and Product Development - The company has not yet commercialized any products or technologies and may never achieve profitability[29]. - The company is currently developing the hCDR1 product candidate, which is planned for advanced clinical studies[59]. - The company faces risks related to the success of its clinical trials, which are uncertain and could adversely affect its business strategy[30]. - The company faces risks related to the completion of clinical trials, including potential delays in patient enrollment and site engagement[43]. - The company has limited experience in conducting clinical trials necessary for obtaining regulatory approvals[44]. - The company must demonstrate safety and efficacy in humans to obtain FDA approval, which requires significant additional research and testing[44]. - The company anticipates significant operating and capital expenditures for the foreseeable future related to research and development, clinical trials, and regulatory approvals[37]. - The company is at risk of incurring additional costs and delays if clinical trials do not yield positive results or if regulatory approvals are not obtained[51]. Third-Party Reliance and Risks - The company relies on third parties for clinical trials and manufacturing, and any failure in these areas could harm its business[31]. - The company relies on third-party manufacturers for the production of drug candidates, which poses risks if these manufacturers fail to deliver on time or meet quality standards[65]. - The company is subject to risks related to third-party manufacturers' compliance with regulations, which could impact product commercialization[69]. - The company relies on licensed drug candidates and technologies, and failure to meet obligations could result in loss of rights[89]. Market and Competitive Environment - The company faces competition from pharmaceutical and biotechnology companies with greater capital resources and experience in drug development[71]. - The company anticipates that market acceptance of its products will depend on factors such as safety, efficacy, and cost-effectiveness compared to existing treatments[63]. - The company may face challenges in establishing strategic partnerships and licensing arrangements, which are crucial for commercialization[61]. Legal and Regulatory Risks - The company may incur substantial costs and management distraction if securities class-action litigation is instituted against it following periods of market volatility[102]. - Political, economic, and military conditions in Israel may adversely affect the company's operations and results, particularly due to the ongoing hostilities and threats in the region[120]. - The company may encounter difficulties in enforcing U.S. judgments or securities law claims in Israel, complicating legal recourse[127]. - Tax considerations under Israeli law may make certain transactions less appealing, impacting shareholder interests and potential mergers[125]. - Israeli law may delay or impede potential mergers or acquisitions, requiring specific approvals and timeframes that could hinder strategic transactions[124]. Currency and Economic Risks - The company holds most of its cash and equivalents in U.S. dollars, while a significant portion of its expenses is in New Israeli Shekels (NIS), exposing it to currency fluctuation risks[123]. - Inflation and currency devaluation risks in Israel could adversely affect the company's financial results, especially if inflation exceeds the rate of currency devaluation[123]. - The ongoing military conflict between Russia and Ukraine has led to significant volatility in global markets, which may adversely affect the company's financial condition[84]. - The company is subject to economic boycotts and restrictive laws from several countries, which may adversely impact its operating results and business expansion[122]. Shareholder and Market Considerations - The concentration of ownership among two principal shareholders, Mr. Alexander Rabinovitch and Mr. David Bassa, who hold approximately 25.79% of the ordinary shares, may significantly influence corporate decisions[104]. - The trading volume of the company's ADSs has historically been low, limiting the ability to sell at desirable prices[100]. - The trading price of the ADSs is likely to be highly volatile, influenced by various factors including drug candidate developments and market conditions[101]. - If the company fails to maintain compliance with Nasdaq's continued listing standards, it may face delisting, which could impair capital-raising efforts and reduce liquidity[117]. - Delisting of the ADSs could result in them being classified as "penny stocks," leading to reduced trading activity and attractiveness to investors[118]. - The effective trading prices of the company's securities may differ on Nasdaq and TASE due to different currencies and trading times[105].

Financial Performance - Total comprehensive loss for the year was $782,000, compared to a loss of $1,347,000 in 2019, representing a 42% improvement[25] - Research and development expenses were $38,000 in 2020, slightly increasing from $35,000 in 2019[25] - General and administrative expenses rose to $910,000 in 2020, up from $807,000 in 2019, indicating a 12.7% increase[25] - The company reported a net cash used in operating activities of $850 thousand for the year ended December 31, 2020, indicating a need for significant additional financing to continue operations[95] Cash and Assets - Cash, cash equivalents, and short-term bank deposits decreased to $3,631,000 in 2020 from $4,455,000 in 2019, a decline of 18.5%[26] - Total assets decreased to $6,503,000 in 2020 from $7,212,000 in 2019, reflecting a 9.8% reduction[26] - Total shareholders' equity was $6,249,000 in 2020, down from $6,980,000 in 2019, a decrease of 10.5%[26] - As of December 31, 2020, the company had approximately $3,631 thousand in cash and cash equivalents, with an accumulated deficit of approximately $154,661 thousand[36] - The company estimates that its existing cash and cash equivalents will finance activities for at least 12 months from the report date[36] Future Profitability and Losses - The company has incurred substantial operating losses since inception and expects to continue incurring losses in the future[31] - The company expects to continue incurring losses for the foreseeable future, with no assurance of achieving profitability[34] - The company has not yet commercialized any products or technologies and may never become profitable[31] - The company has not yet commercialized any products and may never achieve profitability[42] Clinical Trials and Regulatory Risks - The company faces risks related to the successful completion of clinical trials for its drug candidates, which could adversely affect its business strategy[32] - Clinical trials are subject to rigorous regulatory requirements, and delays in these trials could adversely affect the company's business strategy[44] - The company faces risks related to obtaining regulatory approvals, which are critical for the commercialization of its products[46] - The company relies on third parties for clinical trials, and any failure of these parties to perform could delay or prevent product development[53] Manufacturing and Development Risks - The company does not currently have the ability to manufacture its drug candidates and relies on third-party manufacturers, which poses risks if they fail to deliver on time or meet quality standards[63] - The company relies on third-party manufacturers for drug candidates and technologies, which may lead to delays or termination of development programs if agreements are not successfully established or maintained[59] - Significant operating and capital expenditures are anticipated for product development, including research, manufacturing, and clinical trials[37] Market and Competitive Risks - Market acceptance of the company's drug candidates is uncertain and depends on factors such as safety, efficacy, and cost-effectiveness compared to existing treatments[60] - The pharmaceutical industry is highly competitive, and the company faces risks if competitors develop more effective or cheaper products[68] Financing and Shareholder Considerations - The company may require additional financing through public or private equity, debt financings, or strategic partnerships to support its development activities[39] - Approximately 31.83% of the company's ordinary shares are beneficially held by two principal stockholders, potentially limiting new investors' influence on corporate decisions[100] - The company must maintain stockholders' equity of at least $2.5 million and a market value of listed securities of $35 million to comply with Nasdaq listing requirements[113] - Future issuances of ADSs could depress the market price of the company's ordinary shares or ADSs, affecting the ability to raise funds[99] Legal and Intellectual Property Risks - Legal actions related to intellectual property infringement could divert management's attention and resources, impacting business operations[91] - The company has licensed all its drug candidates and technologies from third parties, and failure to meet obligations could result in loss of rights to these candidates[85] - The company actively files patent applications but faces uncertainty regarding the enforceability and breadth of these patents, which may affect competitive advantage[87] - Trade secrets are difficult to protect, and the company relies on confidentiality agreements, which may not be sufficient to safeguard proprietary information[90] Operational and External Risks - The company has no employees and relies on part-time service providers, which may affect its ability to attract and retain skilled personnel necessary for drug development[73] - Political, economic, and military conditions in Israel may adversely affect the company's operations, as key facilities and personnel are located there[118] - The company is exposed to risks from inflation and foreign currency fluctuations, particularly as a significant portion of expenses are in New Israeli Shekels (NIS) while cash reserves are held in U.S. dollars[122] - Israeli corporate law may impede potential mergers or acquisitions, requiring lengthy approval processes and specific conditions to be met[123] - Tax considerations under Israeli law may deter potential transactions, as tax-free share exchanges are not recognized to the same extent as in U.S. law[124] - Enforcement of non-competition agreements may be difficult, potentially allowing competitors to benefit from the expertise of former employees[128] - Employees may claim compensation for inventions made during their employment, which could impact future revenue and profitability[129] Dividend and Stock Considerations - The company has never declared or paid any cash dividends on its ordinary stock and does not anticipate doing so in the foreseeable future[109] - The trading volume of the company's ADSs has historically been low, which may hinder shareholders' ability to sell at desirable prices[96] - Delisting could result in the company's ADSs being classified as "penny stocks," leading to reduced trading activity and making it less attractive to institutional investors[116] - The company may face delisting from Nasdaq if it fails to maintain compliance with continued listing standards, which could severely limit liquidity and adversely affect capital raising efforts[114] - The company may be classified as a passive foreign investment company (PFIC), which could impose special federal income tax rules on U.S. holders of its shares[102]

Financial Performance - For the year ended December 31, 2019, the total comprehensive loss was $1,347 thousand, compared to a comprehensive income of $2,986 thousand in 2018[23]. - Research and development expenses for 2019 were $35 thousand, a decrease from $38 thousand in 2018[23]. - Cash, cash equivalents, and short-term bank deposits as of December 31, 2019, were $4,455 thousand, down from $5,275 thousand in 2018[25]. - Total assets decreased to $7,212 thousand in 2019 from $8,575 thousand in 2018[25]. - The accumulated deficit as of December 31, 2019, was approximately $153,930 thousand[32]. - The company reported a net cash usage of $908 thousand for the year ended December 31, 2019, indicating a need for significant additional financing[89]. Future Outlook and Financing - The company expects to continue incurring losses in the foreseeable future due to ongoing drug development activities[29]. - The company estimates that its cash and cash equivalents will finance activities for at least 12 months from the report date[32]. - The company plans to raise additional financing to support clinical trials and product development[33]. - The company may need to raise additional capital through equity or debt financing, which could dilute existing shareholders[1]. - Future issuances of ADSs could dilute existing shareholders' equity and depress the market price of the company's shares[93]. Drug Development and Commercialization Risks - The company has not yet commercialized any drug candidates or technologies and cannot ensure future profitability[30]. - The company has not yet commercialized any products or technologies and may never achieve profitability[38]. - The company is currently not seeking regulatory approval for any drug candidates with the FDA or other regulatory authorities[42]. - The company faces risks related to the completion of clinical trials, which may take longer than projected and incur additional costs[40]. - The company relies on third parties for clinical trials and manufacturing, which may lead to delays or failures in obtaining regulatory approval[49][60]. - The company’s product candidate hCDR1 is planned for advanced clinical studies, but must show positive clinical results to proceed[53]. - Market acceptance of the company’s products will depend on perceptions of safety and efficacy by healthcare providers[56]. - The company’s financial results may be materially impaired if clinical trials do not confirm positive early data[54]. - The company faces risks related to third-party manufacturers' compliance with FDA regulations, which could impact product commercialization[62]. - The company is at risk of losing market share if competitors develop more effective or cheaper products, potentially harming revenues[64]. Operational and Strategic Challenges - The company has limited personnel resources, with only one part-time employee and two part-time service providers, which could impair performance[67]. - The company relies on licensed drug candidates and technologies, and failure to meet obligations could result in losing these rights[79]. - The company may face substantial costs and operational risks associated with acquisitions or in-licensing transactions, which could dilute equity[69]. - The company intends to expand insurance coverage for product liability but faces increasing costs and potential inadequacy of coverage[74]. - The company is exposed to product liability risks that could lead to substantial liabilities or limit commercialization of approved products[73]. - The company must actively defend its patent rights, which could involve significant costs and impact its ability to compete effectively[85]. - The expiration of the hCDR1 patent in 2024 poses a risk if the company fails to obtain patent term extensions[5]. - The company may face challenges in establishing strategic partnerships and licensing arrangements, which are crucial for commercialization[55]. Market and Regulatory Environment - The trading volume of the company's ADSs has historically been low, making it difficult for shareholders to sell at favorable prices[90]. - The trading price of the company's ADSs is likely to be highly volatile, influenced by various factors beyond its control, including market fluctuations in the biotechnology sector[92]. - Approximately 31.83% of the company's ordinary shares are held by two principal shareholders, potentially limiting new investors' influence on corporate decisions[94]. - The company must maintain stockholders' equity of at least $2.5 million and a market value of listed securities of $35 million to comply with Nasdaq listing requirements[107]. - If the company fails to meet Nasdaq's continued listing standards, its ADSs may be delisted, which could significantly impair liquidity and capital-raising efforts[108]. - The company has never declared or paid cash dividends on its ordinary stock and does not anticipate doing so in the foreseeable future[103]. - The company may be classified as a passive foreign investment company (PFIC), which could impose additional tax liabilities on U.S. shareholders[96]. - The effective trading prices of the company's securities may differ between the Nasdaq and TASE due to different trading currencies and times[95]. - The depositary for the ADSs may not be able to make distributions to ADS holders if it is unlawful or impractical to do so[105]. - The company is permitted to follow home country corporate governance practices, which may provide less protection to investors compared to U.S. domestic issuers[99]. External Factors and Risks - Political, economic, and military conditions in Israel may adversely affect the company's operations and results, particularly due to ongoing hostilities and threats in the region[112]. - The company holds most of its cash and equivalents in U.S. dollars, while a significant portion of expenses is in New Israeli Shekels (NIS), exposing it to currency fluctuation risks[116]. - Israeli law may delay or impede mergers and acquisitions, requiring specific approvals and a minimum holding period for tax deferral on certain transactions[117][118]. - The company is subject to economic boycotts and restrictive laws from several countries, which may negatively impact its operating results and business expansion[115]. - The company’s commercial insurance does not cover losses from security-related events, which could materially affect its business if government coverage is not maintained[114]. - Inflation and currency fluctuations in Israel could harm the company's financial results, particularly if inflation exceeds the rate of devaluation of the NIS against the U.S. dollar[116]. - Enforcement of non-competition agreements may be difficult under Israeli law, potentially allowing competitors to benefit from the expertise of former employees[122]. - Employees may claim compensation for inventions made during their employment, which could impact future revenue and profitability[123]. - Shareholder rights and responsibilities are governed by Israeli law, which may differ from those of U.S. companies, imposing additional obligations on shareholders[124].