EXPLANATORY NOTE
This Post-Effective Amendment No. 1 to the Registration Statement on Form F-1 (File
No. 333-268510), as amended (the “Registration Statement”), of SatixFy Communications Ltd. (the “Company”), as
originally declared effective by the Securities and Exchange Commission (the “SEC”) on January 23, 2023, is being filed pursuant
to the undertakings in Item 9 of the Registration Statement to update the information in the Registration Statement to reflect the Company’s
results for the year ended December 31, 2022.
The information included in this filing amends the Registration Statement and the prospectus
contained therein. No additional securities are being registered under this Post-Effective Amendment No. 1. All applicable registration
fees were paid at the time of the original filing of the Registration Statement.
The information in this prospectus is not complete and may be changed. We may not sell these securities
until the post-effective amendment to the registration statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
Subject to completion, dated May 4, 2023
PRELIMINARY PROSPECTUS
28,373,475 Ordinary Shares
1,000,000 Warrants
SATIXFY
COMMUNICATIONS LTD.
We are registering for resale by certain selling shareholders named herein (the “Selling
Shareholders”) up to 14,043,676 of our ordinary shares, no par value per share (the “SatixFy Ordinary Shares”), up to
1,000,000 redeemable warrants (the “PIPE Warrants”) to purchase SatixFy Ordinary Shares at a price of $11.50 per share, up
to 1,000,000 SatixFy Ordinary Shares issuable upon the exercise of the PIPE Warrants, and up to 3,329,799 ordinary shares issuable upon
the exercise of the outstanding private placement warrants at a price of $11.50 per share, which were assumed by us and previously registered
by us in connection with the Business Combination. The private placement warrants are also exercisable on a cashless basis at the option
of the holder, to the extent held by the Sponsor or Cantor (or their respective permitted transferees).
Certain of the Selling Shareholders may have acquired the securities registered hereunder
at prices substantially below current market prices or pursuant to the Forward Purchase Agreement (which contemplates market resales)
and may therefore have incentive to sell their securities in this offering. For example: (i) the Sellers under the Forward Purchase Agreement
purchased most of their 10,149,384 SatixFy Ordinary Shares (of which, we were informed that the Sellers have sold at least 5,362,440 shares
as of April 1, 2023) being registered for resale hereunder in market or negotiated transactions at prices not known to us (except for
the 1,605,100 Additional Shares, which were issued to Vellar for no consideration under the agreement), but such holders recouped most
of their purchase price directly from the Trust Account (as defined herein) and are at risk, prior to the maturity of the agreement, for
only approximately $1.00 per share pursuant to the terms of the Forward Purchase Agreement (see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources—Forward Purchase
Agreement” and “Risk Factors — Risks Related to Ownership of our Securities
— The market price of our equity securities may be volatile, and your investment could suffer or decline in value”),
(ii) CF Principal Investments LLC acquired the 1,000,000 PIPE Units (each consisting of one
SatixFy Ordinary Share and one-half of one SatixFy warrant) and its outstanding 64,703 SatixFy Private Warrants being registered for resale
hereunder at a price of $10.00 per unit and $1.00 per warrant, respectively, (iii) Francisco Partners acquired the 846,434 SatixFy Ordinary
Shares being registered for resale hereunder at no additional cost, pursuant to its agreement to provide financing to the Company under
the 2022 Credit Agreement, and (iv) the Sponsor acquired the 1,000,000 PIPE Units (each consisting of one SatixFy Ordinary Share and one-half
of one SatixFy warrant), its outstanding 3,265,096 SatixFy Private Warrants and 391,731 SatixFy Ordinary Shares (which shares were issued
in exchange for Class B ordinary shares of Endurance in connection with the Business Combination and are held in escrow pursuant to the
Subscription Agreements) being registered for resale hereunder at the price of $10.00 per unit, $1.00 per warrant and approximately $0.004
per share, respectively. Public securityholders who purchased their SatixFy securities at higher prices than the Selling Shareholders
may experience lower rates of return (if any) than the Selling Shareholders, due to differences in purchase prices and the potential trading
price at which they may be able to sell (see “Risk Factors — Risks Related to Ownership of
our Securities — The market price of our equity securities may be volatile, and your investment could suffer or decline in value”).
The Selling Shareholders may offer, sell or distribute all or a portion of the securities
hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any
of the proceeds from such sales of the ordinary shares or warrants, except with respect to amounts received by us upon exercise of warrants
to the extent such warrants are exercised for cash and with respect to certain sales of SatixFy Ordinary Shares by the Sellers (as defined
elsewhere in this prospectus) under the Forward Purchase Agreement pursuant to that agreement, as further described herein. Given the
recent price volatility of our ordinary shares, there is no certainty that warrant holders will exercise their warrants and, accordingly,
we may not receive any proceeds in relation to our outstanding warrants. We will bear all costs, expenses and fees in connection with
the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. The Selling
Shareholders will bear all commissions and discounts, if any, attributable to their sale of ordinary shares or warrants, except as described
herein with respect to sales by the Sellers pursuant to the Forward Purchase Agreement. See “Plan
of Distribution.”
In addition, this prospectus relates to the issuance by us of up to 10,000,000 ordinary
shares that are issuable upon the exercise of the public warrants assumed by us, which were previously registered in connection with the
Business Combination.
Our ordinary shares and public warrants (which will include the PIPE Warrants upon their
resale pursuant to an effective registration statement or Rule 144 under the Securities Act) are listed on NYSE American LLC under the
symbols “SATX” and “SATX WSA,” respectively. On May 1, 2023, the last reported sales price of our ordinary shares
was $0.45 per share and the last reported sales price of our public warrants was $0.10 per warrant.
Given the substantial amount of redemptions in connection with the Business Combination
(see “Summary of the Prospectus”), and the relative lack of liquidity in our stock,
sales of our ordinary shares under the registration statement of which this prospectus is a part could result in a significant decline
in the market price of our securities.
Investing in our securities involves a high degree of risk. You
should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 10 of this
prospectus, and under similar headings in any amendment or supplements to this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation
to the contrary is a criminal offense.
The date of this prospectus is May 4, 2023.
TABLE OF CONTENTS
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No one has been authorized to provide you with information that is
different from that contained in this prospectus. This prospectus is dated as of the date set forth on the cover hereof. You should not
assume that the information contained in this prospectus is accurate as of any date other than that date.
For investors outside the United States: We have not done anything that would permit
this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than
in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution
of this prospectus.
i
SELECTED DEFINITIONS
“A&R Articles of Association” means the second amended and restated
articles of association of SatixFy.
“A&R Registration Rights Agreement” means the amended and restated registration
rights agreement, dated as of March 8, 2022 by and among Endurance, the Sponsor and Cantor Fitzgerald & Co., as amended on October
27, 2022 by amendment no.1 to the Amended and Restated Registration Rights Agreement, by and among Endurance, the Sponsor and Cantor Fitzgerald
& Co.
“A&R Shareholders’ Agreement” means the amended and restated shareholders’
agreement, dated as of March 8, 2022, by and among SatixFy, the Sponsor and certain shareholders of SatixFy.
“Business Combination” means the merger contemplated by the Business Combination
Agreement, whereby Merger Sub merged with and into Endurance, with Endurance surviving the merger as a wholly owned subsidiary of SatixFy,
and the other transactions contemplated by the Business Combination Agreement.
“Business Combination Agreement” means the Business Combination Agreement,
dated as of March 8, 2022 (as may be amended, supplemented, or otherwise modified from time to time), by and among SatixFy, Endurance
and SatixFy MS, as amended on June 13, 2022 and August 23, 2022.
“CF Principal Investments LLC” means CF Principal Investments LLC (“Cantor”),
an affiliate of Cantor Fitzgerald & Co.
“CF Purchase Agreement” means that certain equity line of credit purchase
agreement, dated as of March 8, 2022, by and between SatixFy and CF Principal Investments LLC.
“CF Registration Rights Agreement” means that certain registration rights
agreement, dated as of March 8, 2022, by and between SatixFy and CF Principal Investments LLC.
“Closing” means the closing of the Business Combination. “Closing
Date” means the date of the Closing.
“Companies Law” means the Israeli Companies Law, 5759-1999, as amended.
“Continental” means Continental Stock Transfer & Trust Company,
the transfer agent for Endurance, the warrant agent for the Endurance warrants and the warrant agent for the SatixFy Warrants.
“Debt Financing” means a credit facility, by and among SatixFy and an institutional
lender and its affiliates, pursuant to the 2022 Credit Agreement, under which SatixFy borrowed an aggregate principal amount of $55,000,000
in February 2022.
“Effective Time” means the effective time of the Business Combination.
“Endurance” means Endurance Acquisition Corp., a Cayman Islands exempted
company.
“Endurance Articles” means Endurance’s amended and restated memorandum
and articles of association adopted by special resolution dated September 14, 2021.
“Endurance Class A ordinary shares” means Class A ordinary shares, par value
$0.0001 per share, of Endurance.
“Endurance Class B ordinary shares” means the Class B ordinary shares, par
value $0.0001 per share, of Endurance.
“Endurance IPO” means the initial public offering of Endurance, which was
consummated on September 17, 2021.
“Endurance Private Warrants” means the 7,630,000 private warrants of Endurance,
each entitling the holder thereof to purchase one (1) Endurance Class A ordinary share at a price of $11.50 per share, subject to adjustment,
in accordance with terms with respect to the private warrants of Endurance, sold to the Sponsor and Cantor Fitzgerald & Co. in a private
placement in connection with the Endurance IPO.
“Endurance Public Shareholders” means all holders of Endurance Public Shares.
“Endurance Public Warrants” means each one (1) warrant of Endurance entitling
the holder thereof to purchase one (1) Endurance Class A ordinary share at a price of $11.50 per share, subject to adjustment, in accordance
with the terms with respect to the public warrants of Endurance issued as part of the Endurance Units in the Endurance IPO.
“Endurance warrants” means the Endurance Private Warrants and Endurance
Public Warrants, collectively.
“Equity Line of Credit” means the CF Purchase Agreement and the CF Registration
Rights Agreement, pursuant to which SatixFy may receive up to $75,000,000 in aggregate gross proceeds from CF Principal Investments LLC
in connection with sales of SatixFy Ordinary Shares.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Ratio” means (a) (i) $365,000,000.00, plus (ii) the Aggregate
Vested Company Option Exercise Price, plus (iii) the Aggregate Warrant Exercise Price, divided by (b) $10.00, which number shall be calculated
and determined by the Company in accordance with the terms of the Business Combination Agreement.
“Forward Purchase Agreement” means the agreement for an OTC Equity Prepaid
Forward Transaction by and among Endurance, SatixFy, Merger Sub and Vellar Opportunity Fund SPV LLC — Series 7, dated October 24,
2022, as subsequently amended on October 25, 2022.
“Founder Shares” means the Endurance Class B ordinary shares which were
originally acquired by the Sponsor for an aggregate purchase price of $25,000 prior to the Endurance IPO.
“GAAP” means accounting principles generally accepted in the United States
of America.
“IFRS” means International Financial Reporting Standards as issued by the
International Accounting Standards Board.
“Israeli Companies Law” means the Israeli Companies Law, 5759-1999,
as amended.
“Merger Sub” means SatixFy MS, a Cayman Islands exempted company and a direct,
wholly owned subsidiary of the Company, which merged with and into Endurance in connection with the consummation of the Business Combination.
“PCAOB” means the Public Company Accounting Oversight Board.
“PIPE Financing” means the issuance and sale of the number of PIPE Units
set forth in the applicable Subscription Agreements to the PIPE Investors in private placements.
“PIPE Financing Amount” means the aggregate purchase price under all Subscription
Agreements.
“PIPE Investors” means certain accredited investors that entered into the
Subscription Agreements providing for the purchase of PIPE Units at a price per unit of $10.00.
“PIPE Shares” means the SatixFy Ordinary Shares to be purchased by the PIPE
Investors pursuant to the Subscription Agreements as part of the PIPE Units.
“PIPE Units” means each unit, consisting of one (1) PIPE Share and one-half
(1∕2) of one (1) PIPE Warrant, to be purchased by the PIPE Investors pursuant to the Subscription Agreements for a purchase price
of $10.00 per unit.
“PIPE Warrant” means each warrant of SatixFy entitling the holder thereof
to purchase one (1) SatixFy Ordinary Share at a price of $11.50 per share, subject to adjustment and on the terms and subject to the limitations
described in the PIPE Warrant Agreement, to be purchased by the PIPE Investors as part of the PIPE Units issued pursuant to the Subscription
Agreements. The PIPE Warrants were subsequently exchanged for public warrants under the terms of the A&R SatixFy Warrant Agreement
as described elsewhere in this prospectus and references to “PIPE Warrants” herein are to the originally issued warrants or
the newly issued warrants, as the context requires.
“Pre-Closing Recapitalization” means the conversion, by stock split, stock
issuance or share consolidation, of each SatixFy Ordinary Share issued and outstanding immediately following the Preferred Shared Conversion,
but prior to the Effective Time, into a number of SatixFy Ordinary Shares determined by multiplying each such SatixFy Ordinary Share by
the Exchange Ratio as described in the Business Combination Agreement.
“Preferred Share Conversion” means the conversion of each SatixFy Preferred
Share issued and outstanding at the end of the date immediately prior to the Closing Date into one (1) SatixFy Ordinary Share, effective
as of the end of such date immediately prior to the Closing Date, as described in the Business Combination Agreement.
“private placement warrants” means the warrants Endurance sold to the Sponsor
and Cantor Fitzgerald & Co. via private placement in connection with the Endurance IPO.
“SatixFy Options” means, as of the relevant date, each SatixFy option
award to any current or former director, manager, officer, employee, individual independent contractor or other service provider of SatixFy
or its subsidiaries of rights of any kind to purchase any equity security of SatixFy or its subsidiaries under the 2020 Share Award Plan.
“SatixFy Ordinary Shares” means each ordinary share of SatixFy, no par value
per share.
“SatixFy Preferred Shares” means, collectively, Series A Preferred Shares,
Series B Preferred Shares and Series C Preferred Shares of SatixFy, in each case NIS 0.0001 par value per share.
“SatixFy Private Warrants” means each warrant of SatixFy assumed as part
of the Business Combination entitling the holder thereof to purchase one (1) SatixFy Ordinary Share on substantially the same terms and
conditions with respect to the Endurance Private Warrants.
“SatixFy Public Warrants” means each warrant of SatixFy assumed as part
of the Business Combination entitling the holder thereof to purchase one (1) SatixFy Ordinary Share on substantially the same terms and
conditions with respect to the Endurance Public Warrants.
“SatixFy Warrants” means the SatixFy Public Warrants, the SatixFy Private
Warrants and the PIPE Warrants, collectively.
“SatixFy Warrant Assumption Agreement” means that certain warrant assignment,
assumption and amendment agreement, dated as of the Closing Date by and among SatixFy, Endurance and Continental.
“SatixFy A&R Warrant Agreement” means that certain Amended and Restated
Warrant Agreement, dated as of January 12, 2023, by and among SatixFy and Continental, which amended and restated the SatixFy Warrant
Assumption Agreement.
“SEC” means the U.S. Securities and Exchange Commission. “Securities
Act” means the Securities Act of 1933, as amended.
“Sponsor” means Endurance Antarctica Partners, LLC, a Cayman Islands limited
liability company.
“Sponsor Letter Agreement” means that certain sponsor letter agreement,
dated March 8, 2022, by and among the Sponsor, Endurance and SatixFy, as amended on June 13, 2022 and August 23, 2022.
“units” means the 20,000,000 units sold as part of the Endurance IPO, each
consisting of one share of Endurance Class A Shares and one-half of one redeemable Endurance warrant.
“Transactions” means the transactions contemplated by the Business Combination
Agreement and the other agreements contemplated thereby or entered into in connection therewith.
“Trust Account” means the trust account established in connection with the
Endurance IPO for the benefit of the Endurance Public Shareholders maintained by Continental, acting as trustee.
“Warrant Letter Agreement” means that certain warrant letter agreement,
dated as of January 12, 2023, by and among SatixFy, the Sponsor and Cantor.
“2020 Share Award Plan” means SatixFy’s 2020 Share Award Plan, as
amended from time to time, that provides for the award to any current or former director, manager, officer, employee, or individual independent
contractor or service provider of SatixFy or its subsidiaries of rights of any kind to receive Equity Securities of SatixFy or its subsidiaries
or benefits measured in whole or in part by reference to equity securities of SatixFy or its subsidiaries.
“2022 Credit Agreement” means that certain credit agreement, dated as of
February 1, 2022, by and among the Company, Wilmington Savings Fund Society, FSB, as administrative agent (the "Agent"), and the lenders
thereunder, each of which is an affiliate of Francisco Partners, as amended by that First Amendment to Credit Agreement, dated as of September
13, 2022, by and among SatixFy, the Agent and the lenders party thereto, and as further amended by that Waiver and Second Amendment to
the Credit Agreement, dated as of April 23, 2023, by and among SatixFy, the Agent and the lenders party thereto.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus may constitute “forward-looking statements”
for purposes of the federal securities laws. SatixFy’s forward-looking statements include, but are not limited to, statements regarding
SatixFy or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements
that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions,
are forward-looking statements. The words “anticipate,” “appear,” “approximate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “foresee,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,”
“seek,” “should,” “would” and similar expressions (or the negative version of such words or expressions)
may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-
looking statements in this prospectus may include, for example, statements about:
Forward-looking statements involve a number of risks, uncertainties and assumptions,
and actual results or events may differ materially from those projected or implied in those statements. Important factors that could cause
such differences include, but are not limited to:
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SatixFy’s performance following the Business Combination; |
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Unpredictability in the satellite communications industry; |
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The effects of health epidemics, such as the recent global pandemic of a novel strain of coronavirus COVID-19; |
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The regulatory environment and changes in laws, regulations or policies in the jurisdictions in which SatixFy operates; |
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Competition in the satellite communications industry, and the failure to introduce new technologies and products in a timely manner
to compete successfully against competitors; |
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If SatixFy fails to adjust its supply chain volume due to changing market conditions or fails to estimate its customers’ demand;
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Disruptions in relationships with any one of SatixFy’s key customers; |
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Disruptions in relationships with any one of SatixFy’s third-party manufacturers or suppliers; |
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Any difficulty selling SatixFy’s products if customers do not design its products into their product offerings; |
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SatixFy’s dependence on winning selection processes and gaining market acceptance of its technologies and products; |
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Even if SatixFy succeeds in winning selection processes for its technologies and products, SatixFy may not generate timely or sufficient
net sales or margins from those wins; |
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SatixFy’s ability to execute its strategies, manage growth and maintain its corporate culture as it grows; |
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Sustained yield problems or other delays in the manufacturing process of products; |
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Changes in the need for capital and the availability of financing and capital to fund these needs; |
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SatixFy’s estimates of its total addressable market and the demand for and pricing of its products and services; |
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SatixFy’s ability to establish or maintain effective internal control over financial reporting; |
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SatixFy’s ability to retain key personnel and to replace such personnel on a timely basis or on acceptable terms; |
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Exchange rate fluctuations; |
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Changes in interest rates or rates of inflation; |
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Legal, regulatory and other proceedings; |
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Changes in applicable laws or regulations, or the application thereof on SatixFy; |
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The results of future financing efforts; |
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The effects of catastrophic events, including war, terrorism and other international conflicts; and |
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The other matters described in the section titled “Risk Factors”. |
SatixFy cautions you against placing undue reliance on forward-looking statements, which
reflect current beliefs and are based on information currently available as of the date a forward-looking statement is made. Forward-looking
statements set forth herein speak only as of the date of this prospectus. SatixFy has no obligation to revise forward-looking statements
to reflect future events, changes in circumstances, or changes in beliefs. In the event that any forward-looking statement is updated,
no inference should be made that SatixFy will make additional updates with respect to that statement, related matters, or any other forward-looking
statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially
from forward-looking statements, including discussions of significant risk factors, may appear in SatixFy’s public filings with
the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you
are advised to consult. For additional information, please see the section titled “Where You Can
Find More Information.”
Market, ranking and industry data used throughout this prospectus, including statements
regarding market size and technology adoption rates, is based on the good faith estimates of SatixFy’s management, which in turn
are based upon SatixFy’s management’s review of internal surveys, independent industry surveys and publications, and other
third party research and publicly available information. These data involve a number of assumptions and limitations, and you are cautioned
not to give undue weight to such estimates. While SatixFy is not aware of any misstatements regarding the industry data presented herein,
its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the
heading “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus.
SUMMARY OF THE PROSPECTUS
This summary highlights selected information from this prospectus
and does not contain all of the information that is important to you in making an investment decision. This summary is qualified in its
entirety by the more detailed information included in this prospectus. Before making your investment decision with respect to our securities,
you should carefully read this entire prospectus, including the information under “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements included elsewhere in this
prospectus.
Unless otherwise indicated or the context otherwise requires, references
in this prospectus to “SatixFy,” “Company”, “we,” “our,” “us” and other similar
terms refer to SatixFy Communications Ltd. and our consolidated subsidiaries.
General
SatixFy is a vertically integrated satellite communications systems provider using its
own semiconductors, focused on designing chips and systems that serve the entire satellite communications value chain — from the
satellite payload to user terminals. SatixFy creates chip technologies capable of enabling satellite-based broadband delivery to markets
around the world. Since SatixFy commenced operations in June 2012, through December 31, 2022 it has invested over $209 million in research
and development to create what we believe are the most advanced satellite communications and ground terminal chips in the world.
SatixFy develops advanced Application-Specific and Radio Frequency Integrated Circuit
chips based on technology designed to meet the requirements of a variety of satellite communications applications, mainly for Low Earth
Orbit (“LEO”), Medium Earth Orbit (“MEO”) and Geostationary (“GEO”) satellite communications systems,
Aero/In Flight Connectivity systems and Communications-on-the-Move applications. Our chip technology supports Electronically Steered Multibeam
Antennas, digital beamforming and beam-hopping, on-board processing for payloads and Software Defined Radio modems — each of which
will be critical for providing optimized access to LEO satellite constellations.
As a result of the Business Combination and the other Transactions, Endurance became
a direct, wholly-owned subsidiary of SatixFy, and its outstanding securities were exchanged for the securities of SatixFy. In connection
with the Closing of the Business Combination, 11,417,072 (or 57%) of the 20,000,000 outstanding Endurance Class A ordinary shares were
redeemed (after purchases by the Sellers under the Forward Purchase Agreement, who agreed not to redeem their purchased shares).
SatixFy was organized as a limited liability company organized under the laws of the
State of Israel in June 2012. The mailing address of SatixFy’s principal executive office is c/o SatixFy Communications Ltd., Attention:
Legal, 12 Hamada St., Rehovot 670315 Israel and its telephone number is +(972) 8-939-3200.
CEO Succession
On January 12, 2023, we entered into a separation agreement with Mr. David Ripstein,
our current CEO, pursuant to which SatixFy and Mr. Ripstein mutually agreed to the termination of Mr. Ripstein’s employment as CEO
effective January 13, 2023. In connection with the termination of Mr. Ripstein’s employment as CEO, SatixFy agreed to provide compensation
to Mr. Ripstein consisting of, (i) continued payment of regular salary and access to certain benefits under his existing employment agreement
until April 12, 2023, when all employment relationships between Mr. Ripstein and SatixFy shall terminate, (ii) a one-time bonus of $125,000
bonus for fiscal year 2022 pursuant to Mr. Ripstein’s existing employment agreement, (iii) a one-time bonus of $95,000 payable on
April 12, 2023, and (iv) a one-time payment of $30,000 in exchange for Mr. Ripstein’s agreement to assist with transition of our
new CEO, and (v) other customary terms and conditions.
On January 12, 2023, we appointed Mr. Ido Gur as our new CEO, effective January 15,
2023. See “Management — Management and Board of Directors — CEO Succession” and
“Management — Employment and Incentive Arrangements with our Directors — Employment Agreement — Mr. Ido Gur”
for more information regarding Mr. Gur’s appointment as CEO.
Risk Factors Summary
Investing in our securities involves risks. You should carefully consider the risks
described in “Risk Factors” before making a decision to invest in our ordinary shares.
If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely
affected. In such case, the trading price of our securities would likely decline, and you may lose all or part of your investment. Set
forth below is a summary of some of the principal risks we face:
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SatixFy has limited capital currently available and will need to raise additional capital in the immediate future to fund its operations
and develop its technology and chips and satellite communications systems. If SatixFy fails to raise sufficient capital or is unable to
do so on favorable or acceptable terms, it might not be able to make the necessary investments in technology development, its operating
results may be harmed, it may have to seek protection under insolvency laws and may be unable to continue its operations. |
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SatixFy is an early stage company with a history of losses, has generated less revenues than its prior projections, and has not demonstrated
a sustained ability to generate predictable revenues or cash flows. If SatixFy does not generate revenue as expected, its financial condition
will be materially and adversely affected. |
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SatixFy may face increased risks and costs associated with volatility in labor or component prices or as a result of supply chain
or procurement disruptions, which may adversely affect its operations. |
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Obtaining customer contracts may require SatixFy to participate in lengthy competitive selection processes that require it to incur
significant costs. |
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Some of SatixFy’s customers may require its chips and satellite communications systems to undergo a demonstration process that
does not assure future sales or customer contracts. |
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SatixFy generates a significant percentage of its revenue from certain key customers and anticipates this concentration will continue
for the foreseeable future, and the loss of one or more of its key customers could negatively affect its business and operating results.
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SatixFy may not be able to continue to develop its technology or develop new technologies for its existing and new satellite communications
systems. |
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Deterioration of the financial conditions of SatixFy’s customers could adversely affect its operating results. |
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SatixFy operates in a highly competitive industry and may be unsuccessful in effectively competing in the future. |
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SatixFy has incurred net losses in each year since inception and may not be able to continue to raise sufficient capital or achieve
or sustain profitability. |
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SatixFy may not be able to generate sufficient cash to service its indebtedness. |
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SatixFy’s estimates, including market opportunity estimates and growth forecasts, are subject to inherent challenges in measurement
and significant uncertainty, and real or perceived inaccuracies in those metrics and estimates may harm its reputation and negatively
affect its business. |
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SatixFy’s results of operations may vary significantly from its expectations or guidance. |
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SatixFy may not be able to comply with its contracts with customers, and non-compliance may harm its operations and expose it to
potential third-party claims for damages. |
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Loss of key employees and the inability to continuously recruit and retain qualified employees could hurt SatixFy’s competitive
position. |
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SatixFy relies on third parties for manufacturing of its products. SatixFy does not have long-term supply contracts with its foundry
or most of its third-party manufacturing vendors, and they may not allocate sufficient capacity to SatixFy at reasonable prices to meet
future demands for its solutions. |
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SatixFy’s business is subject to a wide range of laws and regulations, many of which are continuously evolving, and failure
to comply with such laws and regulations could harm its business, financial condition and operating results. |
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SatixFy is subject to risks from its international operations. |
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The global COVID-19 pandemic has harmed and could continue to harm SatixFy’s business, financial condition, and results of
operations. |
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SatixFy relies on its intellectual property and proprietary rights and may be unable to adequately obtain, maintain, enforce, defend
or protect its intellectual property and proprietary rights, including against unauthorized use by third parties. |
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SatixFy relies on the availability of third-party licenses of intellectual property, and if it fails to comply with its obligations
under such agreements or is unable to extend its existing third-party licenses or enter into new third-party licenses on reasonable terms
or at all, it could have a material adverse effect on its business, operating results and financial condition. |
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Defects, errors or other performance problems in SatixFy’s software or hardware, or the third-party software or hardware on
which it relies, could harm SatixFy’s reputation, result in significant costs to SatixFy, impair its ability to sell its systems
and subject it to substantial liability. |
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SatixFy is subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy
and cybersecurity, which can increase the cost of doing business, compliance risks and potential liability. |
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Changes in SatixFy’s effective tax rate may adversely impact its results of operations. |
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Exchange rate fluctuations between the U.S. dollar, the British pound, the Euro and other foreign currencies may negatively affect
SatixFy’s future revenues. |
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Managing a public company and compliance with regulatory requirements may divert the attention of SatixFy’s senior management
from the day-to-day management of its business. |
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An active trading market for SatixFy’s equity securities may not develop or may not be sustained to provide adequate liquidity.
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The Selling Shareholders generally purchased the securities being registered for resale hereunder at prices that are lower than the
current market prices for such securities and, accordingly, may be or are incentivized to sell them under the registration statement of
which this prospectus is a part and sales of a significant number of our securities by the Selling Shareholders could materially adversely
affect the trading prices of our securities. |
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Investors’ rights and responsibilities as SatixFy’s shareholders will be governed by Israeli law, which differs in some
respects from the rights and responsibilities of shareholders of non-Israeli companies. |
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The market price of SatixFy’s equity securities may be volatile, and your investment could suffer or decline in value.
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SatixFy is an “emerging growth company” and avails itself of the reduced disclosure requirements applicable to emerging
growth companies, which could make its equity securities less attractive to investors. |
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SatixFy may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.
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The listing of our securities on the NYSE American LLC (the “NYSE”) did not benefit from the process customarily undertaken
in connection with an underwritten initial public offering, which could result in diminished investor demand, inefficiencies in pricing
and a more volatile public price for our securities. |
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The market price of our ordinary shares or warrants could be negatively affected by future issuances or sales of our securities.
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The other matters described in the section titled “Risk Factors”. |
THE OFFERING
Issuer
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SatixFy Communications Ltd.
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Securities offered by the Selling Shareholders
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We are registering the resale by the Selling Shareholders named in this prospectus,
or their permitted transferees, of an aggregate of 18,373,475 ordinary shares, including up to 14,043,676 SatixFy Ordinary Shares, up
to 4,329,799 ordinary shares underlying warrants, and up to 1,000,000 PIPE Warrants.
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Securities registered for issuance
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We are registering the issuance of an aggregate of up to 10,000,000 ordinary shares
underlying the SatixFy Public Warrants. The issuance of the SatixFy Public Warrants was registered in connection with the Business Combination.
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Terms of the Offering
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The Selling Shareholders will determine when and how they will dispose of the ordinary
shares registered under this prospectus for resale.
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Shares outstanding prior to the offering
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As of April 24, 2023, we had 80,756,058 ordinary shares issued and outstanding.
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Shares outstanding after the offering
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95,002,743 ordinary shares (assuming the exercise for cash of outstanding warrants
to purchase 14,329,799 ordinary shares).
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Use of proceeds
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We will not receive any of the proceeds from the sale of the warrants (each of which
is generally exercisable for $11.50 per share) or ordinary shares by the Selling Shareholders except with respect to amounts received
by us due to the exercise of the warrants. However, given the recent price volatility of our ordinary shares and relative lack of liquidity
in our stock, there is no certainty that warrant holders will exercise their warrants and, accordingly, we may not receive any proceeds
in relation to our outstanding warrants. We may also receive a portion of the aggregate gross proceeds with respect to certain sales under
the Forward Purchase Agreement pursuant to that agreement, as described in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources— Forward Purchase
Agreement”. We expect to use the proceeds received from the exercise of the warrants, if any, for working capital and general
corporate purposes. See “Use of Proceeds.”
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NYSE American LLC ticker symbol
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Our ordinary shares and our public warrants (which will include the PIPE Warrants upon
their resale pursuant to an effective registration statement or Rule 144 under the Securities Act) are listed on the “NYSE”
under the symbols “SATX” and “SATX WSA,” respectively. |
RISK FACTORS
An investment in our securities involves a high degree of risk.
You should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition,
or operating results could be harmed by any of these risks, as well as other risks not known to us or that we consider immaterial as of
the date of this prospectus. The trading price of our securities could decline due to any of these risks, and, as a result, you may lose
all or part of your investment. The following discussion should be read in conjunction with SatixFy’s financial statements and notes
thereto included herein. You should carefully consider the following risk factors in addition to the other information included in this
prospectus, including matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements.”
Risks Related to Our Business and Industry
We have limited capital currently available
and will need to raise additional capital in the immediate future to fund our operations and develop our technology and chips and satellite
communications systems. If we fail to raise sufficient capital or are unable to do so on favorable or acceptable terms, we might not be
able to make the necessary investments in technology development, our operating results may be harmed, we may have to seek protection
under insolvency laws and may be unable to continue our operations.
The satellite communications industry is subject to rapid technological changes, new
and enhanced product introductions, product obsolescence and changes in user requirements, and we plan to continue to make significant
investments in next-generation satellite communications technologies in order meet industry developed requirements. In order to fund our
operations in the near term and continue our development of these next-generation technologies, we require and are exploring options to
obtain immediate additional debt and/or equity financing, which, if obtained, may be subject to unfavorable terms and could impair the
value of our ordinary shares, dilute existing shareholders’ ownership interests and impose restrictions on us.
In order to preserve liquidity and allow us more time to evaluate our financing and
strategic alternatives, on April 23, 2023, the Company, the lenders and the Agent entered into the Waiver and Second Amendment to the
Credit Agreement (the “Waiver and Second Amendment to the Credit Agreement”), which, among other things, (i) provided a waiver
of certain defaults or potential defaults, (ii) permitted SatixFy to make its interest payments for 2023 on a pay-in-kind basis if its
cash balance is less than $12.5 million, (iii) temporarily reduced SatixFy’s minimum cash requirement from $10 million to $8 million
and $7 million for the months of April and May 2023, respectively, and thereafter to $10 million, in each case plus an amount sufficient
to cover its and its subsidiaries’ accounts payable that are past 60 days due, (iv) increased the interest rate of the loan to Secured
Overnight Financing Rate (“SOFR”) + 9.50% (with a 3% SOFR floor), and (v) provided for certain additional reporting obligations
by SatixFy. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Debt Financing”
for more information. Our inability to raise sufficient capital on reasonable terms may adversely affect our ability to develop new technologies
and chips and satellite communications systems, and may result in our breach of certain covenants under the 2022 Credit Agreement (see
“— We may not be able to generate sufficient cash to service our indebtedness”), which could result in our inability
to fund our working capital requirements and otherwise adversely affect our business, financial condition and results of operations. If
the amount of capital we are able to raise from financing activities, together with our revenues and cash flows from operations, is not
sufficient to satisfy our capital needs (even to the extent that we reduce our operations), third parties may be reluctant to provide
the services we need in order to operate and we may be required to obtain financing on unattractive terms, divest our assets at unattractive
prices, seek protection under insolvency laws or cease our operations.
Additionally, pursuant to the Forward Purchase Agreement, we agreed that we will not
issue additional equity securities (except pursuant to the Equity Line of Credit and our 2020 Share Award Plan) until such time as the
Sellers thereunder recoup the Prepayment Shortfall (as defined therein, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Forward Purchase
Agreement”) which will limit our ability to issue equity securities to raise additional capital, including during times when
it would be advantageous to do so. Further, recent declines in our stock price mean that our ability to raise new capital under the Equity
Line of Credit Facility, which limits the number of shares we can sell based on their daily average trading volume, could be substantially
less than we initially expected.
We are an early stage company with a history
of losses, have generated less revenues than our prior projections, and have not demonstrated a sustained ability to generate predictable
revenues or cash flows. If we do not generate revenue as expected, our financial condition will be materially and adversely affected.
Since inception, we have devoted substantially all of our resources to designing, developing
and manufacturing our chips and satellite communications systems and technology, enhancing our engineering capabilities, building our
business and establishing relations with our customers, raising capital and providing general and administrative support for these operations.
We have a history of losses and have generated substantially less revenues than we previously predicted and have not demonstrated a sustained
ability to generate predictable or sustained revenue or cash flows from our satellite communications systems and chips or convert sufficient
leads into commercial engagements. For example, our revenue declined in 2022 compared to 2021, as a result of various factors, including
extended delays in the manufacturing cycle of our third-party manufacturer and related delays in our ability to deliver chips, payloads
and terminals and/or delays in our development work, a strategic decision by management to reduce sales in China due to concerns about
the changes in the regulatory environment and the termination of discussions with a number of prospective customers and deferrals of orders
under existing contracts and postponement of new contract negotiations with certain existing customers. Our ability to generate predictable
revenue and operating cash flows sufficient to fund our working capital requirements continues to be negatively impacted by these factors
and we expect these factors to continue to negatively impact our operations for the foreseeable future. Consequently, any assessment you
make about our current business or future success or viability may not be as accurate as it could be if we had a longer operating history
or an established track record in generating predictable revenues or operating cash flows sufficient to fund our working capital requirements.
Further, our limited financial track record, without meaningful revenue from our expected future principal business, is of limited reference
value for your assessment of our business and future prospects.
We incurred losses of approximately $397.8 million, $17.1 million and $17.6 million
for the years ended December 31, 2022, 2021 and 2020, respectively. We expect to continue to incur losses until we are able to onboard
a sufficient number of new customers and contracts, and launch and scale a sufficient number of our satellite communications systems and
related products to become profitable. As we work to transition from technology and product development activities to commercial production
and sales, it is difficult to forecast our future results. Although we have several customer contracts, we have limited insight into trends
that may emerge and affect our business, including our ability to attract and retain customers, the amount of revenue we will generate
from our customers and the competition we will face. For example, two customers with whom we were discussing prospective new contracts
in 2022 informed us that they selected our larger competitors with longer track records of providing space-based and aircraft-based satellite
communications solutions as principal contractors for their satellite communications needs. Recently, Telesat postponed negotiations of
new contracts with us related to delivery of SX 3099 chip-enabled ground terminal modems for their Lightspeed LEO network and a prospective
customer significantly narrowed the scope of negotiations regarding a significant potential contract, which will further reduce our opportunities
for new revenues unless we are able to enter into new contracts with new or existing customers. If our revenue grows slower than we anticipate
or we otherwise fall materially short of our forecasts and expectations, we may not be able to achieve profitability and our financial
condition will be materially and adversely affected which could cause our share price to decline and investors to lose confidence in us.
We are currently experiencing, and may continue
to experience, increased risks and costs associated with volatility in labor or component prices or as a result of supply chain or procurement
disruptions, which may adversely affect our operations.
Our chips and satellite communications systems, including the manufactured assemblies
used in our satellite communications systems, are manufactured by third parties in several countries in Europe and in the Far East using
inputs, such as silicon wafers, laminate substrates, gold, copper, lead frames, mold compound, ceramic packages and various chemicals
and gases as well as other production supplies used in our manufacturing processes. Additionally, worldwide manufacturing capacity for
chips is relatively inelastic. The present demand for chips is exceeding market supply, which has resulted in increases in the prices
we pay for our supply of chips, as well as extended delivery delays beyond what we have experienced in the past. If such supply and demand
pressure continues, the prices we pay for our chips and, potentially, other components and assemblies could become substantially more
expensive and the delivery time for such products could be materially prolonged, which would have an adverse effect on our ability to
meet our customers’ demand. The current global shortage in semiconductor and electronic components, resulting mainly from macro
trends such as strong demand for 5G devices and high performance computing, as well as the impact of the COVID-19 pandemic and the Russia-Ukraine
war, has resulted in disruptions in our supply chain and delays in the delivery of our chips by our third-party manufacturers, increases
in the prices of our chip components and manufacturing and disruptions in the operations of our suppliers and customers. For example,
one of our customers is reconsidering the scale and timing of its plans to launch a new LEO communications satellite constellation and
certain of our other current and prospective customers are reconsidering investments in their satellite and In Flight Connectivity (“IFC”)
projects and infrastructure. Additionally, because the quantity of chips and assemblies we order comprises a small percentage of the overall
output of our third-party manufacturers, our third-party manufacturers have, and may continue to, prioritize their near-term capacity
for the production of products for larger companies while extending delivery times for our products. If this chip manufacturing capacity
shortage continues for a prolonged period of time, or if we are unable to secure manufacturing capacity on acceptable price and delivery
terms, it could negatively impact our ability to meet our customer’s demand for our chips and satellite communications systems and
have an adverse impact on our revenue, results of operations and customer relationships. See “— We
rely on third parties for manufacturing of our chips and other satellite communications system components. We do not have long-term supply
contracts with our foundry or most of our third-party manufacturing vendors, and they may not allocate sufficient capacity to us at reasonable
prices to meet future demands for our solutions.”
Many of the manufacturers of our chips and satellite communications systems components
are located outside of the jurisdictions in which we have facilities and sites, necessitating international shipping. Supply chain disruptions
have occurred, and may continue to occur from time to time due to a range of factors beyond our control, including, but not limited to,
international conflicts, such as Russia’s invasion of Ukraine, climate change, increased costs of labor, freight cost and raw material
price fluctuations or a shortage of qualified workers. Such supply chain disruptions could materially impact our operating performance
and financial position, including if deliveries to us are delayed or if such disruptions negatively impact the business and operations
of our key customers.
The Russia-Ukraine war poses indirect but unpredictable risks of disruption to our business.
Several of our current and prospective customers are operators of communication satellite constellations and have historically used Russian-based
launch facilities and vehicles to place their satellites into orbit. If these customers are unable to find alternative launch venues on
a timely basis or at all, they may experience delays in deploying their satellites, which in turn could cause them to defer orders for
our satellite communications chips and satellite payloads. For example, OneWeb announced that it was suspending all satellite launches
from Russia’s Baikonur Cosmodrome. As a result, it partnered with companies in other countries to launch its satellites, which includes
test launches of satellites equipped with our payload systems, we have no control over its ability to transition its expected satellite
launches on a timely basis. OneWeb also announced its merger of equals with Eutelsat, a major GEO satellite provider, expected in 2023,
which may result in further delays or changes in OneWeb’s satellite projects. Additionally, recent reports indicated that the Russia-Ukraine
war may have an adverse impact on the supply of certain commodities, of which Ukraine and Russia were significant producers (for example,
neon gas), used in the fabrication of silicon chips. Our ability to mitigate the potential adverse impacts of the Russia-Ukraine war on
our supply chain or the supply chains of our customers and suppliers is limited, as the impacts are largely indirect and it is difficult
for us to predict at this time how our suppliers and customers will adjust to the new challenges or how these challenges will impact our
costs or demand for our products and services. The effects of the sanctions implemented in response to the conflict may also adversely
affect our industry, including chip supply chains, to the extent that they lead to higher energy and manufacturing costs, lower economic
growth or deferrals of investment in satellite communications technology.
Additionally, the third-party manufacturers, suppliers and distributors that we contract
with are susceptible to losses and interruptions caused by factors outside of their control, such as, floods, hurricanes, earthquakes,
typhoons, volcanic eruptions, and similar natural disasters, as well as power outages, telecommunications failures, industrial accidents,
geopolitical instability (including instability caused by international conflict, such as the Russia-Ukraine war or the increasing potential
of conflicts in Asia implicating the global semiconductor supply-chain, such as conflicts between Taiwan and China), health and safety
epidemics and similar events. The occurrence of natural or conflict-related disasters in any of the regions in which these third-party
service providers operate could severely disrupt the operation of our business by negatively impacting our supply chain, our ability to
deliver products, and the cost of our products. Such events can negatively impact revenue and earnings and can significantly impact cash
flow, both from decreased revenue and from increased costs associated with the event. In addition, these events could cause consumer confidence
and spending to decrease or result in increased volatility to the U.S. and worldwide economies.
The magnitude and nature of the effects of these challenges and uncertainties on our
business are difficult to predict and such effects may not be fully realized, or reflected in our financial results, until future periods.
We rely on third parties for manufacturing
of our chips and other satellite communications system components. We do not have long-term supply contracts with our foundry or most
of our third-party manufacturing vendors, and they may not allocate sufficient capacity to us at reasonable prices to meet future demands
for our solutions.
The semiconductor industry is subject to intense competitive market pressure. Accordingly,
any increase in the cost of our chips or satellite communications systems, whether by adverse purchase price variances or adverse manufacturing
cost variances, will reduce our gross margins and operating profit. We currently rely on third parties for a substantial amount of our
manufacturing operations. If one or more of these vendors terminates its relationship with us, or if they fail to produce and deliver
our products according to our requested demands in specification, quantity, cost and time, our ability to ship our chips or satellite
communications systems to our customers on time and in the quantity required could be adversely affected, which in turn could cause an
unanticipated decline in our sales and damage our customer relationships.
Currently, the majority of our chips are supplied by a single foundry, GlobalFoundries.
We obtain manufacturing services from our foundry vendor and negotiate pricing on a purchase order-by-purchase order basis. We do not
have contractual assurances from our foundry vendor that adequate capacity will be available to us when we need it or to meet our anticipated
future demand for chips. We have experienced delays and price increases in 2022 with respect to the production of chips at our foundry
vendor, and expect that we will continue to experience delays and/or increased prices in the near term due to unprecedented levels of
demand and the resulting tightening of capacity at our foundry vendor. If this trend continues, it could limit the volume of chips and
satellite communications systems we can produce and/or delay production of new chips or satellite communications systems, both of which
would negatively impact our business. If these conditions continue for a substantial period or worsen, our ability to meet our anticipated
demand for our solutions could be impacted which, in turn, could negatively impact our operations and financial results.
Our foundry vendor may allocate capacity to the production of other companies’
products while extending delivery times for our products and may also reduce deliveries to us on short notice. In particular, other companies
that are larger and better financed than we are or that have long-term agreements with our foundry vendor may cause our foundry vendor
or assembly and test vendors to reallocate capacity to them, decreasing the capacity available to us. The unavailability of our foundry
could significantly impact our ability to produce our chips or satellite communications systems or delay production, which would negatively
impact our business. Additionally, the majority of our chips are designed to be compatible with the manufacturing processes and equipment
employed by GlobalFoundries, and switching to a new foundry vendor for these chips may require significant cost and time.
We do not presently own or operate any in-house manufacturing or assembly facilities
and do not anticipate making any investments in new manufacturing facilities in the near term and, accordingly, expect to continue to
rely on third-party vendors or sub-contractors for these services. We currently do not have long-term supply contracts with most of our
other third-party vendors, and we negotiate pricing with our main vendors on a purchase order-by-purchase order basis. Therefore, they
are not obligated to provide services or supply products to us for any specific period, in any specific quantities, or at any specific
price, except as may be provided in a particular purchase order. The ability of our vendors to provide us with products or services is
limited by their available capacity, existing obligations and technological capabilities.
If we need to contract additional third-party vendors or sub-contractors, we may not
be able to do so cost-effectively or on a timely basis, if at all.
Obtaining customer contracts may require us
to participate in lengthy competitive selection processes that require us to incur significant costs.
We expect to sell our satellite communications systems for integration into our customers’
systems primarily at the design stage. These efforts to achieve design wins may be lengthy, and may require us to incur both design and
development costs or dedicate scarce engineering resources in pursuit of a single customer opportunity. We may not prevail in the competitive
selection process, and even when we do achieve a design win, we may never generate any product development or product sale revenue despite
incurring development expenditures. Due to factors outside of our control, our customers have in the past, and may in the future, delay
or cancel their projects, resulting in a loss of projected revenue. In addition, even if a customer designs one of our chips or satellite
communications systems into one of its systems, we cannot be assured that we will secure new design wins from that customer for future
systems. Further, even after securing a design win, we have experienced and may again experience delays in generating revenue, if any,
from our chips and satellite communications systems as a result of the lengthy product development cycle typically required.
Our customers may take a considerable amount of time to evaluate our chips and satellite
communications systems. The delays inherent in these lengthy sales cycles increase the risk that a customer will decide to cancel, curtail
or delay its product plans, causing us to lose anticipated sales. In addition, any delay or cancellation of a customer’s plans could
harm our financial results. If we are unable to generate revenue after incurring substantial expenses to develop any of our solutions,
our business would suffer.
Some of our customers may require our chips
and satellite communications systems to undergo a demonstration process that does not assure future sales or customer contracts.
Prior to purchasing our chips or satellite communications systems, some of our customers
may require that our chips or satellite communications systems undergo extensive demonstration processes, which may involve the testing
of our chips or satellite communications systems in the customers’ systems or via a prototype demonstration. We may also undertake
to commit resources to prepare a demonstration for a prospective customer, in which case we would bear the expenses of the demonstration.
The demonstration process varies by the customer and the product, and may take several months. The demonstration of a chip or satellite
communications system to a customer does not assure any sales of the chip or the satellite communications system to that customer. After
demonstration of our chip or satellite communications system and entry into an agreement for the development of a satellite communications
system or sale of a chip, it can take several months or more before the customer commences volume production of components or systems
that incorporate our satellite communications systems or chips. Despite these uncertainties, we may devote substantial resources, including
design, engineering, sales, marketing and management efforts, to demonstrate our chips or satellite communications systems to customers
in anticipation of sales and without an expectation of reimbursement of these costs or generating future revenues and gross profits from
the projected sale of the chips or satellite communications systems.
We generate a significant percentage of our
revenue from certain key customers, and anticipate this concentration will continue for the foreseeable future, and the loss of one or
more of our key customers could negatively affect our business and operating results.
We derive a significant portion of our revenue from a limited number of customers and,
because the satellite communications industry is characterized by a relatively small number of large players, we anticipate that this
customer concentration will continue for the foreseeable future. For the years ended December 31, 2022 and December 31, 2021, our three
largest customers accounted for, in the aggregate, approximately 78% and 64% of our revenue, respectively. If we fail to deliver upon
contracts with these three customers, or upon the contracts of other large customers, or if demand by these customers for our chips and
satellite communications systems decreases substantially, our revenues and operating results could be materially adversely affected.
In connection with our contracts and arrangements with our largest customers, we have
agreed and may in the future agree to certain restrictions on the sale and license of the developed product and systems to secure the
contract and necessary collaboration for the project. Of our three top customers in 2021 and 2020, Jet Talk, our joint venture which is
accounted for as an equity method investee in our financial statements and in which we own a 51% equity stake but which we do not control,
did not contribute to our revenues for the year ended December 31, 2022 and accounted for approximately 14% and 68% of our revenues in
the years ended December 31, 2021 and December 31, 2020, respectively, all of which was revenue for the provision of research and development
services. We have two contracts with Jet Talk, both related to the development of an Aero/IFC satellite communications terminal for commercial
aircraft, which under our joint venture agreement Jet Talk will have the exclusive right to commercialize and sell to the commercial aviation
market.
Our customers’ continued success will depend in large part on growth within their
respective markets. Demand in these markets fluctuates significantly, driven by the development of new technologies and prevailing economic
conditions. Factors affecting these markets could seriously harm our customers and, as a result, harm us, including:
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the effects of catastrophic and other disruptive events at our customers’ operational sites or targeted markets including,
but not limited to, natural disasters, telecommunications failures, geopolitical instability caused by international conflict, including
the Russia-Ukraine war, cyber-attacks, terrorist attacks, pandemics, epidemics or other outbreaks of infectious disease, including the
COVID-19 pandemic, breaches of security or loss of critical data; |
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increased costs associated with potential disruptions to our or our customers’ supply chain and other manufacturing and production
operations; |
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the deterioration of our customers’ financial condition; |
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delays and project cancellations as a result of design flaws in the chips and communications systems developed by us or our customers;
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the inability of our customers to dedicate the resources necessary to promote and commercialize their products; |
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the inability of our customers to adapt to changing technological demands resulting in their products becoming obsolete; and
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the failure of our satellite communications systems or our customers’ products to achieve market success and gain market acceptance.
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Any slowdown or a disruption in the growth of these markets could adversely affect our
financial condition and results of operations.
The success of our business is highly dependent
on our ability to effectively market and sell our technologies and to convert contracted revenues and our pipeline of potential contracts
into actual revenues, which can be a costly process.
To date, we have relied heavily on equity and debt financing to fund our business and
operations, and we are currently generating revenue from a limited number of customer contracts. See “—
We generate a significant percentage of our revenue from certain key customers, and anticipate this concentration will continue for the
foreseeable future, and the loss of one or more of our key customers could negatively affect our business and operating results.”
Our success will be highly dependent on our ability to retain and expand our business with existing customers and convert our pipeline
of potential contracts into revenues. If we fail to sign contracts with at least some of the customers envisaged in our pipeline, particularly
with large customers over the next years when any large contract would significantly impact our revenues and financial results, and grow
sufficient business volume with such customers, our business, financial condition and results of operations will be materially and adversely
affected. For example, potential additional future contracts with Telesat, one of our largest customers, related to delivery of SX 3099
chip-enabled ground terminal modems for their Lightspeed LEO network are dependent on Telesat obtaining the necessary funding for completion
of this project.
Our ability to establish and expand our customer relationships is subject to several
factors, including, among other things, our ability to overcome customer concerns relating to our lack of experience or track record in
providing chips and satellite communications systems to customers in the same industry, competition from more experienced service providers,
and our customers’ level of satisfaction with our technology, chips, satellite communications systems and services. For example,
two customers with whom we were discussing prospective new contracts recently informed us that they selected our larger competitors with
longer track records of providing space-based and aircraft-based satellite communications solutions as principal contractors for their
satellite communications needs.
If our satellite communications systems or chips fail to perform as expected or their
commercial availability or production is significantly delayed as compared to the timelines we establish with our customers, our business,
financial condition and results of operations may be harmed.
We may not be able to continue to develop our
technology or develop new technologies for our existing and new satellite communications systems.
The satellite communications industry is subject to rapid technological changes, new
and enhanced product introductions, product obsolescence and changes in user requirements. Our ability to compete successfully in the
satellite communications market depends on our ability to successfully enhance our existing technology and develop new chips and satellite
communications systems that are responsive to the latest technological advances. Our ability to continue to enhance our existing technology,
or develop new technology that is responsive to changing technological requirements and suitable for the needs of market participants,
depends on a number of factors, including the following:
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our ability to anticipate the needs of the market for new generations of satellite communications digital chip technology;
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our ability to continue funding and to maintain our current research and development activities, particularly the development of
enhancements to our chips and systems; |
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our ability to successfully integrate our advanced technologies and system design architectures into satellite communications systems
that are compatible with our customers’ infrastructure; |
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our ability to develop and introduce timely and on-budget new satellite communications systems that meet the market’s technological
requirements; |
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our ability to establish close working relationships with our customers and to have them integrate our satellite communications systems
in their design of new communications systems; |
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our ability to maintain intellectual properties rights, whether proprietary or third party, that are necessary to our research and
development activities, such as chip development software; |
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our ability to gain access to the proprietary waveforms that potential customers utilize; and |
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our ability to obtain funding for continuing our technology and product development. |
Some of our chips and satellite communications systems are in the development or engineering
(involving the customization of a developed product to the customer’s specifications) stage with limited or no sales to date, and
we cannot assure that our chips and satellite communications systems will be successful. If we are unable to design and develop new chips
and satellite communications systems that are compatible with current technological needs, it could materially harm our business, financial
condition and results of operations.
Additionally, as part of our current strategy, we have decided to pause development
and marketing related to our satellite-enabled Internet-of-Things Diamond product in order to continue to focus on our other satellite
communications chips and products described herein.
We will be reliant on our joint venture partner,
ST Electronics (Satcom & Sensor Systems) Pte Ltd. (“STE”), for the success of the Jet Talk joint venture and, therefore,
our Aero/IFC terminals business.
In 2018, we established a joint venture, Jet Talk, with STE. We hold 51% of the equity
in Jet Talk and our joint venture partner, STE, participates in significant financial and operational decisions, including participating
in the appointment of Jet Talk’s chief executive officer and direct Jet Talk’s R&D (which is performed by us), marketing
activities, and funding. We are developing our Aero/IFC satellite communications terminal for commercial aircraft under agreements with
Jet Talk and, under our joint venture agreement with STE, Jet Talk will have the exclusive right to commercialize and sell our Aero-IFC
terminals and related products to the commercial aviation market. We believe that the Aero/IFC sector is likely to represent a substantial
portion of our future business and revenues, most of which are likely to be driven by the commercial aviation market. Accordingly, we
expect to rely primarily on STE for managing Jet Talk and directing the marketing and sale of our Aero/IFC terminals. While we believe
our interests are aligned with STE’s, these interests may diverge in the future, including as a result of STE pursuing a different
strategy, developing its own competing product, selling or exiting its aerospace business, or other reasons outside of our control. If
any of these things were to occur, we would have to replace STE as a partner or expand our own sales and marketing resources, which could
increase our costs and materially adversely affect our results of operations.
Additionally, once we complete the development of and are able to commercialize our
Aero/IFC satellite communications terminals, the revenues and margins attributable to such sales will not be fully reflected in our consolidated
financial statements, which will instead reflect our sales of products and services to Jet Talk and our equity in Jet Talk’s net
income or loss for each reporting period. This may make it more difficult for investors and analysts to analyze our business and performance
trends relative to companies that consolidate their material operations. See Note 6 to SatixFy’s consolidated financial statements
included elsewhere in this prospectus.
Deterioration of the financial condition of
our customers could adversely affect our operating results.
Deterioration of the financial condition of our customers could adversely impact our
collection of accounts receivable and may result in delays in product orders or contract negotiations. For example, in 2020 and 2021 the
COVID-19 pandemic impacted the financial performance of many of our customers, in part due to significant slowdown in commercial air traffic
and reduced demand for products and services for commercial aviation markets. For the years ended December 31, 2022 and December 31, 2021,
our three largest customers accounted for, in the aggregate, approximately 78% and 64% of our revenue, respectively. As of December 31,
2022 and December 31, 2021, accounts receivable with these customers were approximately $0.8 million and $0.6 million, respectively. We
regularly review the collectability and creditworthiness of our customers to determine an appropriate allowance for credit losses. Based
on our review of our customers, we currently have only immaterial reserves for uncollectible accounts. If our uncollectible accounts,
however, were to exceed our current or future allowance for credit losses, our operating results would be negatively impacted. Further,
recent global inflationary trends and financial markets volatility have resulted in funding constraints that may affect the timing and
scale of investments in new communications satellite constellations and related infrastructure by some of our existing and prospective
customers. The effects of recent macroeconomic uncertainties on our customers have also resulted in delays to contract negotiations or
customer orders, and may result in further delays. For example, one of our customers recently announced that it is reconsidering the scale
and timing of its plans to launch a new LEO communications satellite constellation. These and any new or further delays in new contracts
or customer orders could materially adversely affect our financial condition and operating results.
We operate in a highly competitive industry
and may be unsuccessful in effectively competing in the future.
We operate in the highly competitive and rapidly developing industry of satellite communications,
and we face intense worldwide competition in the introduction of new chips and satellite communications systems. Our customers’
selection processes are typically highly competitive, and our chips and satellite communications systems may not be included in the next
generation of their products and systems.
We compete with various companies across the various satellite communications industry’s
segments we serve. In addition to our direct competitors, some of our customers and suppliers also compete with us to some extent by designing
and manufacturing their own satellite communications systems. We face intense competition to introduce new technologies and satellite
communications systems and to competitively price our chips and satellite communications systems. Some of our competitors have recently
introduced products with more advanced technologies than in the past which increases competition with our products. Many of our current
and potential competitors have existing customer relationships, established patents and other intellectual property, greater access to
capital, advanced manufacturing capabilities, more experience in the satellite communications industry and substantial technological resources.
We may not be able to compete successfully against current or future competitors, which would adversely affect our business, financial
condition and results of operations.
Pricing at too high a level could adversely affect our ability to gain new customers
and retain current customers, while increased competition could force us to lower our prices or lose market position and could adversely
affect growth prospects and profitability. Relatedly, if we are unable to deliver on our contracts with our existing customers for any
reason or if we fail to meet customer needs and expectations, we may lose our existing contracts or our reputation could be harmed, either
of which would have a material adverse effect on our business, operations and financial condition.
The magnitude and nature of the effects of these challenges and uncertainties, in addition
to the challenges and uncertainties discussed above under “— We are an early stage company
with a history of losses, have generated less revenues than our prior projections, and have not demonstrated a sustained ability to generate
predictable revenues or cash flows. If we do not generate revenue as expected, our financial condition will be materially and adversely
affected,” on our business are difficult to predict and such effects may not be fully realized, or reflected in our financial
results, until future periods.
If the satellite communications markets fail
to grow, our business could be materially harmed.
We develop and market satellite communications systems and digital chips across the
value chain for the satellite communications industry. The industry is undergoing a dramatic transformation due to lower cost solutions
and miniaturization as well as introduction of new technologies and manufacturing practices. Demand for large GEO communication satellites
has fallen as new satellite operators prepare to launch constellations of hundreds or thousands of smaller, lower cost LEO and MEO broadband
satellite constellations, increasing the need for chips and products that are small in size, low in weight, with low power consumption
and low cost. Because the industry is constantly changing, it is difficult to predict the rate at which these markets will grow or decline.
If the markets for commercial satellite communications systems fail to grow, or if we
fail to penetrate the market for LEO satellites, or if LEO satellite operators to whom we are targeting for the sale of our satellite
communications systems do not successfully deploy their satellites, or fail to build their clientele in a reasonable period, our business
could be materially harmed. Additionally, if we fail to penetrate the market for IFC systems, or if airline operators or service providers
to whom we are targeting for the sale of our IFC systems do not select our IFC system, or decide not to pursue IFC upgrade, our business
could be materially harmed. A significant decline or a delay in the growth in these two markets could materially harm our business and
impair the value of our shares.
We have incurred net losses in each year since
inception and may not be able to continue to raise sufficient capital or achieve or sustain profitability.
We have incurred net losses and had net cash outflows from operating activities in each
year since 2012, when we commenced operations. We have invested and continue to invest significantly in our business, including in technology
research and development and the recruitment of quality industry talent. As of December 31, 2022, we have invested over $209 million in
research and development, a substantial portion of which has been defrayed by government and public entity grants.
We have based some of our plans, budgets and financial projections on assumptions that
may prove to be wrong, and we may be required to utilize our available capital resources sooner than we expect. Changing circumstances
could also cause us to consume capital faster than we currently anticipate, and we may need to spend more than currently expected. The
timing of the completion of the development and engineering of our satellite communications systems that are expected to drive our future
results is uncertain. The commercialization of these products may also entail unpredictable costs and is subject to significant risks,
uncertainties and contingencies, many of which are beyond our control. Certain of these risks and uncertainties include, but are not limited
to, changing business conditions, continued supply chain challenges, other disruptions due to governmental and regulatory changes, competitive
pressures, regulatory developments or the cessation of public sector research and development funding, among other potential developments.
As discussed above, we need to seek immediate additional equity and/or debt financing in order to fund our operations for the near term
and continue the development of products and technologies. Debt financing could contain restrictive covenants relating to financial and
operational matters including restrictions on the ability to incur additional secured or unsecured indebtedness that may make it more
difficult to obtain additional capital with which to pursue business opportunities. If financing is not available, or if the terms of
financing are less desirable than we expect, we may be forced to decrease our level of investment in product development or scale back
our operations, which could have a material adverse impact on our business and financial prospects.
In addition, as of December 31, 2022, we had financial debt of approximately $55.0 million
and our liabilities exceeded our assets by $31.0 million. Any failure to increase our revenue, manage the increase in our operating expenses,
continue to raise capital, manage our liquidity or otherwise manage the effects of net liabilities, net losses and net cash outflows,
could prevent us from continuing as a going concern or achieving or maintaining profitability. Additionally, recent media and regulatory
scrutiny of SPAC business combinations, and high redemption trends, may lead customers to view SatixFy as a riskier or undercapitalized
partner, which could negatively affect our customer relationships, business and operations.
We may not be able to generate sufficient cash
to service our indebtedness.
We have a high amount of debt relative to our earnings. Our ability to make payments
on our indebtedness depends on our ability to generate cash in the future. Accordingly, we will need to generate significant cash flows
from operations, or obtain new capital, in the future to meet our debt service requirements. Additionally, the 2022 Credit Agreement contains
customary covenants that limit our ability to incur additional indebtedness or liens or dispose of our assets, which may impair our ability
to meet our debt service requirements. The 2022 Credit Agreement also imposes a financial maintenance covenant, requiring that, for so
long as we have a leverage ratio of total debt to Consolidated Adjusted EBITDA (as defined in the 2022 Credit Agreement) greater than
or equal to 6.00x to 1.00x, we must maintain a minimum cash balance of $8 million and $7 million for the months of April and May 2023,
respectively, and thereafter the lesser of $10 million and our budgeted cash balance, in each case plus an amount sufficient to cover
our and our subsidiaries’ accounts payable that are past 60 days due, which cash is held in deposit accounts subject to a security
interest in favor of the Agent for the benefit of the lenders. See “Management’s Discussion
and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources.” If we are unable to
generate sufficient cash flows it may make it more difficult for us to obtain future financing on terms that are acceptable to us, or
at all, which may require us to seek protection under insolvency laws or cease our operations altogether.
Additionally, pursuant to the Forward Purchase Agreement, we agreed that we will not
issue additional equity securities (except pursuant to the Equity Line of Credit and our 2020 Share Award Plan) until such time as the
sellers thereunder recoup the Prepayment Shortfall (as defined therein) which will limit our ability to issue equity securities to raise
additional capital, including during times when it would be advantageous to do so.
Our estimates, including market opportunity
estimates and market growth forecasts, are subject to inherent challenges in measurement and significant uncertainty, and real or perceived
inaccuracies in those metrics and estimates may harm our reputation and negatively affect our business.
We track certain key metrics and market data, including, among others, our estimated
demand for communication satellites, particularly LEO satellites, which may differ from estimates or similar metrics published by third
parties due to differences in sources, methodologies or the assumptions on which we rely. We previously reported estimates of our potential
future revenue pipeline, however, due to the postponement or narrowing of negotiations of new contracts with existing and prospective
customers and the early stage of our negotiations with additional new customers, our management has decided to no longer publicly report
our potential revenue pipeline unless and until these uncertainties are resolved, as any such pipeline information would be of limited
utility to investors. Our methodologies for tracking these data may change over time, which could result in changes to our metrics, including
the metrics we publicly disclose. While our key metrics and market data are based on what we believe to be reasonable estimates for the
applicable period of measurement, there are inherent challenges in measuring our performance. For example, the accuracy of our projected
potential contract revenue pipeline could be impacted by developments outside of our control, such as changes in customers’ plans,
supply chain difficulties and the availability of alternative products. In addition, limitations with respect to how we measure data or
with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term
strategies. If our estimates of operating metrics and market data are not accurate representations of our business, if investors do not
perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our business, financial
condition, results of operations and prospects could be materially and adversely affected.
Additionally, industry data, forecasts, estimates and projections included elsewhere
in this prospectus are subject to inherent uncertainty as they necessarily require certain assumptions and judgments. Certain facts, forecasts
and other statistics relating to the industries in which we compete have been derived from various public data sources, including third-party
industry reports and analyses. Accordingly, our use of the terms referring to our markets and industries such as, satellite communications
systems, chips, IFC, and Communications-On-The-Move (“COTM”) may be subject to interpretation,
and the resulting industry data, projections and estimates are inherently uncertain. You should not place undue reliance on such information.
In addition, our industry data and market share data should be interpreted in light of the defined markets in which we operate. Any discrepancy
in the interpretation thereof could lead to varying industry data, measurements, forecasts and estimates. Further, the sources on which
such industry and market data and estimates are based were prepared as of a certain point in time, and any changes in global macroeconomic
conditions, including recent global inflationary trends and financial markets volatility, could also lead to changes in these data, measurements,
forecasts and estimates. For these reasons and due to the nature of market research methodologies, you should not place undue reliance
on such information as a basis for making, or refraining from making, your investment decision.
Furthermore, we do not, as a matter of general practice, publicly disclose long-term
forecasts or internal projections of our future performance, revenue, financial condition or other results.
Our results of operations may vary significantly
from our expectations or guidance.
Our revenue, margins and other operating results depend on demand for our chips and
satellite communications systems. A decline in demand for such products as a result of economic conditions or for other reasons could
materially adversely impact our revenue and profitability. Given recent developments described elsewhere herein, our prior projections
should not be viewed as current. Our future operating results will depend on many factors, including the following:
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our ability to timely introduce to the market our current chips and satellite communications systems; |
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our ability to develop new chips and satellite communications systems that respond to customer requirements; |
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changes in cost estimates and cost overruns associated with our development projects; |
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changes in demand for, and market conditions of, our chips and satellite communications systems; |
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the ability of third-party foundries and other third-party suppliers to manufacture, assemble and test our chips and satellite communications
systems in a timely and cost-effective manner; |
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the discovery of defects or errors in our hardware or software after delivery to customers; |
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our ability to achieve cost savings and improve yields and margins on our new and existing products; |
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our ability to utilize our capacity efficiently or to adjust such capacity in response to customer demand; |
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our ability to realize the expected benefits of any acquisitions or strategic investments; |
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business, political, geopolitical and macroeconomic changes, including trade disputes, the imposition of tariffs or sanctions, inflation
trends and downturns in the semiconductor and the satellite communications industries and the overall global economy; and |
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changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, expectations for inflation,
unemployment levels, and energy or other commodity prices. |
Our future operating results could be adversely affected by one or more factors, including
any of the above factors, which may also damage our reputation, reduce customer satisfaction, cause the loss of existing customers, result
in a failure to attract new customers, result in a failure to achieve market acceptance for our chips and satellite communications systems,
result in cancellation of orders and loss of revenues, reduce our backlog and our market share, increase our service and warranty costs,
divert development resources, lead to legal actions by our customers, result in product returns or recalls and increase our insurance
premiums. In addition, any prolonged adverse effect on our revenue could alter our anticipated working capital needs and interfere with
our short-term and long-term business strategies.
If we are unable to manage our growth effectively,
our business and financial results may be adversely affected.
To continue to grow, we must continue to expand our operational, engineering, sales
and marketing efforts, accounting and financial systems, procedures, controls and other internal management systems. This may require
substantial managerial and financial resources, and our efforts in this regard may not be successful. Our current systems, procedures
and controls may not be adequate to support our future operations. Unless our growth results in an increase in our revenues that is proportionate
to the increase in our costs associated with this growth, our operating margins and profitability will be adversely affected. If we fail
to adequately manage our growth effectively, improve our operational, financial and management information systems, or effectively train,
motivate and manage our new and future employees, it could adversely affect our business, financial condition and results of operations.
We may not benefit from our investment in the
development of new technologies and satellite communications systems.
The time from conception to launch of a new chip or a satellite communications systems
may be several years, thereby delaying our ability to realize the benefits of our investments in new technologies. In addition, we may
lose our investment in new chips or satellite communications systems that we develop if by the time we launch the new chips or satellite
communications systems they are no longer responsive to market needs or have become obsolete due to technological changes, the introduction
of new and superior technology or product or changes in customer needs. For example, the satellite communications industry and the IFC
customers we serve, or may serve in the future, will likely experience increased market pressure from telecommunication-based connectivity
providers as 5G broadband coverage increases. A decrease in demand for satellite communications connectivity solutions would likely have
an adverse effect on such IFC customers’ businesses, which may in turn have an adverse effect on our business and operations. We
may also experience design, procurement and manufacturing difficulties that could delay or prevent us from successfully launching new
chips and satellite communications systems. Any delays could result in increased costs of development, reducing the benefits from the
launch of new chips or satellite communications systems. If we are not able to benefit from our investments in new technologies and satellite
communications systems, or if we experience delays or other difficulties, our business, financial condition and results of operations
could be adversely affected.
We developed our chip set with the help of substantial grants from the European Space
Agency (“ESA”), sponsored by the U.K. Space Agency (“UKSA”),
through ESA’s Advanced Research in Telecommunication Systems (ARTES) program, which have amounted to over $76 million through December
31, 2022. In connection with the ESA grants, which are intended to fund 50%-75% of the cost of development and manufacturing of the integrated
chip sets and the communications systems, our agreement stipulates that the resulting intellectual property will be available to ESA on
a free, worldwide license for its own programs. In addition, ESA can require us to license the intellectual property to certain bodies
that are part of specified ESA programs, for ESA’s own requirements on acceptable commercial terms, and can also require us to license
the intellectual property to any other third party for purposes other than ESA’s requirements, subject to our approval that such
other purposes do not contradict our commercial interests. Although ESA has not yet indicated an intention to exercise its right to require
us to license our intellectual property to other parties, it may do so in the future, which may require us to agree to contractual terms
that are less favorable than what we may otherwise agree to in other customer contracts.
We may not be able to comply with our contracts
with customers, and non-compliance may harm our operations and expose us to potential third-party claims for damages.
A significant portion of our revenue is derived from commercial contracts with customers
for the development and delivery of satellite communications systems. These contracts typically contain strict performance requirements
and project milestones. Some of our customers expressed initial concerns with our performance due to delays in deliveries and completion
of work, which has primarily been the result of the ongoing supply-chain and macro-economic events discussed elsewhere herein. We may
not be able to comply with these performance requirements or meet these project milestones in the future. If we are unable to comply with
these performance requirements or meet these milestones, our customers may terminate these contracts and, under some circumstances, recover
damages or other penalties from us. Any termination of these contracts could materially reduce our revenues and adversely affect our business,
financial condition and results of operations.
Loss of key employees and the inability to
continuously recruit and retain qualified employees could hurt our competitive position.
We depend on a limited number of key technical, marketing and management personnel to
manage and operate our business. In particular, we believe our success depends to a significant degree on our ability to attract and retain
highly skilled engineers to facilitate the enhancement of our existing technologies and the development of new chips and satellite communications
systems.
In order to compete effectively, we must:
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hire and retain qualified professionals; |
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continue to develop leaders for key business units and functions; and |
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train and motivate our employee base. |
The competition for qualified personnel is intense, and the number of candidates with
relevant experience, particularly in radio-frequency device and satellite communications systems development and engineering, integrated
circuit and technical pre- and post-sale support, is limited. Changes in employment-related laws and regulations may also result in increased
operating costs and less flexibility in how we meet our changing workforce needs. Additionally, we have dismissed, and may in the future
decide to dismiss, certain personnel in order to save on costs and focus on our core competencies, which may have an adverse effect on
our reputation and our ability to retain additional qualified personnel in the future. We cannot assure that we will be able to attract
and retain skilled personnel in the future, which could harm our business and our results of operations.
Due to intense competition for highly skilled
personnel in Israel and the U.K., we may fail to attract, recruit, retain and develop qualified employees, which could materially and
adversely impact our business, financial condition and results of operations.
Our principal research and development activities are conducted from our offices in
Israel and the U.K. and we face significant competition for suitably skilled software engineers, electrical engineers working in digital
signal processing and developers in these regions. For example, the Israeli high-tech industry has experienced significant economic growth,
although there was a decline in the IPO market with 13 initial public offerings and special purpose acquisition company (“SPAC”)
transactions in 2022, amounting to a value of approximately $10.7 billion, as reported on December 15, 2022 by PwC Israel in its annual
tech exits report, down significantly in comparison to 72 offerings in 2021 at a total value of $71 billion. The accelerated economic
growth of Israeli tech companies led to a sudden surplus of job opportunities and intense competition between Israeli-based employers
to attract locally qualified employees. As a result, the high-tech industry in Israel has experienced significant levels of employee attrition
and is currently facing a severe shortage of skilled personnel. Many of the companies with whom we compete for experienced personnel have
greater resources than we do and we may not succeed in recruiting additional experienced or professional personnel, retaining current
personnel or effectively replacing current personnel who may depart with qualified or effective successors.
Our effort to retain and develop personnel may also result in significant additional
expenses, which could adversely affect our profitability. There can be no assurance that qualified employees will continue to be employed
or that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract qualified personnel could
have a material adverse effect on our business, financial condition and results of operations.
We are dependent on our senior management and
other key personnel for the success of our business.
We depend on the services of our senior management team and other key personnel. The
loss of the services of any member of senior management or a key employee could have an adverse effect on our business. We may not be
able to locate, attract or employ on acceptable terms qualified replacements for senior management or other key employees if their services
are no longer available.
Damage to our reputation could negatively impact
our business, financial condition and results of operations.
Our reputation is a critical factor in our relationships with customers, employees,
governments, suppliers and other stakeholders. Incidents involving product quality, security, or safety issues, allegations of unethical
behavior or misconduct or legal noncompliance, internal control failures, data or privacy or cybersecurity breaches, workplace safety
incidents, environmental incidents, the use of our chips or satellite communications systems for illegal or objectionable applications,
negative media reports, the conduct of our suppliers or representatives, and other issues or incidents that, whether actual or perceived,
may result in adverse publicity and harm to our reputation. In addition, if we fail to respond quickly and effectively to address such
incidents, the ensuing negative public reaction could harm our reputation and lead to litigation or subject us to regulatory actions or
restrictions. Damage to our reputation could harm customer relations, reduce demand for our chips or satellite communications systems,
reduce investor confidence in us, and may also damage our ability to compete for highly skilled employees. Repairing our reputation may
be difficult, time-consuming and expensive.
Our customers’ satellite communications
projects incorporate components or rely on launch services supplied by multiple third parties, and a supply shortage or delay in delivery
of these components or lack of access to launch capabilities could delay orders for our systems by our customers.
Our customers purchase components or services used in the manufacture of their satellite
communications projects from various sources of supply, often involving several specialized components or service providers. Any supply
shortage or delay in delivery by third-party component suppliers, or a third-party supplier or service provider’s cessation or shut
down of its business, may prevent or delay production of our customers’ systems or products. As a result of delays in delivery or
supply shortages of third-party components or services, orders for our chips or satellite communications systems may be delayed or canceled
and our business may be harmed. In addition, the semiconductor industry is currently experiencing a shortage on manufacturing capacity
due to unprecedented levels of demand, which has impacted, and may continue to impact, our customers’ ability to build their products
and negatively impact our customers’ demand for our solutions. Additionally, certain of our customers are satellite operators that
rely on third parties to launch their satellites into space, with some of them having relied on Russian launch capabilities that are currently
no longer available due to sanctions resulting from the Russia-Ukraine war. The unavailability of the Russian launch capabilities caused
delays in the deployment by certain of our customers of their satellites, which in turn caused them to defer orders for our satellite
communications chips and satellite payloads. This could materially adversely affect our business, financial condition, results of operations
and prospects.
We rely on a third-party vendor to supply chip
development software to us for the development of our new chips and satellite communications systems, and we may be unable to obtain the
tools necessary to develop or enhance new or existing chips or satellite communications products.
We rely on third-party chip development software (i.e., EDA tools) to assist us in the
design, simulation and verification of new chips or chip enhancements. To bring new chips or chip enhancements to market in a timely manner,
or at all, we need development software that is sophisticated enough or technologically advanced enough to complete our design, simulations
and verifications. We have experienced in the past, and may experience in the future, delays in our development of chips that utilize
third-party software as a result of bugs, defects or other issues in, or caused by, such third-party software. Such delays could cause
us to fail to meet our contractual obligations to customers, or otherwise delay the development, testing and release of new products,
and could negatively impact our reputation, business and operating results.
Because of the importance of chip development software to the development and enhancement
of our chips and satellite communications systems, our relationships with leaders in the computer-aided design industry, such as Cadence
Design Systems, Inc. and Siemens, are critical to us. If these relationships are not successful, we may be unable to develop new chips
or satellite communications systems, or enhancements to these products, in a timely manner, which could result in a loss of market share,
a decrease in revenue or negatively impact our operating results.
Any disruption to the operations of our third-party
contractors and their suppliers could cause significant delays in the production or delivery of our chips and satellite communications
systems.
Our operations could be harmed if manufacturing, logistics or other operations of our
third-party contractors or their suppliers are disrupted for any reason, including natural disasters, severe storms, other negative impacts
from climate change, information technology system failures or other cybersecurity event, geopolitical instability, military actions or
environmental, public health or regulatory issues. The majority of our chips and satellite communications systems are manufactured by
or use components from third-party contractors located in Europe and the Far East. Any disruption resulting from such events in the regions
in which our suppliers operate could cause significant delays in the production or shipment of our chips or satellite communications systems
until we are able to shift our manufacturing, from the affected contractor to another third-party vendor. We may not be able to obtain
alternate capacity on favorable terms, or at all which could adversely affect our financial condition and results of operations.
We may in the future invest significant resources
in developing new products or service offerings and exploring the application of our proprietary technologies for other uses and those
opportunities may never materialize.
While our primary focus for the foreseeable future will be on acquiring customers, commercializing
our satellite communications systems and developing our proprietary chip technologies for application in satellite communications systems,
we may also invest significant resources in the future in developing new technologies, products and offerings. However, we may not realize
the expected benefits of these investments. Such technologies, services, products and offerings are unproven and may never materialize
or be commercialized in a way that would allow us to generate material revenues from them. If such technologies, products and offerings
become viable in the future, we may be subject to competition from our competitors, some of which may have substantially greater monetary
and knowledge resources than we have and expect to have in the future to devote to the development of these technologies.
New research and development initiatives may also have a high degree of risk and involve
unproven business strategies and technologies with which we have limited experience. They may involve claims and liabilities, expenses,
regulatory challenges and other risks that we may not be able to anticipate. There can be no assurance that such initiatives will yield
technologies or products for which there is customer demand or that any such demand will be sustained at the levels that we anticipate,
or that any of these initiatives will gain sufficient traction or market acceptance to generate sufficient revenue to offset any new expenses
or liabilities associated with these new investments. Further, any such research and development efforts could distract management from
our operations, and would divert capital and other resources from our more established technologies and products. Even if we were to be
successful in developing new technologies, products or offerings, regulatory authorities may subject us to new rules or restrictions in
response to our innovations that may increase our expenses or prevent us from successfully commercializing such new technologies, products
or offerings.
We are subject to warranty claims, product
recalls and product liability claims and may be adversely affected by unfavorable court decisions or legal settlements.
From time to time, we may be subject to warranty or product liability claims as a result
of defects in our chips or satellite communications systems that could lead to significant expense.
If we or one of our customers recalls any of our chips or satellite communications systems
or a customer recalls any of its products containing one of our chips, we may incur significant costs and expenses, including replacement
costs, direct and indirect product recall-related costs, diversion of technical and other resources and reputational harm. Our customer
contracts typically contain warranty and indemnification provisions, and in certain cases may also contain liquidated damages provisions
related to product delivery obligations. The potential liabilities associated with such provisions are significant, and in some cases,
including in agreements with some of our largest customers, are potentially unlimited. Any such liabilities may greatly exceed any revenue
we receive from the sale of the relevant products. Costs, payments or damages incurred or paid by us in connection with warranty and product
liability claims and product recalls could materially and adversely affect our financial condition and results of operations.
We are subject to risks from our international
operations.
We operate globally with several operational centers in Israel, the United Kingdom,
the U.S. and Bulgaria, and have customers, potential customers and suppliers across different regions of the world. We are also developing
our business across several international markets, where each country in which our customers plan to launch their projects has different
infrastructure, regulations, systems and customer expectations, all of which require more investment by us than if we only operated in
one country. As a result, we are subject to regulatory, geopolitical and other risks associated with doing business internationally, including:
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global and local economic, social and political conditions and uncertainty; |
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currency controls and fluctuations; |
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formal or informal imposition of export, import or doing-business regulations, including trade sanctions, tariffs and other related
restrictions; |
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compliance with laws and regulations that differ among jurisdictions, including those covering taxes, intellectual property ownership
and infringement, export control regulations, anti-corruption and anti-bribery, antitrust and competition, data privacy, cybersecurity
and environment, health, and safety; |
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labor market conditions and workers’ rights affecting our operations; and |
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occurrences of geopolitical crises such as terrorist activity, armed conflict, civil or military unrest or political instability,
which may disrupt our operations — for example, conflicts in Asia implicating the global semi-conductor supply-chain, such as conflicts
between Taiwan and China, the war between Russia and Ukraine, or the tense relations between the U.S. and China, could lead to regional
and/or global instability, as well as adversely affect supply chains as well as commodity and other financial markets or economic conditions.
The U.S., European Union (the “EU”), the United Kingdom, Switzerland and other countries have imposed, and may further impose,
financial and economic sanctions and export controls targeting certain Russian entities and/or individuals, and we, or our customers,
may face restrictions on engaging with certain businesses due to any current or impending sanctions and laws, which could adversely affect
our business. |
These and other factors could harm our operations and materially impact our business,
results of operations and financial condition.
The global COVID-19 pandemic has harmed and
could continue to harm our business, financial condition, and results of operations.
On March 11, 2020, the World Health Organization designated the outbreak of COVID-19
as a global pandemic. The COVID-19 pandemic has hindered the movement of people and goods worldwide, and many governments instituted restrictions
on work and travel. Governments, non-governmental organizations and private sector entities issued in the past and may issue in the future
non-binding advisories or recommendations regarding air travel or other social distancing measures, including limitations on the number
of persons that should be present at public gatherings.
Among other things, the COVID-19 pandemic caused a significant decline in aviation travel,
which has resulted in several project delays in relation to IFC and has adversely affected our business and results since 2020. Beginning
in the first quarter of 2020, several opportunities at different stages of negotiations were postponed and exhibitions and sales meetings
were canceled. In addition, work on many of our current projects was delayed, as more than 50% of our employees worked from home during
a period of over eight months in 2021. This led to delays in project schedules, and several of our customers put current projects on hold
or postponed anticipated projects in light of uncertainties surrounding the air travel industry and demand for satellite communications-related
products and services.
Additionally, many manufacturing businesses globally are currently experiencing supply
chain issues with respect to electronic components and other materials and labor used in their production processes, which is due to a
complex array of factors, including the COVID-19 pandemic. Supply chain issues experienced by suppliers that we rely on have resulted,
and may in the future result in, increases in the prices we pay such suppliers and delays in our ability to meet obligations under our
contracts. See “— We are currently experiencing, and may continue to experience, increased
risks and costs associated with volatility in labor or component prices or as a result of supply chain or procurement disruptions, which
may adversely affect our operations.”
Our customers’ businesses or cash flows have been and may continue to be negatively
impacted by effects of COVID-19, which may lead them to continue to delay upgrading their existing satellite communications systems or
lead them to delay the advancement of their satellite communications projects, seek adjustments to payment terms or delay making payments
or default on their payables, any of which may impact the timely receipt and/or collectability of our receivables.
Risks Related to Litigation, Laws and Regulation and Governmental
Matters
Our business is subject to a wide range of
laws and regulations, many of which are continuously evolving, and failure to comply with such laws and regulations could harm our business,
financial condition and operating results.
We are subject to environmental, labor, health, safety and other laws and regulations
in Israel, the United Kingdom, the United States and other jurisdictions in which we operate or sell our chips and satellite communications
systems. We are also required to obtain authorizations or licenses from governmental authorities for certain of our operations, including
with respect to regulatory approval of our Aero products for installation on commercial aircraft, and have to maintain and protect our
intellectual property worldwide. In the jurisdictions where we operate, we need to comply with differing standards and varying practices
of regulatory, tax, judicial and administrative bodies.
Our business environment is also subject to many business uncertainties, resulting from
the following international risks:
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negative economic developments in economies around the world and the instability of governments; |
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social and political instability in Israel and in the other countries in which we operate; |
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pandemics or national and international environmental, nuclear or other disasters, which may adversely affect our workforce, as well
as our local suppliers and customers; |
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adverse changes in governmental policies, especially those affecting trade and investment; |
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foreign currency exchange, in particular with respect to the U.S. dollar, the Euro, the British pound sterling, the Israeli Shekel,
and transfer restrictions, in particular in Russia and China; and |
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threats that our operations or property could be subject to nationalization and expropriation. |
No assurance can be given that we have been or will be at all times in complete compliance
with the laws and regulations to which we are subject or that we have obtained or will obtain the permits and other authorizations or
licenses that we need. If we violate or fail to comply with laws, regulations, permits and other authorizations or licenses, we could
be fined or otherwise sanctioned by regulators. In addition, if any of the international business risks materialize or become worse, they
could also have a material adverse effect on our business, financial condition and results of operations.
Changes in government trade policies, including
the imposition of export restrictions, could limit our ability to sell our chips and satellite communications systems to certain customers,
which may materially and adversely affect our sales and results of operations.
We are subject to United Kingdom, Israeli and, to a certain extent, the U.S. export
control and economic sanctions laws, which prohibit the shipment of certain products to embargoed or sanctioned countries and regions,
governments and persons. In addition, we incorporate encryption capabilities into certain of our products, and these products are subject
to Israel export control requirements that control the use, import and export of encryption technology.
Any change in export or import regulations, the scope of economic sanctions or related
legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies
targeted by such sanctions, legislation or regulations, could result in decreased use of our products by, or in our decreased ability
to export or sell our products to, existing or potential customers with international operations. Additionally, any new, expanded or modified
sanctions, legislation or regulations, such as the sanctions imposed on Russia following its invasion of the Ukraine, could adversely
affect the operations of certain of our customers, which could in turn adversely affect their demand for our products and services.
The loss of customers, the imposition of restrictions on our ability to sell products
to customers or the reduction in customer demand for our products as a result of export restrictions or other regulatory actions could
materially adversely affect our sales, business and results of operations.
We have received grants from the Israeli Innovation
Authority that require us to meet several specified conditions and may restrict our ability to manufacture some product candidates and
transfer relevant know- how outside of Israel.
We have received grants from the government of Israel through the National Authority
for Technological Innovation (formerly known as the Office of the Chief Scientist of the Ministry of Economy and Industry) (the “Israel
Innovation Authority” or “IIA”) under several research and development programs funded by the IIA (the “Approved
Programs”), in an aggregate amount of $6.3 million for the financing of our research and development expenditures in Israel. These
IIA grants are comprised of $3.3 million royalty-bearing grants which are related to certain elements of the SX-3000 chip, which currently
forms a nominal part of our activities, and $3.0 million of non-royalty-bearing grants which are related to several consortium programs
(with participation of academic institutions and the industry) for the development of related ASIC manufacturing technologies. We are
required to pay the IIA royalties from the revenues generated from the sale of products (and related services) or services using the IIA
royalty-bearing grants we received under certain Approved Programs at rates which are determined under the Encouragement of Research,
Development and Technological Innovation in the Industry Law 5744-1984, and related rules, guidelines and regulations (the “Innovation
Law”), up to the aggregate amount of the total grants received by the IIA, plus annual interest at an annual rate based on the 12-month
LIBOR. In this regard, the United Kingdom’s Financial Conduct Authority, which regulates the London Interbank Offered Rate (LIBOR),
announced that it will no longer persuade or require banks to submit rates for LIBOR after January 1, 2022. To date, the IIA has not issued
any clarification regarding an alternative interest to be used instead of the LIBOR. Accordingly, there is an uncertainty regarding the
interest accrued to the IIA grants.
As we received grants from the IIA, we are subject to certain restrictions under the
Innovation Law. These restrictions may impair our ability to perform or outsource manufacturing activities outside of Israel, grant licenses
for R&D purposes or otherwise transfer outside of Israel, in each case, without the approval of the IIA, the intellectual property
and other know-how resulting, directly or indirectly, in whole or in part, in accordance with or as a result of, research and development
activities made according to the Approved Programs, as well as any rights associated with such know-how (including later developments
which derive from, are based on, or constitute improvements or modifications of, such know-how) (the “IIA Funded Know- How”).
We cannot be certain that any approval of the IIA will be obtained on terms that are acceptable to us, or at all. Furthermore, in the
event that we undertake a transaction involving the transfer to a non-Israeli entity of IIA Funded Know-How pursuant to a merger or similar
transaction, or in the event we undertake a transaction involving the licensing of IIA Funded Know-How for R&D purposes to a non-Israeli
entity, the consideration available to our shareholders may be reduced by the amounts we are required to pay to the IIA. Any approval
with respect to such transactions, if given, will generally be subject to additional financial obligations, calculated according to formulas
provided under the IIA’s rules and guidelines. Failure to comply with the requirements under the Innovation Law may subject us to
financial sanctions, to mandatory repayment of grants received by us (together with interest and penalties), as well as expose us to criminal
proceedings.
The restrictions under the Innovation Law generally continue to apply even after payment
of the full amount of royalties payable pursuant to the grants. In addition, the government of the State of Israel may from time to time
audit sales of products which it claims incorporate IIA Funded Know-How and this may lead to additional royalties being payable on additional
product candidates, and may subject such products to the restrictions and obligations specified hereunder.
See “Business — Grants from the Israel
Innovation Authority” for additional information.
The United Kingdom’s decision to exit
from the EU has had, and may continue to have, uncertain effects on our business.
On December 31, 2020 the transition period following the United Kingdom’s departure
from the EU (“Brexit”) ended. On December 24, 2020, the United Kingdom and the EU agreed to a trade and cooperation agreement
(the “Trade and Cooperation Agreement”), in relation to the United Kingdom’s withdrawal from the EU which will enter
into force on the first day of the month following that in which the United Kingdom and the EU have notified each other that they have
completed their respective internal requirements and procedures for establishing their consent to be bound. The Trade and Cooperation
Agreement took full effect on February 28, 2021 and provided for, among other things, zero-rate tariffs and zero quotas on the movement
of goods between the United Kingdom and the EU.
We have significant operations in the United Kingdom and Bulgaria and cannot predict
whether or not the United Kingdom will significantly alter its current laws and regulations in respect of the satellite communications
and semiconductor industry and, if so, what impact any such alteration would have on us or our business. Moreover, we cannot predict the
impact that Brexit will have on (i) the marketing of our chips or satellite communications systems or (ii) the process to obtain regulatory
approval in the United Kingdom for our business, chips or satellite communications systems. As a result of Brexit, we may experience adverse
impacts on customer demand and profitability in the United Kingdom and other markets. Depending on the terms of Brexit and any subsequent
trade agreement, the United Kingdom could also lose access to the single EU market, or specific countries in the EU, resulting in a negative
impact on the general and economic conditions in the United Kingdom and the EU. Changes may occur in regulations that we are required
to comply with as well as amendments to treaties governing tax, duties, tariffs, etc. which could adversely impact our operations and
require us to modify our financial and supply arrangements. For example, the imposition of any import restrictions and duties levied on
our chips and satellite communications systems may make our chips and satellite communications systems more expensive and less competitive
from a pricing perspective. To avoid such impacts, we may have to restructure or relocate some of our operations which would be costly
and negatively impact our profitability and cash flow.
Additionally, political instability in the EU may result in a material negative effect
on credit markets, currency exchange rates and foreign direct investments and any subsequent trade agreement in the EU and UK. This deterioration
in economic conditions could result in increased unemployment rates, increased short- and long-term interest rates, adverse movements
in exchange rates, consumer and commercial bankruptcy filings, a decline in the strength of national and local economies, and other results
that negatively impact household incomes.
Due to, among other things, the absence of comparable precedent, it is unclear what
financial, regulatory and legal implications the withdrawal of the United Kingdom from the EU would have and how such withdrawal would
affect us, and the full extent to which our business could be adversely affected.
Risks Related to Intellectual Property, Information Technology,
Data Privacy and Cybersecurity
We rely on our intellectual property and proprietary
rights and may be unable to adequately obtain, maintain, enforce, defend or protect our intellectual property and proprietary rights,
including against unauthorized use by third parties.
We rely on a combination of patent, trademark, copyright and trade secret laws, as well
as contractual rights and confidentiality procedures to protect our intellectual property and proprietary rights. We seek to maintain
the confidentiality of our trade secrets and confidential information through nondisclosure policies, the use of appropriate confidentiality
agreements and other security measures.
We have registered a number of patents worldwide and have a number of patent applications
pending determination, including provisional patent applications for which we are considering whether to file a non-provisional patent
application. We cannot be certain that patents will be issued from any of our pending patent applications or that patents will be issued
in all countries where our systems may be sold. Further, we cannot be certain that any claims allowed from pending applications will be
of sufficient scope or strength to provide meaningful protection against our competitors in any particular jurisdiction. Our competitors
may also be able to design around our patents. Additionally, we have not applied for patents with respect to certain of our products,
and cannot ensure that any patent applications for such products will be made by us or that, if they are made, they will be granted. There
can be no assurance our intellectual property rights will be sufficient to protect against others offering products or services that are
substantially similar to our systems and compete with our business or that unauthorized parties may attempt to copy aspects of our systems
and use information that we consider proprietary. In addition, our patents and other intellectual property rights can be challenged, narrowed
or rendered invalid or unenforceable, including through interference proceedings, reexamination proceedings, post-grant review, inter
partes review and derivation proceedings before the United States Patent and Trademark Office and similar proceedings in foreign
jurisdictions, such as oppositions before the European Patent Office. Any of the foregoing could potentially result in the loss of some
of our competitive advantage and a decrease in revenue which would adversely affect our business, prospects, financial condition and operating
results.
Additionally, we have not registered the right to use the SatixFy trademark, and cannot
ensure that any such trademark registrations for the SatixFy name will be made by us or that, if they are made, they will be granted.
Unregistered, or common law, trademarks may be more difficult to enforce than registered trademarks in the United States because they
are not entitled to, among other things, a presumption of ownership and exclusive rights on a nationwide basis, and certain statutory
remedies (including the right to record the trademarks with the U.S. Customs and Border Patrol to block importation of infringing goods
from overseas). Moreover, there are jurisdictions that do not recognize unregistered trademark rights, and third parties in these jurisdictions
may register trademarks similar or identical to our own and sue us to preclude our use of the SatixFy name. The rights of a common law
trademark are also limited to the geographic area in which the trademark is actually used. Even where we have effectively secured statutory
protection for our use of the SatixFy name, our competitors and other third parties may infringe, misappropriate or otherwise violate
our intellectual property, and in the course of litigation, such competitors and other third parties may attempt to challenge the breadth
of our ability to prevent others from using similar trademarks. If such challenges were to be successful, less ability to prevent others
from using similar trademarks may ultimately result in a reduced distinctiveness of our brand.
We may, over time, strategically increase our intellectual property investment through
additional patent, trademark, copyright and other intellectual property filings, which could be expensive and time-consuming and are not
guaranteed to result in the issuance of registrations. Even if we are successful in obtaining a particular patent, trademark or copyright
registration, it is expensive to enforce our rights, including through maintenance costs, monitoring, sending demand letters, initiating
administrative proceedings and filing lawsuits. In addition to registering material and eligible intellectual property, we rely to a degree
on contractual restrictions to prevent others from exploiting our intellectual property rights. However, the enforceability of these provisions
is subject to various state and federal laws, and is therefore uncertain.
Our reliance on unpatented proprietary information, such as trade secrets and confidential
information, depends in part on agreements we have in place with employees, independent contractors and other third parties that allocate
ownership of intellectual property and place restrictions on the use and disclosure of this intellectual property and confidential information.
These agreements may be insufficient or may be breached, in either case potentially resulting in the unauthorized use or disclosure of
our trade secrets and other intellectual property and confidential information, including to our competitors, which could cause us to
lose any competitive advantage resulting from this intellectual property, and we cannot be certain that we will have adequate remedies
for any breach. We cannot guarantee that we have entered into such agreements with each party that may have or have had access to our
trade secrets or other intellectual property or confidential information or otherwise developed intellectual property for us. Individuals
and entities not subject to invention assignment agreements may make adverse ownership claims to our current and future intellectual property.
Additionally, to the extent that our employees, independent contractors, or other third parties with whom we do business use intellectual
property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
In addition, the laws of some countries in which our systems are developed, manufactured
or sold may not adequately protect our systems or intellectual property or proprietary rights. Furthermore, recent changes to U.S. intellectual
property laws may jeopardize the enforceability and validity of our intellectual property portfolio. This increases the possibility of
infringement, misappropriation or other violations of our intellectual property and proprietary rights in our technology and systems.
Although we intend to vigorously defend our intellectual property and proprietary rights, we may not be able to prevent the infringement,
misappropriation or other violation of our intellectual property and proprietary rights in our technology and systems. We will not be
able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our
intellectual property rights. Any of our intellectual property rights may be challenged, which could result in them being narrowed in
scope or declared invalid or unenforceable. Additionally, our competitors may be able to independently develop non-infringing technologies
that are substantially equivalent or superior to ours.
We have in the past, and may in the future, engage in legal action to enforce, defend
or protect our intellectual property and proprietary rights. Our efforts to enforce our intellectual property rights in this manner may
be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Generally,
intellectual property litigation is both expensive, time-consuming and unpredictable. Our involvement in intellectual property litigation
could divert the attention of our management and technical personnel, expose us to significant liability and have a material, adverse
effect on our business.
We may be subject to claims of infringement,
misappropriation or other violations of third-party intellectual property or proprietary rights.
The industries in which we compete are characterized by rapidly changing technologies,
a large number of patents, and claims and related litigation regarding patent and other intellectual property rights. Third parties have
in the past, and may in the future, assert claims that our systems infringed, misappropriated or otherwise violated their patent or other
intellectual property or proprietary rights. This risk has been amplified by the increase in “non-practicing entities” or
patent holding companies that seek to monetize patents they have purchased or otherwise obtained and whose sole or primary business is
to assert such claims. Such assertions could lead to expensive, time-consuming and unpredictable litigation, diverting the attention of
management and technical personnel. Even if we believe that intellectual property related-claims are without merit, litigation may be
necessary to determine the scope and validity of intellectual property or proprietary rights of others or to protect or enforce our intellectual
property rights. An unsuccessful result in any such litigation could have adverse effects on our business, which may include substantial
damages, exclusion orders, royalty payments to third parties, injunctions requiring us to, among other things, stop using our intellectual
property or rebrand or redesign our systems, stop providing our systems, and indemnification obligations that we have with certain parties
with whom we have commercial relationships. Moreover, we could be found liable for significant monetary damages, including treble damages
and attorneys’ fees, if we are found to have willfully infringed a third party’s patent. In addition, if one of our customers
or another supplier to one of our customers are alleged or found to be infringing, misappropriating or otherwise violating any third-party
intellectual property or proprietary rights, such finding could expose us to legal claims and otherwise adversely affect the demand for
our systems.
We rely on the availability of third-party
licenses of intellectual property, and if we fail to comply with our obligations under such agreements or are unable to extend our existing
third-party licenses or enter into new third-party licenses on reasonable terms or at all, it could have a material adverse effect on
our business, operating results and financial condition.
Many of our systems are designed to include software or other intellectual property
licensed from third parties. It may be necessary in the future to seek or renew licenses relating to various elements of the technology
used to develop these systems or our future systems. While we believe, based upon past experience and standard industry practice, that
such licenses generally could be obtained on commercially reasonable terms, we cannot assure that our existing or future third-party licenses
will be available to us on commercially reasonable terms, if at all. The licensing or acquisition of third-party intellectual property
rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual
property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due
to their size, capital resources and greater development or commercialization capabilities. In addition, companies that perceive us to
be a competitor may be unwilling to assign or license rights to us. Even if such licenses are available, in return for the use of a third
party’s intellectual property, we may agree to pay the licensor royalties based on sales of our systems. Royalties are a component
of cost of systems and affect the margins on our systems.
Further, if we fail to comply with any of our obligations under such agreements, we
may be required to pay damages and the licensor may have the right to terminate the license. Termination by the licensor would cause us
to lose valuable rights, and could prevent us from selling our systems or inhibit our ability to commercialize future systems. Our business
would suffer if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensors
fail to enforce licensed intellectual property rights against infringing third parties, if the licensed software or other intellectual
property rights are found to be infringing third-party rights, or if we are unable to enter into necessary licenses on acceptable terms.
In addition, our rights to certain technologies are licensed to us on a non-exclusive basis. The owners of these non-exclusively licensed
technologies are therefore free to license them to third parties, including our competitors, on terms that may be superior to those offered
to us, which could place us at a competitive disadvantage. Moreover, our licensors may own or control intellectual property that has not
been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating
the licensor’s rights. In addition, the agreements under which we license intellectual property from third parties are generally
complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation
disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property, or increase
what we believe to be our financial or other obligations under the relevant agreement. Additionally, third parties from whom we currently
license intellectual property rights and technology could refuse to renew our agreements upon their expiration or could impose additional
terms and fees that we otherwise would not deem acceptable requiring us to obtain the intellectual property from another third party,
if any is available, or to pay increased licensing fees or be subject to additional restrictions on our use of such third-party intellectual
property. Defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent us from commercializing our
systems. Our inability to maintain or obtain any third-party license required to sell or develop our systems and product enhancements,
or the need to engage in litigation regarding our third-party licenses, could have a material adverse effect on our business, operating
results and financial condition.
We use open source software in our systems,
which could negatively affect our ability to offer our systems and subject us to litigation and other actions.
We rely on some open source in the development of our chips for the purpose of activating
and operating the chips, and may continue to rely on similar licenses. Third parties may assert a copyright claim against us regarding
our use of such software or libraries, including asserting its ownership of, or demanding release of, the open source software or derivative
works that we have developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the
terms of the applicable open source license. We may also be forced to purchase a costly license or cease offering the implicated systems
unless and until we can re-engineer them to avoid infringement, which may be a costly and time-consuming process, and we may not be able
to complete the re-engineering process successfully. Like any other intellectual property claim or litigation, such claims could lead
to the adverse results listed above. However, the terms of many open source licenses have not been interpreted by the courts, and there
is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to
commercialize our systems. In addition, some open source software licenses require those who distribute open source software as part of
their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative
works of the open source code on unfavorable terms or at no cost, and we may be subject to such terms. As a result, use of such software
or libraries by us may also force us to provide third parties, at no cost, the source code to our systems. Additionally, the use of certain
open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not
provide warranties or controls on the origin of software. There is typically no support available for open source software, and we cannot
ensure that the authors of such open source software will implement or push updates to address security risks or will not abandon further
development and maintenance. Many of the risks associated with the use of open source software, such as the lack of warranties or assurances
of title or performance, cannot be eliminated, and could, if not properly addressed, negatively affect our business. While we monitor
our use of open source software and do not believe that our use of such software would require us to disclose our proprietary source code
or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have
occurred, in part because open source license terms are often ambiguous. Any of these risks could be difficult to eliminate or manage
and may decrease revenue and lessen any competitive advantage we have due to the secrecy of its source code.
We may be obligated to disclose our proprietary
source code to certain of our customers, which may limit our ability to protect our intellectual property and proprietary rights.
In limited circumstances, our customer agreements may contain provisions permitting
the customer to become a party to, or a beneficiary of, a source code escrow agreement under which we place the proprietary source code
for certain of our systems in escrow with a third party. Under these source code escrow agreements, our source code may be released to
the customer upon the occurrence of specified events, such as in situations of our bankruptcy or insolvency. Disclosing the content of
our source code may limit the intellectual property protection we can obtain or maintain for our source code or our systems containing
that source code and may facilitate intellectual property infringement, misappropriation or other violation claims against us. Following
any such release, we cannot be certain that customers will comply with the restrictions on their use of the source code and we may be
unable to monitor and prevent unauthorized disclosure of such source code by customers. Any increase in the number of people familiar
with our source code as a result of any such release also may increase the risk of a successful hacking attempt. Any of these circumstances
could result in a material adverse effect on our business, financial condition and results of operations.
Defects, errors or other performance problems
in our software or hardware, or the third-party software or hardware on which we rely, could harm our reputation, result in significant
costs to us, impair our ability to sell our systems and subject us to substantial liability.
Our software and hardware, and those of third parties on which we rely, is complex and
may contain defects or errors when implemented or when new functionality is released, as we may modify, enhance, upgrade and implement
new systems, procedures and controls to reflect changes in our business, technological advancements and changing industry trends. Despite
our testing, from time to time we have discovered and may in the future discover defects or errors in our software and hardware. Any performance
problems or defects in our software or hardware, or those of third parties on which we rely, could materially and adversely affect our
business, financial condition and results of operations. Defects, errors or other similar performance problems or disruptions, whether
in connection with day-to-day operations or otherwise, could be costly for us, damage our customers’ businesses, harm our reputation
and result in reduced sales or a loss of, or delay in, the market acceptance of our systems. In addition, if we have any such errors,
defects or other performance problems, our clients could seek to terminate their contracts, delay or withhold payment or make claims against
us. Any of these actions could result in liability, lost business, increased insurance costs, difficulty in collecting accounts receivable,
costly litigation or adverse publicity, which could materially and adversely affect our business, financial condition and results of operations.
Cybersecurity breaches, attacks and other similar
incidents, as well as other disruptions, could compromise our confidential and proprietary information, including personal information,
and expose us to liability and regulatory fines, increase our expenses, or result in legal or regulatory proceedings, which would cause
our business and reputation to suffer.
We rely on trade secrets, technical know-how and other unpatented confidential and proprietary
information relating to our product development and production activities to provide us with competitive advantages. We also collect,
maintain and otherwise process certain sensitive and other personal information regarding our employees, as well as contact information
of our customers and service providers, in the ordinary course of business. One of the ways we protect this information is by entering
into confidentiality agreements with our employees, consultants, customers, suppliers, strategic partners and other third parties with
which we do business. We also design our computer networks and implement various procedures to restrict unauthorized access to dissemination
of our confidential and proprietary information.
We, and our service providers which may have access to any such information, face various
internal and external cybersecurity threats and risks. For example, current, departing or former employees or other individuals or third
parties with which we do business could attempt to improperly use or access our computer systems and networks, or those of our service
providers, to copy, obtain or misappropriate our confidential or proprietary information, including personal information, or otherwise
interrupt our business. Additionally, like others, we and our service providers are subject to significant system or network or computer
system disruptions from numerous causes, including cybersecurity breaches, attacks or other similar incidents, facility access issues,
new system implementations, human error, fraud, energy blackouts, theft, fire, power loss, telecommunications failure or a similar catastrophic
event. Moreover, computer viruses, worms, malware, ransomware, phishing, spoofing, malicious or destructive code, social engineering,
denial- of-service attacks, and other cyber-attacks have become more prevalent and sophisticated in recent years. Attacks of this nature
may be conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise, including organized
criminal groups, “hacktivists,” terrorists, nation states, nation state-supported actors, and others. We have been subject
to attempted cyberattacks in the past, including attempted phishing attacks, and may continue to be subject to such attacks in the future.
While we defend against these threats and risks on a daily basis, we do not believe that any such incidents to date have caused us any
material damage. Because the techniques used by computer hackers and others to access or sabotage networks and computer systems constantly
evolve and generally are not recognized until launched against a target, we and our service providers may be unable to anticipate, detect,
react to, counter or ameliorate all of these techniques or remediate any incident as a result therefrom. Further, the COVID-19 pandemic
has increased cybersecurity risk due to increased online and remote activity. As a result, our and our customers’ and employees’
confidential and proprietary information, including personal information, may be subject to unauthorized release, accessing, gathering,
monitoring, loss, destruction, modification, acquisition, transfer, use or other processing, and the impact of any future incident cannot
be predicted. While we generally perform cybersecurity diligence on our key service providers, because we do not control our service providers
and our ability to monitor their cybersecurity is limited, we cannot ensure the cybersecurity measures they take will be sufficient to
protect any information we share with them. Due to applicable laws and regulations or contractual obligations, we may be held responsible
for cybersecurity breaches, attacks or other similar incidents attributed to our service providers as they relate to the information we
share with them.
We routinely implement improvements to our network security safeguards and we are devoting
increasing resources designed to protect the security of our information technology systems. We cannot, however, assure that such safeguards
or system improvements will be sufficient to prevent or limit a cybersecurity breach, attack or other similar incident or network or computer
system disruption, or the damage resulting therefrom. We may be required to expend significant additional resources to continue to modify
or enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities, breaches, attacks or other similar
incidents. Any cybersecurity incident, attack or other similar incident, or our failure to make adequate or timely disclosures to the
public, regulators, or law enforcement agencies following any such event, could harm our competitive position, result in violations of
applicable data privacy or cybersecurity laws or regulations, result in a loss of customer confidence in the adequacy of our threat mitigation
and detection processes and procedures, cause us to incur significant costs to remedy the damages caused by the incident or defend legal
claims, subject us to additional regulatory scrutiny, expose us to civil litigation, fines, damages or injunctions, cause disruption to
our business activities, divert management attention and other resources or otherwise adversely affect our internal operations and reputation
or degrade our financial results.
The costs related to cybersecurity breaches, attacks or other similar incidents or network
or computer system disruptions typically would not be fully insured or indemnified by others. We cannot ensure that any limitations of
liability provisions in our agreements with customers, service providers and other third parties with which we do business would be enforceable
or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim in connection with a cybersecurity
breach, attack or other similar incident. We do not currently maintain cybersecurity insurance, and therefore the successful assertion
of one or more large claims against us in connection with a cybersecurity breach, attack or other similar incident could adversely affect
our business and financial condition.
We are subject to complex and evolving laws,
regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity, which can increase the cost of doing
business, compliance risks and potential liability.
In the ordinary course of our business, we collect, use, transfer, store, maintain and
otherwise process certain sensitive and other personal information regarding our employees, and contact information of our customers and
service providers, that is subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data
privacy and cybersecurity. Ensuring that our collection, use, transfer, storage, maintenance and other processing of personal information
complies with applicable laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity in relevant
jurisdictions can increase operating costs, impact the development of new systems, and reduce operational efficiency. Global legislation,
enforcement, and policy activity in this area is rapidly expanding and creating a complex regulatory compliance environment. Any actual
or perceived mishandling or misuse of the personal information by us or a third party with which we are affiliated, including payrolls
providers and other service providers that have access to sensitive and other personal information, could result in litigation, regulatory
fines, penalties or other sanctions, damage to our reputation, disruption of our business activities, and significantly increased business
and cybersecurity costs or costs related to defending legal claims.
Internationally, many jurisdictions have established data privacy and cybersecurity
legal frameworks with which we may need to comply. For example, the EU has adopted the General Data Protection Regulation (“GDPR”),
which requires covered businesses to comply with rules regarding the processing of personal data, including its use, protection and the
ability of persons whose personal data is processed to access, to correct or delete personal data about themselves. Failure to meet GDPR
requirements could result in penalties of up to 4% of annual worldwide turnover or EUR 20 million (UK£17.5 million) (whichever is
the greater). Additionally, the U.K. General Data Protection Regulation (“U.K. GDPR”) (i.e., a version of the GDPR as implemented
into U.K. law) went into effect following Brexit. While the GDPR and the U.K. GDPR are substantially the same, going forward there is
increasing risk for divergence in application, interpretation and enforcement of the data privacy and cybersecurity laws and regulations
as between the EU and the United Kingdom, which may result in greater operational burdens, costs and compliance risks. Additionally, the
GDPR and the U.K. GDPR include certain limitations and stringent obligations with respect to the transfer of personal data from the EU
and the United Kingdom to third countries (including the United States), and the mechanisms to comply with such obligations are also in
considerable flux and may lead to greater operational burdens, costs and compliance risks.
At the federal level, we are subject to the rules and regulations promulgated under
the authority of the Federal Trade Commission, which regulates unfair or deceptive acts or practices, including with respect to data privacy
and cybersecurity. Moreover, the United States Congress has recently considered, and is currently considering, various proposals for more
comprehensive data privacy and cybersecurity legislation, to which we may be subject if passed. Data privacy and cybersecurity are also
areas of increasing state legislative focus and we are, or may in the future become, subject to various state laws and regulations regarding
data privacy and cybersecurity. For example, the California Consumer Protection Act of 2018, as amended by the California Privacy Rights
Act (collectively, the “CCPA”), applies to for-profit businesses that conduct business in California and meet certain revenue
or data collection thresholds. The CCPA gives California residents certain rights with respect to personal information collected about
them. Other states where we do business, or may in the future do business, or from which we otherwise collect, or may in the future otherwise
collect, personal information of residents have enacted or are considering enacting similar laws, with at least four such laws (in Virginia,
Colorado, Connecticut and Utah) having taken effect or scheduled to take effect in 2023. In addition, laws in all 50 U.S. states generally
require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result
of a data breach. Certain state laws and regulations may be more stringent, broader in scope, or offer greater individual rights, with
respect to personal information than international, federal or other state laws and regulations, and such laws and regulations may differ
from each other, which may complicate compliance efforts and increase compliance costs. The interpretation and application of international,
federal and state laws and regulations relating to data privacy and cybersecurity are often uncertain and fluid, and may be interpreted
and applied in a manner that is inconsistent with our data practices.
Further, while we strive to publish and prominently display privacy policies that are
accurate, comprehensive, and compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy
policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse
publicity relating to data privacy or cybersecurity. Although we endeavor to comply with our privacy policies, we may at times fail to
do so or be alleged to have failed to do so. The publication of our privacy policies and other documentation that provide promises and
assurances about privacy and cybersecurity can subject us to potential federal or state action if they are found to be deceptive, unfair,
or misrepresentative of our actual practices.
Any failure or perceived or inadvertent failure by us to comply with our privacy policies,
or existing or new laws, regulations, rules, standards or contractual obligations, or any compromise of security that results in unauthorized
access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal information,
may result in substantial costs, time and other resources, orders to stop or modify the alleged non-compliant activity, proceedings or
actions against us by governmental entities or others, legal liability, audits, regulatory inquiries, governmental investigations, enforcement
actions, claims, fines, judgments, awards, penalties, sanctions and costly litigation (including class actions). Any of the foregoing
could harm our reputation, distract our management and technical personnel, increase our costs of doing business, adversely affect the
demand for our systems, and ultimately result in the imposition of liability, any of which could have a material adverse effect on our
business, financial condition and results of operations.
Risks Related to Tax and Accounting
Changes in our effective tax rate may adversely
impact our results of operations.
We are subject to taxation in Israel, the United Kingdom., the U.S. and Bulgaria. Our
effective tax rate is subject to fluctuations, as it is impacted by a number of factors, including the following:
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changes in our overall profitability and the amount of profit determined to be earned and taxed in jurisdictions with differing statutory
tax rates; |
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the resolution of issues arising from tax audits with various tax authorities; |
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the impact of transfer pricing policies; |
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changes in the valuation of either our gross deferred tax assets or gross deferred tax liabilities; |
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changes in expenses not deductible for tax purposes; |
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changes in available tax credits; and |
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changes in tax laws or the interpretation of such tax laws, and changes in generally accepted accounting principles. |
Any significant increase in our future effective tax rates could reduce net income for
future periods.
Exchange rate fluctuations between the U.S.
dollar, the British pound, the Euro and other foreign currencies may negatively affect our future revenues.
Our results of operations are affected by movements in currency exchange rates. The
functional currency for our operations is the U.S. dollar. Our revenue has in recent periods been primarily denominated in Euro and British
pound. Our operating expenses and certain working capital items are denominated in local currencies (in addition to the U.S. dollar) and
therefore are affected by changes in the U.S. dollar exchange rate. Due to the constantly changing currency exposures to which we are
subject and the volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon future operating
results. See “— The United Kingdom’s decision to exit from the European Union (the
“EU”) has had, and may continue to have, uncertain effects on our business.” In addition, our exposure to various
currencies may increase or decrease over time as the volume of our business fluctuates in the countries where we have operations, and
these changes could have a material impact on our financial results.
Changes to tax laws or regulations in Israel,
the United Kingdom, the EU and other jurisdictions expose us to tax uncertainties and could adversely affect our results of operations
or financial condition.
As a multinational business, operating in multiple jurisdiction such as Israel, the
United Kingdom and the EU, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws,
the application of which can be uncertain. Changes to tax laws or regulations in the jurisdictions in which we operate, or in the interpretation
of such laws or regulations, could, significantly increase our effective tax rate and reduce our cash flow from operating activities,
and otherwise have a material adverse effect on our financial condition. Since a significant portion of our operations are located in
Israel and the United Kingdom, changes in tax laws or regulations in Israel or the United Kingdom could significantly affect our operating
results. Further changes in the tax laws of foreign jurisdictions could arise, in particular, as a result of different initiatives undertaken
by the Organization for Economic Co-operation and Development (the “OECD”). Any changes in the OECD policy or recommendations,
if adopted, could increase tax uncertainty and may adversely affect our provision for income taxes and increase our tax liabilities. In
addition, other factors or events, including business combinations and investment transactions, changes in the valuation of our deferred
tax assets and liabilities, adjustments to taxes upon finalization of various tax returns or as a result of deficiencies asserted by taxing
authorities, increases in expenses not deductible for tax purposes, changes in available tax credits, changes in transfer pricing methodologies,
other changes in the apportionment of our income and other activities among tax jurisdictions, and changes in tax rates, could also increase
our effective tax rate.
We are subject to regular review and audit by Israeli, the United Kingdom and other
foreign tax authorities. Although we believe our tax estimates are reasonable, the authorities in these jurisdictions could review our
tax returns and impose additional taxes, interest, linkage and penalties, and the authorities could claim that various withholding requirements
apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could
materially affect our income tax provision, net income, or cash flows in the period or periods for which such determination and settlement
is made. We may also be liable for taxes in connection with businesses we acquire. Our determinations are not binding on any taxing authorities,
and accordingly the final determination in an audit or other proceeding may be materially different than the treatment reflected in our
tax provisions, accruals and returns. An assessment of additional taxes because of an audit could have a material adverse effect on our
business, financial condition, results of operations and cash flows.
Transfer pricing rules may adversely affect
our corporate income tax expense.
Many of the jurisdictions in which we conduct business have detailed transfer pricing
rules, which require contemporaneous documentation establishing that all transactions with non-resident related parties be priced using
arm’s length pricing principles. The tax authorities in these jurisdictions could challenge our related party transfer pricing policies
and as a consequence the tax treatment of corresponding expenses and income. International transfer pricing is an area of taxation that
depends heavily on the underlying facts and circumstances and generally involves a significant degree of judgment. If any of these tax
authorities are successful in challenging our transfer pricing policies, we may be liable for additional corporate income tax, and penalties
and interest related thereto, which may have a significant impact on our results of operations and financial condition.
If we or any of our subsidiaries are characterized
as a PFIC for U.S. federal income tax purposes, U.S. investors may suffer adverse tax consequences.
A non-U.S. corporation generally will be treated as a PFIC for U.S. federal income tax
purposes, in any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the
value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that
produce or are held for the production of passive income (including cash). For purposes of the above calculations, a non-U.S. corporation
that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate
share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive
income generally includes dividends, interest, rents, royalties and capital gains. Goodwill is an active asset under the PFIC rules to
the extent attributable to activities that produce active income.
Based on the current and anticipated composition of our and our subsidiaries’
income, assets and operations, including goodwill, which is based on the trading prices of our Satixfy Ordinary Shares, we do not expect
to be a PFIC for our current taxable year, but there can be no assurance in this regard. Whether we or any of our subsidiaries are a PFIC
for any taxable year is a factual determination that depends on, among other things, the composition of our and our subsidiaries’
income and assets. Changes in the composition of our and our subsidiaries’ income or assets may cause us to be or become a PFIC
for the current or subsequent taxable years. In addition, because the value of our goodwill may be determined based on our market capitalization,
the decline in our market capitalization (or a further such decline) could cause us to be treated as a PFIC for the current taxable year.
Moreover, if our market capitalization does not increase significantly and we continue to hold substantial amounts of cash and financial
investments, we may be a PFIC for our current taxable year. Our PFIC status for our current taxable year can be determined only after
the end of the year. Accordingly, we can give no assurance that we will not be a PFIC for our current or any future taxable year. The
application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you that the Internal Revenue Services
(the “IRS”) will not take a contrary position or that a court will not sustain such a challenge by the IRS.
If we are a PFIC for any taxable year, a U.S. investor who owns our ordinary shares
may be subject to adverse tax consequences and may incur certain information reporting obligations. For a further discussion, see “Taxation
— U.S. Federal Income Tax Considerations — Ownership and Disposition of SatixFy Ordinary Shares and SatixFy Warrants by U.S.
Holders — Passive Foreign Investment Company Rules.” U.S. investors who own our ordinary shares and/or warrants are
strongly encouraged to consult their own advisors regarding the potential application of these rules to us and the ownership of our ordinary
shares and/or warrants.
If a U.S. investor is treated for U.S. federal
income tax purposes as owning at least 10% of the SatixFy Ordinary Shares, such U.S. investor may be subject to adverse U.S. federal income
tax consequences.
For U.S. federal income tax purposes, if a U.S. investor who is a U.S. person is treated
as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our ordinary shares, such U.S. investor
may be treated as a “United States shareholder” with respect to us, or any of our non-U.S. subsidiaries. A non-U.S. corporation
is considered a controlled foreign corporation if more than 50% of (1) the total combined voting power of all classes of stock of such
corporation entitled to vote, or (2) the total value of the stock of such corporation is owned, or is considered as owned by applying
certain constructive ownership rules, by United States shareholders on any day during the taxable year of such non-U.S. corporation. If
we have one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as a controlled foreign corporation regardless
of whether we are treated as a controlled foreign corporation (although there are recently promulgated final and currently proposed Treasury
regulations that may limit the application of these rules in certain circumstances).
Certain United States shareholders of a controlled foreign corporation may be required
to report annually and include in their U.S. federal taxable income their pro rata share of the controlled foreign corporation’s
“Subpart F income” and, in computing their “global intangible low-taxed income,” “tested income” and
a pro rata share of the amount of certain U.S. property (including certain stock in U.S. corporations and certain tangible assets located
in the United States) held by the controlled foreign corporation regardless of whether such controlled foreign corporation makes any distributions.
The amount includable by a United States shareholder under these rules is based on a number of factors, including potentially, but not
limited to, the controlled foreign corporation’s current earnings and profits (if any), tax basis in the controlled foreign corporation’s
assets, and foreign taxes paid by the controlled foreign corporation on its underlying income. Failure to comply with these reporting
obligations (or related tax payment obligations) may subject such United States shareholder to significant monetary penalties and may
extend the statute of limitations with respect to such United States shareholder’s U.S. federal income tax return for the year for
which reporting (or payment of tax) was due. We cannot provide any assurances that we will assist U.S. investors in determining whether
we or any of our non-U.S. subsidiaries are treated as a controlled foreign corporation for U.S. federal income tax purposes or whether
any U.S. investor is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to
any holder information that may be necessary to comply with reporting and tax paying obligations if we, or any of our non-U.S. subsidiaries,
is treated as a controlled foreign corporation for U.S. federal income tax purposes. U.S. investors who hold 10% or more of the combined
voting power or value of our ordinary shares are strongly encouraged to consult their own advisors regarding the U.S. tax consequences
of owning or disposing of our ordinary shares.
Risks Related to Being a Public Company
The listing of our securities on the NYSE did
not benefit from the process customarily undertaken in connection with an underwritten initial public offering, which could result in
diminished investor demand, inefficiencies in pricing and a more volatile public price for our securities.
Unlike an underwritten initial public offering of our securities, the initial listing
of our securities as a result of the Business Combination did not benefit from the following:
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the book-building process undertaken by underwriters that helps to inform efficient price discovery with respect to opening trades
of newly listed securities; |
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underwriter support to help stabilize, maintain or affect the public price of the new issue immediately after listing; and
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underwriter due diligence review of the offering and potential liability for material misstatements or omissions of fact in a prospectus
used in connection with the securities being offered or for statements made by its securities analysts or other personnel. |
The lack of such a process in connection with the listing of our securities could result
in diminished investor demand, inefficiencies in pricing and a more volatile public price for our securities during the period immediately
following the listing than in connection with an underwritten initial public offering.
We incur increased expenses as a result of
being a public company, and our current resources may not be sufficient to fulfill our public company obligations.
As a public company, we incur significant legal, accounting and other expenses that
we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing
requirements of the NYSE and other applicable securities rules and regulations impose various requirements on public companies, including
establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other
personnel continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations continue
to increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules
and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and make it more
difficult for us to attract and retain qualified members of our board.
We continue to evaluate these rules and regulations and cannot predict or estimate the
amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations,
in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is
provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices.
We are required to comply with the SEC’s rules implementing Sections 302 and 404
of the Sarbanes-Oxley Act, which require management to certify financial and other information in our annual reports and provide an annual
management report on the effectiveness of control over financial reporting. Though we are required to disclose material changes in internal
control over financial reporting on an annual basis, we will not be required to make our first annual assessment of our internal control
over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until the year following our first annual report required to
be filed with the SEC. To achieve compliance with Section 404 of the Sarbanes-Oxley Act within the prescribed period, we will be engaged
in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard,
we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess
and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate
through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal
control over financial reporting.
We have begun the process of evaluating various matters related to our internal control
over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or
at all, that our internal control over financial reporting is effective as required by Section 404 of the Sarbanes-Oxley Act. If we identify
one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability
of our financial statements. As a result, the market price of the SatixFy Ordinary Shares and our warrants could be negatively affected,
and we could become subject to litigation including shareholder suits or investigations by the stock exchange on which our securities
are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
Failure to comply with requirements to design,
implement and maintain effective internal control over financial reporting could have a material adverse effect on our business and share
price.
As a public company, we have significant requirements for enhanced financial reporting
and internal controls. The process of designing, implementing, testing and maintaining effective internal controls is a continuous effort
that requires us to anticipate and react to changes in our business and the economic and regulatory environments. In this regard, we need
to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document
the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through
testing whether such controls are functioning as documented, and implement a continuous reporting and improvement process for internal
control over financial reporting.
It is possible that our internal control over financial reporting is not effective because
it cannot detect or prevent material errors at a reasonable level of assurance. If we are unable to establish or maintain appropriate
internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result
in material misstatements in our consolidated financial statements and adversely affect our operating results. In addition, we will be
required, pursuant to Section 404, to furnish a report by our management on, among other things, the effectiveness of our internal control
over financial reporting in the second annual report filed with the SEC. This assessment will need to include disclosure of any material
weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must
be met for our management to assess our internal control over financial reporting are complex and require significant documentation and
testing. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to
our business. In addition, once we are no longer an emerging growth company, we will be required to include in the annual reports that
we file with the SEC an attestation report on our internal control over financial reporting issued by our independent registered public
accounting firm, pursuant to Section 404 of the Sarbanes-Oxley Act.
Furthermore, we may, during the course of our testing of our internal controls over
financial reporting, or during the subsequent testing by our independent registered public accounting firm, identify deficiencies which
would have to be remediated to satisfy the SEC rules for certification of our internal controls over financial reporting. As a consequence,
we may have to disclose in periodic reports we file with the SEC significant deficiencies or material weaknesses in our system of internal
controls. The existence of a material weakness would preclude management from concluding that our internal controls over financial reporting
are effective, and would preclude our independent auditors from issuing an unqualified opinion that our internal controls over financial
reporting are effective. In addition, disclosures of this type in our SEC reports could cause investors to lose confidence in the accuracy
and completeness of our financial reporting and may negatively affect the trading price of the SatixFy Ordinary Shares and our warrants,
and we could be subject to sanctions or investigations by regulatory authorities. Moreover, effective internal controls are necessary
to produce reliable financial reports and to prevent fraud. If we have deficiencies in our disclosure controls and procedures or internal
controls over financial reporting, it could negatively impact our business, results of operations and reputation.
Managing a public company and compliance with
regulatory requirements may divert the attention of our senior management from the day-to-day management of our business.
As a public company, we are subject to significant obligations relating to reporting,
procedures and internal controls, and must comply with increasingly complex laws, rules and regulations that govern public companies,
and our management team may not successfully or efficiently manage such obligations. These obligations and scrutiny will require significant
attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely
affect our business, financial condition and results of operations.
An active trading market for our equity securities
may not develop or may not be sustained to provide adequate liquidity.
An active trading market may not be sustained for the SatixFy Ordinary Shares or our
warrants. The lack of an active market may impair your ability to sell your shares or warrants at the time you wish to sell them or at
a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling ordinary shares and may
impair our ability to acquire other companies by using our shares as consideration.
We could be the subject of securities class
action litigation due to future share price volatility, which could divert management’s attention and materially and adversely affect
our business, financial position, results of operations and cash flows.
The trading prices of SatixFy Ordinary Shares and our warrants may be volatile and,
in the past, companies that have experienced volatility in the trading price of their securities have been subject to securities class
action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial
costs and divert management’s attention from other business concerns, which could adversely affect our business, financial condition
and results of operations.
Our quarterly results of operations may fluctuate.
As a result, we may fail to meet or exceed the expectations of investors or securities analysts, which could cause our share price to
decline.
We operate in a highly dynamic industry and our future operating results could be subject
to significant fluctuations, particularly on a quarterly basis. Our quarterly revenues and operating results have fluctuated significantly
in the past and may continue to vary from quarter to quarter due to a number of factors, many of which are not within our control. As
a result, accurately forecasting our operating results in any fiscal quarter is difficult. If our operating results do not meet the expectations
of securities analysts and investors, our share price may decline.
Additional factors that can contribute to fluctuations in our operating results include:
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the rescheduling, increase, reduction or cancellation of significant customer orders; |
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the timing of customer qualification of our products and commencement of volume sales by our customers of systems that include our
products; |
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the timing and amount of research and development and sales and marketing expenditures; |
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the rate at which our present and future customers and end users adopt our technologies in our target end markets; |
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the timing and success of the introduction of new products and technologies by us and our competitors, and the acceptance of our
new products by our customers; |
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our ability to anticipate changing customer product requirements; our gain or loss of one or more key customers; |
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the availability, cost and quality of materials and components that we purchase from third-party vendors and any problems or delays
in the manufacturing, testing or delivery of our products; |
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the availability of production capacity at our third-party facilities or other third-party subcontractors and other interruptions
in the supply chain, including as a result of materials shortages, bankruptcies or other causes; |
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supply constraints for and changes in the cost of the other components incorporated into our customers’ products; |
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our ability to reduce the manufacturing costs of our products; |
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fluctuations in manufacturing yields; |
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the changes in our product mix or customer mix; |
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the timing of expenses related to the acquisition of technologies or businesses; |
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product rates of return or price concessions in excess of those expected or forecasted; |
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the emergence of new industry standards; |
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unexpected inventory write-downs or write-offs; |
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costs associated with litigation over intellectual property rights and other litigation; |
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the length and unpredictability of the purchasing and budgeting cycles of our customers; |
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loss of key personnel or the inability to attract qualified engineers; |
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the quality of our products and any remediation costs; |
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adverse changes in economic conditions in the various markets where we or our customers have operations; |
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the general industry conditions and seasonal patterns in our target end markets, particularly the satellite communications market;
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other conditions affecting the timing of customer orders or our ability to fill orders of customers subject to export control or
economic sanctions; and |
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geopolitical events, such as war, threat of war or terrorist actions, including the current war in Ukraine, or the occurrence of
pandemics, epidemics or other outbreaks of disease, including the COVID-19 pandemic, or natural disasters, and the impact of these events
on the factors set forth above. |
We may experience a delay in generating or recognizing revenues for a number of reasons.
For example, our customer agreements typically provide that the customer may delay scheduled delivery dates and cancel orders within specified
timeframes without significant penalty. In addition, we maintain an infrastructure of facilities and human resources in several locations
around the world and have a limited ability to reduce the expenses required to maintain such infrastructure. Accordingly, we believe that
period-to-period comparisons of our results of operations should not solely be relied upon as indications of future performance. Any shortfall
in revenues or net income from a previous quarter or from levels expected by the investment community could cause a decline in the trading
price of our shares.
Risks Related to SatixFy’s Incorporation and Location in Israel
Conditions in Israel could adversely affect
our business.
We are incorporated under the laws of the State of Israel, and our principal offices
are located in Israel. Accordingly, political, economic and geo-political instability in Israel may affect our business.
Several countries, principally in the Middle East, still restrict doing business with
Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if
hostilities in Israel or geo-political instability in the region continues or increases. Any hostilities involving Israel or the interruption
or curtailment of trade between Israel and its present trading partners, or significant downturn in the economic or financial condition
of Israel, could adversely affect our business. Furthermore, the Israeli government is currently pursuing extensive changes to Israel’s
judicial system. In response to the foregoing developments, critics have voiced concerns that the proposed changes may negatively impact
the business and economic environment in Israel.
Investors’ rights and responsibilities
as our shareholders are governed by Israeli law, which differs in some respects from the rights and responsibilities of shareholders of
non-Israeli companies.
We were incorporated under Israeli law and the rights and responsibilities of our shareholders
are governed by our articles of association and Israeli law. These rights and responsibilities differ in some respects from the rights
and responsibilities of shareholders of U.S. and other non-Israeli 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 the general meeting
of shareholders on certain matters, such as an amendment to the company’s articles of association, an increase of the company’s
authorized share capital, a merger of the company and approval of related party transactions that require shareholder approval. A shareholder
also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder of an Israeli
company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to
appoint or prevent the appointment of a director or officer in the company or has other powers toward the company has a duty of fairness
toward the company. However, Israeli law does not define the substance of this duty of fairness. There is little case law available to
assist in understanding the implications of these provisions that govern shareholder behavior. These provisions may be interpreted to
impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations.
Provisions of Israeli law and our amended and
restated articles of association may delay, prevent or make undesirable an acquisition of all or a significant portion of our shares or
assets.
Provisions of Israeli law and our amended and restated articles of association could
have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or our shareholders
to elect different individuals to our board of directors, even if doing so would be considered to be beneficial by some of our shareholders,
and may limit the price that investors may be willing to pay in the future for our ordinary shares. Among other things:
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the Israeli Companies Law regulates mergers and requires that a tender offer be effected when one or more shareholders propose to
purchase shares that would result in it or them owning more than a specified percentage of shares in a company; |
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the Israeli Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders
and regulates other matters that may be relevant to these types of transactions; |
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the Israeli Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all
shareholder actions to be taken at a general meeting of shareholders; |
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our amended and restated articles of association divide our directors into three classes, each of which is elected once every three
years; |
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an amendment to our amended and restated articles of association generally requires, in addition to the approval of our board of
directors, a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting on the matter at
a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision
empowering our board of directors to determine the size of the board, the provision dividing our directors into three classes, the provision
that sets forth the procedures and the requirements that must be met in order for a shareholder to require the Company to include a matter
on the agenda for a general meeting of the shareholders, the provisions relating to the election and removal of members of our board of
directors and empowering our board of directors to fill vacancies on the board, requires, in addition to the approval of our board of
directors, a vote of the holders of 662∕3% of our outstanding ordinary shares entitled to vote at a general meeting; |
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our amended and restated articles of association do not permit a director to be removed except by a vote of the holders of at least
662∕3% of our outstanding shares entitled to vote at a general meeting of shareholders; and |
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our amended and restated articles of association provide that director vacancies may be filled by our board of directors. |
Further, Israeli tax considerations may make potential transactions undesirable to us
or some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders
from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect
to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous
conditions, including, a holding period of two years from the date of the transaction during which certain sales and dispositions of shares
of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited
in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred.
Our amended and restated articles of association
provide that unless SatixFy consents otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially
all disputes between SatixFy and its shareholders under the Israeli Companies Law and the Israeli Securities Law, which could limit shareholders’
ability to bring claims and proceedings against, as well as obtain favorable judicial forum for disputes with SatixFy, its directors,
officers and other employees.
Unless we agree otherwise, the competent courts of Tel Aviv, Israel shall be the exclusive
forum for (i) any derivative action or proceeding brought on behalf of SatixFy, (ii) any action asserting a claim of breach of fiduciary
duty owed by any director, officer or other employee of SatixFy to SatixFy or SatixFy’s shareholders, or (iii) any action asserting
a claim arising pursuant to any provision of the Israeli Companies Law or the Israeli Securities Law. Such exclusive forum provision in
our amended and restated articles of association will not relieve SatixFy of its duties to comply with federal securities laws and the
rules and regulations thereunder, and shareholders of SatixFy will not be deemed to have waived SatixFy’s compliance with these
laws, rules and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum
of its choosing for disputes with SatixFy or its directors or other employees which may discourage lawsuits against SatixFy, its directors,
officers and employees. The foregoing exclusive forum provision is intended to apply to claims arising under Israeli law and would not
apply to claims for which the federal courts would have exclusive jurisdiction, whether by law (as is the case under the Exchange Act)
or pursuant to our amended and restated articles of association, including claims under the Securities Act for which there is a separate
exclusive forum provision in our amended and restated articles of association. However, the enforceability of similar forum provisions
(including exclusive federal forum provisions for actions, suits or proceedings asserting a cause of action arising under the Securities
Act) in other companies’ organizational documents has been challenged in legal proceedings and there is uncertainty as to whether
courts would enforce the exclusive forum provisions in our amended and restated articles of association. If a court were to find the choice
of forum provision contained in our amended and restated articles of association to be inapplicable or unenforceable in an action, we
may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business,
financial condition and results of operations.
Our amended and restated articles of association
provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of
resolution of any claims arising under the Securities Act which could limit shareholders’ ability to obtain a favorable judicial
forum for disputes with SatixFy or SatixFy’s directors, officers or employees and may impose additional litigation costs on our
shareholders.
Our amended and restated articles of association provides that the federal district
courts of the United States shall be the exclusive forum for the resolution of any claims arising under the Securities Act or the federal
forum provision in our amended and restated articles of association (the “Federal Forum Provision”). While the Federal Forum
Provision does not restrict the ability of our shareholders to bring claims under the Securities Act, nor does it affect the remedies
available thereunder if such claims are successful, we recognize that it may limit shareholders’ ability to bring a claim in the
judicial forum that they find favorable and may increase certain litigation costs which may discourage the filing of claims under the
Securities Act against SatixFy, its directors and officers. However, the enforceability of similar forum provisions (including exclusive
federal forum provisions for actions, suits or proceedings asserting a cause of action arising under the Securities Act) in other companies’
organizational documents has been challenged in legal proceedings and there is uncertainty as to whether courts would enforce the exclusive
forum provisions in our amended and restated articles of association. If a court were to find the choice of forum provision contained
in our amended and restated articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and results
of operations.
Any person or entity purchasing or otherwise acquiring or holding any interest in any
of SatixFy’s securities shall be deemed to have notice of and consented to SatixFy’s Federal Forum Provision. Notwithstanding
the foregoing, the shareholders of SatixFy will not be deemed to have waived compliance with the federal securities laws and the rules
and regulations thereunder.
Certain tax benefits that may be available
to SatixFy, if obtained by SatixFy, would require it to continue to meet various conditions and may be terminated or reduced in the future,
which could increase SatixFy’s costs and taxes.
We may be eligible for certain tax benefits provided to “Preferred Technological
Enterprises” under the Israeli Law for the Encouragement of Capital Investments, 5719-1959, referred to as the Investment Law. If
we obtain tax benefits under the “Preferred Technological Enterprises” regime then, in order to remain eligible for such tax
benefits, we will need to continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended. If these
tax benefits are reduced, cancelled or discontinued, our Israeli taxable income may be subject to the Israeli corporate tax (at a rate
of 23% in 2022). Additionally, if we increase our activities outside of Israel through acquisitions, for example, our activities might
not be eligible for inclusion in future Israeli tax benefit programs. See “Certain Material Israeli
Tax Considerations.”
It may be difficult to enforce a U.S. judgment
against SatixFy, its officers and directors in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve
process on SatixFy’s officers and directors.
Most of SatixFy’s directors or officers are not residents of the United States
and most of their and SatixFy’s assets are located outside the United States. Service of process upon SatixFy or its non-U.S. resident
directors and officers and enforcement of judgments obtained in the United States against SatixFy or its non-U.S. directors and executive
officers may be difficult to obtain within the United States, although our amended and restated articles of association provide that unless
we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims
arising under the Securities Act. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against SatixFy
or its non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if
an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is
found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process.
Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described
above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered
against SatixFy or its non-U.S. officers and directors.
Moreover, an Israeli court will not enforce a non-Israeli judgment if, among other things,
it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if
its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence
of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit
in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought.
Risks Related to Ownership of our Securities
SatixFy’s amended and restated articles
of association and Israeli law could prevent a takeover that shareholders consider favorable and could also reduce the market price of
the SatixFy Ordinary Shares.
Certain provisions of Israeli law and our amended and restated articles of association
could have the effect of delaying or preventing a change in control and may make it more difficult for a third-party to acquire SatixFy
or for SatixFy’s shareholders to elect different individuals to its board of directors, even if doing so would be beneficial to
its shareholders, and may limit the price that investors may be willing to pay in the future for the SatixFy Ordinary Shares. For example,
Israeli corporate law regulates mergers and requires that a tender offer be effected when certain thresholds of percentage ownership of
voting power in a company are exceeded (subject to certain conditions). Further, Israeli tax considerations may make potential transactions
undesirable to SatixFy or to some of its shareholders whose country of residence does not have a tax treaty with Israel granting tax relief
to such shareholders from Israeli tax. See the section titled “Certain Material Israeli Tax Considerations
— Taxation of our shareholders.”
We do not intend to pay dividends for the foreseeable future. We currently intend to
retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends
on our ordinary shares in the foreseeable future. Consequently, you may be unable to realize a gain on your investment except by selling
sell such shares after price appreciation, which may never occur.
SatixFy’s board of directors has sole discretion whether to pay dividends. If
SatixFy’s board of directors decides to pay dividends, the form, frequency, and amount will depend upon its future, operations and
earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that its directors
may deem relevant. The Israeli Companies Law imposes restrictions on SatixFy’s ability to declare and pay dividends. See the section
titled “Description of SatixFy Ordinary Shares — Dividend and Liquidation Rights”
for additional information. Payment of dividends may also be subject to Israeli withholding taxes. See the section titled “Certain
Material Israeli Tax Considerations” for additional information.
The market price of our equity securities may
be volatile, and your investment could suffer or decline in value.
The stock markets, including the NYSE, on which certain of our securities are listed,
have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops
and is sustained for the SatixFy Ordinary Shares and our warrants, the market price of the SatixFy Ordinary Shares and our warrants may
be volatile and could decline significantly. Between October 27, 2022 and May 1, 2023, our share price has fluctuated from a high of $79.21
to a low of $0.40. Given the recent price volatility of our ordinary shares and relative lack of liquidity in our stock, there is no certainty
that warrant holders will exercise their warrants and, accordingly, we may not receive any proceeds in relation to our outstanding warrants.
If our securities become delisted from the NYSE, the liquidity and price of our securities may be more limited than if our securities
were quoted or listed on the NYSE or another national securities exchange. In addition, the trading volume in the SatixFy Ordinary Shares
and our warrants may fluctuate and cause significant price variations to occur. SatixFy cannot assure you that the market price of the
SatixFy Ordinary Shares and our warrants will not fluctuate widely or decline significantly in the future in response to a number of factors,
including, among others, the following:
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the Selling Shareholders generally purchased the securities being registered for resale hereunder at prices that are lower than the
current market prices for such securities and, accordingly, may be or are incentivized to sell them under the registration statement of
which this prospectus is a part (for example, the Sponsor acquired its PIPE shares for $10.00 per share and received its PIPE Warrants
for no additional consideration, originally acquired its private placement warrants for $1.00 per warrant, originally acquired its other
shares that were converted into SatixFy Ordinary Shares in the Business Combination for nominal consideration and received its Price Adjustment
Shares for no consideration; Cantor acquired its PIPE shares for $10.00 per share and received its PIPE Warrants for no additional consideration
and originally acquired the private placement warrants for $1.00 per warrant; Francisco Partners acquired its SatixFy Ordinary shares
for no cost, in consideration of providing the Debt Financing under the 2022 Credit Agreement; and the Sellers under the Forward Purchase
Agreement acquired their SatixFy Ordinary Shares in market or negotiated transactions (except for the 1,605,100 Additional Shares, which
were issued to Vellar for no consideration under the agreement), but recouped most of their purchase price directly from the Trust Account
and are at risk, prior to the maturity of the agreement, for only approximately $1.00 per share pursuant to the terms of the Forward Purchase
Agreement; |
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the Selling Shareholders may be incentivized to sell their securities even if the prevailing trading price of such securities is
at or significantly below the Endurance IPO price, because the prices at which they acquired their shares may be lower than prevailing
market prices and/or the prices at which public investors purchased our securities in the open market, and therefore such Selling Shareholders
may generate positive rates of return on their investment that would not be available to public shareholders that acquired their SatixFy
securities at higher prices; |
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the SatixFy Ordinary Shares (including the shares underlying private and public warrants) registered on the registration statement
of which this prospectus is a part represent approximately 35% of SatixFy Ordinary Shares outstanding as of April 24, 2023 (not including
shares underlying SatixFy Warrants), and sales of a significant number of such shares could materially adversely affect the trading prices
of our securities. However, based on the information available to us, at least 6,362,440 of the SatixFy Ordinary Shares initially registered
on such registration statement have been sold prior to the date hereof; |
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the realization of any of the risk factors presented in this prospectus; |
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actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, earnings, results of operations,
level of indebtedness, liquidity or financial condition; |
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failure to comply with the requirements of the NYSE; |
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failure to comply with the Sarbanes-Oxley Act or other laws or regulations; |
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variance in our financial performance from the expectations of market analysts; |
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announcements by us or our competitors of significant business developments, changes in service provider relationships, acquisitions
or expansion plans; |
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changes in the prices of our products and services; |
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commencement of, or involvement in, litigation involving us; |
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future issuances, sales, repurchases or anticipated issuances, sales, resales or repurchases, of our securities including due to
the expiration of contractual lock-up agreements; |
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publication of research reports about us; |
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failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts
who follow us or our failure to meet these estimates or the expectations of investors; |
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new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to us; |
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market conditions in our industry; |
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changes in key personnel; |
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speculation in the press or investment community; |
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changes in the estimation of the future size and growth rate of our markets; |
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broad disruptions in the financial markets, including sudden disruptions in the credit markets; |
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actual, potential or perceived control, accounting or reporting problems; |
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changes in accounting principles, policies and guidelines; and |
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other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the ongoing
COVID-19 pandemic), natural disasters, war, acts of terrorism or responses to these events. |
In the past, following periods of volatility in the trading price of a company’s
securities, securities class action litigation has often been instituted against that company. If we were to be involved in any similar
litigation, we could incur substantial costs and our management’s attention and resources could be diverted, which would have a
material adverse effect on us.
If securities or industry analysts do not publish
or cease publishing research or reports about SatixFy, its business, or its market, or if they change their recommendations regarding
our securities adversely, then the price and trading volume of our securities could decline.
The trading market for our securities will be influenced by the research and reports
that industry or financial analysts publish about our business. We do not control these analysts, or the content and opinions included
in their reports. As a new public company, we may be slow to attract research coverage and the analysts who publish information about
our securities will have relatively little experience with our business, which could affect their ability to accurately forecast our results
and make it more likely that we fail to meet their estimates. In the event we obtain industry or financial analyst coverage, if any of
the analysts who cover us issues an inaccurate or unfavorable opinion regarding our business, our share price would likely decline. In
addition, the share prices of many companies in the technology industry have declined significantly after those companies have failed
to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts. If our financial
results fail to meet, or significantly exceed, our announced guidance or the expectations of analysts or public investors, analysts could
downgrade our securities or publish unfavorable research about it. If one or more of these analysts cease coverage of us or fail to publish
reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause our share price or trading
volume to decline.
Our failure to meet the continued listing requirements
of the NYSE could result in a delisting of our securities.
If we fail to satisfy the continued listing requirements of the NYSE such as any applicable
corporate governance requirements, the requirement that we maintain a total value of market capitalization of at least $50 million and
have at least 1.1 million shares publicly held with a value of at least $15 million and 400 round lot shareholders, or the minimum closing
bid price requirement, the NYSE may take steps to delist our securities. Such a delisting would likely have a negative effect on the price
of our securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting,
we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to
become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below
the NYSE minimum bid price requirement or prevent future non-compliance with the NYSE’s listing requirements. Additionally, if our
securities are not listed on, or become delisted from, the NYSE for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer
automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities
may be more limited than if our securities were quoted or listed on the NYSE or another national securities exchange. You may be unable
to sell your securities unless a market can be established or sustained.
We are an “emerging growth company”
and avail ourselves of the reduced disclosure requirements applicable to emerging growth companies, which could make our equity securities
less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act and remain
an “emerging growth company” until the earliest to occur of:
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the last day of the fiscal year during which our total annual revenue equals or exceeds $1.235 billion (subject to adjustment for
inflation); |
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the last day of the fiscal year following the fifth anniversary of our initial registered offering; |
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the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; or |
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the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. |
The JOBS Act exempts emerging growth companies from certain SEC disclosure requirements
and standard and we intend to take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies
pursuant to the JOBS Act so long as we qualify as an emerging growth company, including, but not limited to, (1) not being required to
comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, (2) presenting only two years of audited
consolidated financial statements until we file our first annual report with the SEC, including in this prospectus, and (3) not being
required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or current or future
PCAOB rules requiring supplements to the auditor’s report providing additional information about the audit and the consolidated
financial statements (critical audit matters or auditor discussion and analysis). Although under the JOBS Act emerging growth companies
can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards
apply to private companies, this exemption does not apply to companies, such as us, reporting under IFRS since IFRS does not provide for
different transition periods for public and private companies.
Investors may find our ordinary shares less attractive because we rely on these exemptions.
If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the
trading prices of our securities may be materially adversely affected and more volatile.
We are a foreign private issuer and, as a result,
are not subject to U.S. proxy rules but are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less
frequent than those of a U.S. issuer.
Because we qualify as a foreign private issuer under the federal securities laws and
although we follow Israeli laws and regulations with regard to such matters, we are exempt from certain provisions of the Exchange Act
that are applicable to U.S. public companies, including: (i) the sections of the Exchange Act regulating the solicitation of proxies,
consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring
insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made
in a short period of time and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q
containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant
events. In addition, foreign private issuers will be required to file their annual report on Form 20-F by 120 days after the end of each
fiscal year, while U.S. domestic issuers that are non-accelerated filers are required to file their annual report on Form 10-K within
90 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing
issuers from making selective disclosures of material information. As a result of the above, even though we are contractually obligated
and intend to make interim reports available to our shareholders, copies of which we are required to furnish to the SEC on a Form 6-K,
and even though we are required to file reports on Form 6-K disclosing whatever information we have made or are required to make public
pursuant to Israeli law or distribute to our shareholders and that is material to our company, you may not have the same protections afforded
to shareholders of companies that are U.S. domestic issuers.
As we are a “foreign private issuer”
and follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders
of companies that are subject to all the NYSE corporate governance requirements.
As a foreign private issuer, we have the option to follow certain home country corporate
governance practices rather than those of the NYSE, provided that we disclose the requirements we are not following and describe the home
country practices we are following. We have relied on, and in the future intend to rely on, this “foreign private issuer exemption”
with respect to certain NYSE rules, as further described in the section entitled “Management —
Corporate Governance Practices.” We may in the future elect to follow home country practices with regard to other matters.
As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all the NYSE
corporate governance requirements.
We may lose our foreign private issuer status
in the future, which could result in significant additional costs and expenses.
As discussed above, we are a foreign private issuer, and therefore, we are not required
to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private
issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly,
the next determination will be made with respect to us on June 30, 2023. In the future, we would lose our foreign private issuer status
if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive
officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer
status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements
on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also
have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject
to the short- swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability
to rely upon exemptions from certain corporate governance requirements under the listing rules of the NYSE. As a U.S. listed public company
that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur
as a foreign private issuer.
The market price of our ordinary shares or
warrants could be negatively affected by future issuances or sales of our securities.
As of April 24, 2023, giving effect to the cashless exercise by (i) the Sponsor of 3,364,904
SatixFy Private Warrants for 2,000,000 SatixFy Ordinary Shares and (ii) Cantor of 935,297 SatixFy Private Warrants for 553,692 SatixFy
Ordinary Shares, we had 80,756,058 ordinary shares outstanding.
Future sales by us, which may be without the approval of SatixFy’s shareholders
(and subject to restrictions in the Forward Purchase Agreement, as discussed above), or our shareholders of a substantial number of ordinary
shares, the issuance of ordinary shares as consideration for acquisitions, 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.
If any of SatixFy’s large shareholders or members of its management were to sell
substantial amounts of SatixFy Ordinary Shares and/or SatixFy Warrants in the public markets, or the market perceives that such sales
may occur, this could have the effect of increasing the volatility in, and put significant downward pressure on, the trading price of
SatixFy Ordinary Shares and/or SatixFy Warrants. Any such volatility or decrease in the trading price of SatixFy Ordinary Shares and/or
SatixFy Warrants could also adversely affect SatixFy’s ability to raise capital through an issue of equity securities in the future.
As of April 24, 2023, giving effect to the cashless exercise of private warrants discussed
above, there are outstanding (i) 10,000,000 public warrants to purchase SatixFy Ordinary Shares held by former holders of Endurance warrants,
(ii) 3,329,799 warrants to purchase SatixFy Ordinary Shares which are held by the Sponsor and Cantor Fitzgerald & Co. as a result
of the exchange of Endurance private placement warrants for warrants of SatixFy, (iii) and 1,000,000 PIPE Warrants with an exercise price
of $11.50 per share. To the extent the above referenced warrants are exercised, additional shares will be issued, which will result in
dilution to our shareholders and increase the number of our ordinary shares eligible for resale in the public market, which could have
an adverse effect on the market price of our ordinary shares. Pursuant to the Business Combination Agreement, we issued 27,500,000 Price
Adjustment Shares to SatixFy’s founders and the Sponsor which are subject to vesting and forfeiture based on the trading price of
our ordinary shares. To the extent the Price Adjustment Shares vest upon the achievement of certain price thresholds as described in the
Business Combination Agreement (see “Management’s Discussion and Analysis of Financial Condition
and Results of Operations –– Business Combination Agreement.”), such Price Adjustment Shares will result in dilution
to our shareholders and increase the number of our ordinary shares eligible for resale in the public market, which could have an adverse
effect on the market price of our ordinary shares. Pursuant to the Forward Purchase Agreement, we agreed to register for resale under
the Securities Act the 10,149,384 SatixFy Ordinary Shares held by the Sellers (including 8,544,284 shares purchased by them prior to the
closing of the Business Combination), which sales thereof could have an adverse effect on the market price of our ordinary shares. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity
and Capital Resources—Forward Purchase Agreement.” Additionally, pursuant to the Forward Purchase Agreement, at the
Maturity Date (as defined therein) we have agreed to pay the Sellers thereunder the Maturity Consideration in an amount of up to $15 million
which amount may be paid by the issuance of SatixFy Ordinary Shares to the Sellers (and we have agreed to register any such shares for
resale), which issuance and subsequent registration for resale could have an adverse effect on the market price of our ordinary shares
eligible for resale in the public market, which could have an adverse effect on the market price of our ordinary shares.
Under the A&R Articles of Association, each existing SatixFy shareholder, with the
exception of Francisco, as of immediately prior to the consummation of the Business Combination is restricted from transferring SatixFy
Ordinary Shares (excluding any SatixFy Ordinary Shares acquired by the shareholder in open market transactions after March 8, 2022), except
to certain permitted transferees, for the one-hundred and eighty (180) days immediately following the Closing. Further, the Sponsor has
agreed not to transfer certain of its SatixFy Ordinary Shares and SatixFy Private Warrants, except to certain permitted transferees, beginning
on the Closing and continuing until the earlier of (i) one hundred eighty (180) days thereafter and (ii) when SatixFy completes a liquidation,
merger, share exchange, reorganization or other similar transaction that results in all SatixFy shareholders having the right to exchange
their ordinary shares for cash, securities or other property.
Pursuant to the Forward Purchase Agreement, we agreed that we will not issue any SatixFy
Ordinary Shares, or securities or debt that is convertible, exercisable or exchangeable into SatixFy Ordinary Shares until the gross proceeds
generated from Shortfall Sales thereunder equal the Prepayment Shortfall, except issuances under our 2020 Share Award Plan and the Equity
Line of Credit. As of April 1, 2023, the Sellers have informed us that they sold 5,362,440 Subject Shares pursuant to Shortfall Sales
and 4,536,944 Subject Shares remain available for sale under the Forward Purchase Agreement. The Reset Price, as of April 1, 2023, is
$6.00. Accordingly, we may be unable to capitalize on market opportunities to issue new equity securities in the near future while we
continue to be subject to the Forward Purchase Agreement. Further, recent declines in our stock price mean that our ability to raise new
capital under the Equity Line of Credit Facility, which limits the number of shares we can sell based on their daily average trading volume,
could be substantially less than we initially expected. Additionally, resales of SatixFy Ordinary Shares by the Sellers under the
Forward Purchase Agreement may lead to declines in the market prices of our securities.
As of the date hereof, all lock-up agreements have expired and the shares held by certain
of our shareholders are eligible for resale, subject to, in the case of certain stockholders, volume, manner of sale and other limitations
under Rule 144, if then available. In addition, pursuant to the A&R Shareholders’ Agreement, A&R Registration Rights Agreement,
Forward Purchase Agreement and Equity Grant Agreement (as defined herein) certain shareholders have the right, subject to certain conditions,
to require us to register the sale of our ordinary shares they hold under the Securities Act. By exercising their registration rights
and selling a large number of shares, these stockholders could cause the prevailing market price of our SatixFy Ordinary Shares to decline.
See “SatixFy Ordinary Shares Eligible for Future Sale — Registration Rights”
for a description of these registration rights.
If these shareholders exercise their registration rights now that all applicable lock-up
agreements have expired, the market price of shares of our ordinary shares could drop significantly if the holders of these shares sell
them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional
funds through future offerings of our ordinary shares or other securities.
As of the date of this prospectus, we have up to $77.25 million aggregate principal
amount of ordinary shares available for future issuance under the Equity Line of Credit to the investor thereunder. Pursuant to the Exchange
Cap (as defined in the CF Purchase Agreement) in the CF Purchase Agreement, we have reserved an initial amount of up to 15,295,125 ordinary
shares for issuance under the Facility, which represents approximately 19.0% of our total outstanding shares as of March 1, 2023.
To the extent shares are issued and sold to the investor pursuant to the Equity Line of Credit, such issuance will result in permanent
dilution to our shareholders and increase the number of our ordinary shares eligible for resale in the public market, which could have
an adverse effect on the market price of our ordinary shares. See “Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Equity Line of Credit.”
As discussed elsewhere in this prospectus, the SatixFy Ordinary Shares (including shares
underlying private and public warrants) registered on the registration statement of which this prospectus is a part represent approximately
35% of SatixFy Ordinary Shares outstanding as of April 24, 2023 (not including shares underlying SatixFy Warrants), and sales of a significant
number of such shares could materially adversely affect the trading prices of our securities. However, based on the information available
to us, at least 6,362,440 of the SatixFy Ordinary Shares initially registered on such registration statement have been sold prior to the
date hereof. Further, the Selling Shareholders may be incentivized to sell their securities even if the prevailing trading price of such
securities is at or significantly below the Endurance IPO price, because the prices at which they acquired their shares may be lower than
prevailing market prices and/or the prices at which public investors purchased our securities in the open market, and therefore such Selling
Shareholders may generate positive rates of return on their investment that would not be available to public shareholders that acquired
their SatixFy securities at higher prices.
As of April 24, 2023, we had 3,253,896 ordinary shares underlying options that would
have been vested and exercisable and an additional 3,516,374 unvested options outstanding, as well as 3,019,619 ordinary shares underlying
unvested RSUs (with no RSUs vested as of such date). These grants, and any additional grants that we make in the future, will result in
dilution to our shareholders, which may be material and could cause the market price for our equity securities to decline.
Risks Related to our Warrants
SatixFy may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
The public warrants and PIPE Warrants became exercisable upon the effectiveness of the
registration statement of which this prospectus forms a part. When our warrants become redeemable, SatixFy may exercise the redemption
right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption
of our outstanding warrants could force holders (i) to exercise our warrants and pay the exercise price therefor at a time when it may
be disadvantageous to do so, (ii) to sell our warrants at the then-current market price when the holder might otherwise wish to hold our
warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely
to be substantially less than the market value of our warrants. The warrants of SatixFy exchanged for Endurance warrants that were issued
in a private placement are not expected to be redeemable by SatixFy so long as they are held by the Sponsor or its permitted transferees.
There can be no assurance that warrants received
by holders of Endurance warrants or PIPE Warrant holders in the Business Combination will be in the money at the time they become exercisable
or otherwise, and they may expire worthless.
The exercise price of our warrants is $11.50 per SatixFy Ordinary Share. There can be
no assurance that our warrants will be in the money following the time they become exercisable and prior to their expiration, and as such,
our warrants may expire worthless.
The SatixFy A&R Warrant Agreement designates
the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of
warrant holders to obtain a favorable judicial forum for disputes with our company.
The SatixFy A&R Warrant Agreement provides that, subject to applicable law, (i)
any action, proceeding or claim against SatixFy arising out of or relating in any way to the each such agreement will be brought and enforced
in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that the parties
thereto irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim.
The parties also agreed to waive any objection to such exclusive jurisdiction or that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the SatixFy A&R Warrant Agreement
will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal
district courts of the United States are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest
in our warrants will be deemed to have notice of and to have consented to the forum provisions in the applicable agreement. If any action,
the subject matter of which is within the scope the forum provisions of the SatixFy A&R Warrant Agreement, is filed in a court other
than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”)
in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state
and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions
(an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action
by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a
claim in a judicial forum that it finds favorable for disputes with SatixFy, which may discourage such lawsuits. Alternatively, if a court
were to find this provision of the SatixFy A&R Warrant Agreement inapplicable or unenforceable with respect to one or more actions
or proceedings, SatixFy may incur additional costs associated with resolving such matters in other jurisdictions, which could materially
and adversely affect SatixFy’s business, financial condition and results of operations.
USE OF PROCEEDS
All of the ordinary shares offered by the Selling Shareholders pursuant to this prospectus
will be sold by the Selling Shareholders for their respective accounts. We will not receive any of the proceeds from these sales, except
that we may receive a portion of the aggregate gross proceeds from further sales by the Sellers under the Forward Purchase Agreement in
connection with certain sales of our ordinary shares, though unless the market price of our ordinary shares appreciates substantially
from current levels, such further sales are uncertain to occur.
We will receive up to an aggregate of approximately $164,792,689 from the exercise of
the outstanding warrants (each of which is generally exercisable for $11.50 per share), assuming the exercise in full of all such warrants
for cash. The market price of our ordinary shares is currently substantially below the minimum level at which a warrant exercise would
be profitable. It is therefor uncertain and there is no assurance that the holders of the warrants will elect to exercise any or all of
the warrants. To the extent that warrants are exercised on a “cashless basis,” the amount of cash we would receive from the
exercise of the warrants will decrease, potentially to zero. Accordingly, we may not receive any proceeds in relation to our outstanding
warrants.
We expect to use the net proceeds received from the Sellers under the Forward Purchase
Agreement or from the exercise of the warrants, if any, for general corporate purposes, which may include funding working capital requirements,
capital expenditures, acquisitions and other business opportunities and the repayment of indebtedness. Our management will have broad
discretion over the use of proceeds from the Forward Purchase Agreement or the exercise of the warrants. See “Plan
of Distribution” elsewhere in this prospectus for more information.
MARKET
PRICE OF OUR SECURITIES
Our ordinary shares and public warrants (which will include the PIPE Warrants upon their
resale pursuant to an effective registration statement or Rule 144 under the Securities Act) began trading on the NYSE under the symbols
“SATX” and “SATX WSA,” respectively, on October 28, 2022. Endurance’s ordinary shares, warrants, and units
were previously listed on Nasdaq under the symbols “EDNC,” “EDNCW,” and “EDNCU,” respectively. Endurance’s
units began trading on Nasdaq on September 15, 2021 and its ordinary shares and warrants began trading on Nasdaq on November 4, 2021.
Endurance’s units automatically separated into the component securities upon consummation of the Business Combination. Prior to
the Closing, each unit of Endurance consisted of one Endurance Class A ordinary share and one public warrant of Endurance, whereby each
public warrant entitled the holder to purchase one-half of one Endurance Class A ordinary share at an exercise price of $11.50 per whole
ordinary share. Upon the closing of the Business Combination, Endurance’s ordinary shares were converted into our ordinary shares.
As of April 24, 2023, there were approximately 75 holders of record of our ordinary shares and three holders of record of our warrants.
Such numbers do not include beneficial owners holding our securities through nominee names. On May 1, 2023, the last reported closing
sale prices of our ordinary shares and public warrants were $0.45 and $0.10, respectively.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial
condition and results of operations together with SatixFy’s consolidated financial statements and the related notes thereto appearing
elsewhere in this prospectus. Some of the information contained in this discussion and analysis, including information with respect to
SatixFy’s plans and strategy for SatixFy’s business, includes forward-looking statements that involve risks and uncertainties.
As a result of many factors, including those factors set forth in the sections titled “Risk Factors” and “Cautionary
Statement Regarding Forward- Looking Statements,” SatixFy’s actual results could differ materially from the results described
in or implied by the forward-looking statements contained in the following discussion and analysis. Throughout this section, unless otherwise
noted or the context requires otherwise, “we,” “us,” “our,” “SatixFy” and the “Company”
refer to SatixFy Communications Ltd. and its consolidated subsidiaries, and in references to monetary amounts, “dollars” and
“$” refer to U.S. dollars, “GBP” refers to British pounds, “EUR” refers to the Euro (the common currency
of certain member states of the European Union) and “NIS” refers to New Israeli Shekels.
Overview
We are a vertically integrated satellite communications systems provider using our own
semiconductors, focused on designing chips and systems that serve the entire satellite communications value chain — from the satellite
payload to user terminals. We create chip technologies capable of enabling satellite-based broadband delivery to markets around the world.
Since we commenced operations in June 2012, through December 31, 2022 we have invested over $209 million in R&D to create what we
believe are the most advanced satellite communications and ground terminal chips in the world.
We develop advanced ASICs and RFICs based on technology designed to meet the requirements
of a variety of satellite communications applications, mainly for LEO, MEO and GEO satellite communications systems, Aero/IFC systems
and certain COTM applications. Our chip technology supports ESMA, digital beamforming and beam-hopping, on-board processing for payloads
and SDR modems — each of which will be critical for providing optimized access to LEO satellite constellations.
We believe we are the only vertically integrated maker of satellite communications systems
selling products across the entire satellite communications value chain. All of our systems integrate our proprietary semiconductor chips,
of which we are a fabless manufacturer. We design our chips, code our software and design end-to-end communications systems for use in
various satellite communications applications.
Our end-to-end solutions for the satellite communications industry include satellite
payloads, user terminals (ground and Aero/IFC) and hubs, each built around our advanced ASICs and RFICs. We have a diverse customer base,
including satellite operators, airlines, manufacturers of satellite communications systems, and other connectivity service providers that
integrate our chips and systems in their satellite communications infrastructure. We believe that our modular, scalable and software controllable
technology, our focus on producing products for the entire satellite communications value chain and our ability and experience in designing
our systems to meet our customers’ specifications, differentiate us from our competitors.
Business Combination Agreement
On March 8, 2022, we and one of our subsidiaries entered the Business Combination Agreement
and on October 27, 2022, our subsidiary, Merger Sub, merged with and into Endurance, with Endurance continuing as the surviving company
and becoming our direct, wholly owned subsidiary. The Business Combination Agreement, as amended, and the related transactions were approved
by both our board of directors and the board of directors of Endurance.
Additionally, on October 24 and 25, 2022, Endurance, SatixFy, Merger Sub and the Sellers
entered into the Forward Purchase Agreement, pursuant to which we agreed to register for resale the shares purchased by the Sellers thereunder
and under which we received the Prepayment Amount of approximately $10.0 million from Sellers (including $1.6 million as a result of our
issuance to Vellar of Additional Shares following the consummation of the Business Combination) upon the effectiveness of the registration
statement to which this prospectus relates. We may also be entitled to additional proceeds of any OET Sales of such shares by Seller,
as described in “Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Liquidity and Capital Resources— Forward Purchase Agreement” (subject to the payment of fees, expenses
and break-up fees, as applicable).
Additionally, the SatixFy Ordinary Shares (including shares underlying private and public
warrants) registered on the registration statement of which this prospectus is a part represent approximately 35% of the SatixFy Ordinary
Shares outstanding as of April 24, 2023 (not including shares underlying SatixFy Warrants), and sales of a significant number of such
shares, which could be made by the Selling Shareholders (including the Sponsor) at any time that the registration statement of which this
prospectus forms a part is available for use, could materially adversely affect the trading prices of our securities, which could, in
turn, materially adversely impact our ability to raise additional capital. Further, the Sellers under the Forward Purchase Agreement were
paid $86.5 million directly out of the funds held in the Trust Account upon the consummation of the Business Combination and, in certain
circumstances, may be entitled to receive from us the Maturity Consideration in addition to other potential fees. As a result, such Sellers
may be incentivized to sell their SatixFy Ordinary Shares at prices that are substantially lower than prevailing market prices for our
shares at the date of this prospectus, which, in turn, may compound the risk of a market price decline and further limit our ability to
access the public markets for additional capital. See “— Liquidity and Capital Resources.”
Concurrently with the execution of the Business Combination Agreement, we entered into
the Equity Line of Credit with CF Principal Investments, pursuant to which we may issue and sell to CF Principal Investments, from time
to time and subject to the conditions in the related purchase agreement, up to $75.0 million in SatixFy Ordinary Shares. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources—Equity Line of Credit.”
The Business Combination is accounted for as a capital reorganization, with no goodwill
or other intangible assets recorded, in accordance with IFRS. SatixFy has been determined to be the accounting acquirer. In connection
with the Business Combination, the SatixFy Ordinary Shares have been registered under the Exchange Act and listed on the NYSE, which will
require SatixFy to hire additional personnel and implement procedures and processes to address public company regulatory requirements
and customary practices. SatixFy expects to incur additional annual expenses as a public company for, among other things, directors’
and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources.
Impact of COVID-19
On March 11, 2020, the World Health Organization designated the outbreak of COVID-19
as a global pandemic. The COVID-19 pandemic has hindered the movement of people and goods worldwide, and many governments instituted restrictions
on work and travel. For example, the U.S. government declared a national emergency and subsequently issued a “do not travel”
advisory advising U.S. citizens to avoid all international travel due to the global impact of COVID-19. Governments, non-governmental
organizations and private sector entities have also issued and may continue to issue non-binding advisories or recommendations regarding
air travel or other social distancing measures, including limitations on the number of persons that should be present at public gatherings.
The U.S. and other governments also implemented enhanced immigration controls for air travel, including screenings, mandatory quarantine
requirements and restrictions on travel. The Israeli and many foreign and U.S. state governments also issued stay home or “shelter
in place” orders or advisories and imposed limits or advised against non-essential travel. We took precautionary measures intended
to help minimize the risk of the virus to our employees, including requiring some of our employees to work remotely and suspending all
non-essential travel.
Among other things, the COVID-19 pandemic caused a significant decline in aviation travel,
the industry primarily served by many of our current customers, and resulted in several project delays in the Aero/IFC sector, which adversely
affected our business and results starting in 2020. Beginning in the first quarter of 2020, several opportunities at different stages
of negotiations were postponed and exhibitions and sales meetings were canceled. In addition, work on many of our current projects was
delayed, as more than 50% of our employees worked from home during a period of over eight months. This lead to delays in project schedules,
and several of our customers put current projects on hold or postponed anticipated projects in light of uncertainties surrounding the
air travel industry and demand for satellite communications-related products and services.
Our business volume and revenues improved following the end of the pandemic, as air
travel gradually resumed and airlines and providers of satellite communications services resumed investments in satellite communications
projects and our employees returned to work. On the other hand, we and certain of our customers have continued to be hampered by pandemic-related
supply chain challenges, including a substantial manufacturing backlog for silicon chips, which are manufactured for us by a third party
under contract, and related supplies and services. Additionally, we have continued to experience periodic disruptions in air travel and
normal business practices as a result of restrictions imposed in response to new COVID-19 variants.
Despite the challenges associated with COVID-19 and the clear impact on the Aero/IFC
sector, we have continued to invest in R&D and also believe the circumstances have provided us with an opportunity to gain IFC market
share. Significant delays occurred in the procurement of IFC antennas as a result of the pandemic, providing us with the opportunity to
mature our technology and design lower cost, more powerful and easier to install Aero/IFC terminals at a time that our principal competitors’
market-ready products, based on more traditional mechanical antennas operating over GEO, did not receive substantial orders. Subject to
the developments discussed below under “— Key Factors and Trends Affecting our Performance
— Market Trends and Uncertainties,” we believe we have an opportunity to bring our Aero/ IFC terminals to market at
the time the industry is likely to begin procuring its next-generation of IFC equipment, which we expect to better coincide with new services
being introduced by new LEO constellations.
At this time, we are not able to predict whether the COVID-19 pandemic will result in
long-term changes to business practices, including but not limited to a long-term reduction in air travel as a result of increased usage
of “virtual” and “teleconferencing” products, which could lead to a decline in demand for air travel and related
satellite communications services. The full extent of the ongoing impact of COVID-19 on our longer-term operational and financial performance
will depend on future developments, many of which are outside of our control. The magnitude and nature of the effects of these challenges
and uncertainties on our business are difficult to predict and such effects may not be fully realized, or reflected in our financial results,
until future periods. See “Risk Factors — Risks Related to SatixFy’s Business, Operations
and Industry — The global COVID-19 pandemic has harmed and could continue to harm our business, financial condition, and results
of operations” and “Risk Factors — Risks Related to SatixFy’s Business,
Operations and Industry — We are currently experiencing, and may continue to experience, increased risks and costs associated with
volatility in labor or component prices or as a result of supply chain or procurement disruptions, which may adversely affect our operations.”
Our management continues to monitor and to examine the effects of the COVID-19 pandemic
on our business and has made adjustments, and may make further adjustments, in order to keep our employees and partners safe, meet our
contractual obligations and continue developing our proprietary technology. Our management has not identified any asset impairments or
solvency challenges to date. See “— Key Factors and Trends Affecting our Performance”
below for additional information.
Our Revenue Model and Prospects
We seek to provide end-to-end solutions for the satellite communications industry, driven
by our proprietary chip technology, which we believe allow us to develop and provide satellite communications systems that have higher
system processing capacities and throughputs and that are lighter in weight, consume less power and are lower in cost than competing systems.
In most cases, our systems must be tailored to our customers’ specifications. A typical system development life cycle starts with
an assessment of the customer’s needs and specifications, is followed by the design of a communications system based on those specifications
and the integration of our proprietary chips, and culminates in the delivery of the final product to the customer.
The structure of our contracts with customers varies based on the needs and preferences
of our individual customers. For example, while we may enter into agreements with some customers that cover the whole life cycle of a
project from the definition of requirements to the development and delivery of a system, at the outset of the engagement, other customers
may prefer a phased approach, placing a contract with us for an initial product demonstration, followed by a second phase for the delivery
of a commercial-ready product. Accordingly, the length and nature of our contracts vary across our customer base. We are an early stage
company and, to date, a substantial portion of our revenues has been derived from relatively few customers.
We recorded $ 10.6 million, $21.7 million and $10.6 million in revenues for the years
ended December 31, 2022, 2021 and 2020, respectively. To date, most of our customer contracts have covered the early phases of satellite
communications system development, typically requiring our R&D personnel to team with our customers on the development of system specifications.
Accordingly, over the last three years, most of our customer revenues have related to these phases of product development, and have been
recorded under “development services and preproduction,” which accounted for approximately 95%, 89% and 97% of our total revenues
in the years ended December 31, 2022, 2021 and 2020, respectively. Our revenues from sales of products have related mainly to sales of
modems and chips, which amounted to $0.5 million, $2.4 million and $0.3 million in the years ended December 31, 2022, 2021 and 2020, respectively.
Ongoing macro-level events and supply-chain constraints across the satellite industry have resulted in order delays and project cancellations
by certain of our current and prospective customers, which we expect will continue to impact our business in the near term.
Our three largest customers accounted for, in the aggregate, approximately 78%, 64%
and 35% of our revenues in the years ended December 31, 2022, 2021 and December 31, 2020, respectively. Of our three top customers in
2021 and 2020, Jet Talk, our equity method investee in which we own a 51% equity stake but which we do not control, did not contribute
to our revenues for the year ended December 31, 2022 and accounted for approximately 14% and 68% of our revenues in the years ended December
31, 2021 and December 31, 2020, respectively, all of which was revenue for the provision of R&D services. See “— Principal
Components of Our Results of Operations — Share in the loss of a company accounted by equity method, net” below.
We have two commercial contracts with Jet Talk, both related to the development of an
Aero/IFC satellite communications terminal for commercial aircraft, which under our joint venture agreement Jet Talk will have the exclusive
right to commercialize and sell. Jet Talk pays for the development services associated with these contracts with the proceeds of a $20.0
million investment by our joint venture partner, STE. We believe our partnership with STE, which under our joint venture contributes to
Jet Talk’s funding and its marketing and other activities, will allow us to benefit from STE’s resources, commercial aviation
industry expertise and strong presence in East Asia, thus providing us with an added advantage in commercializing our Aero/IFC satellite
communications terminals, once their development is complete.
Jet Talk did not generate any revenue in 2022 and is not expected to generate material
revenue until at least 2024. Once we complete the development of and are able to commercialize our Aero/IFC satellite communications terminal
product, the revenues and margins attributable to such sales will not be fully reflected in our consolidated financial statements, which
will instead reflect revenue from our sales of products and services to Jet Talk on a contract basis (which we expect Jet Talk to sell
to end-users in the commercial aviation market) and our equity in Jet Talk’s net income or loss for each reporting period. Accordingly,
our consolidated statements of operations for future periods may not fully reflect the underlying revenues and margins of our future IFC/Aero
terminals business. See Note 6 to SatixFy’s consolidated financial statements included elsewhere in this prospectus.
We expect our mix of revenue to gradually shift to sales of products towards the end
of 2023 and beginning of 2024, as we attract more customers, develop custom-tailored and off-the-shelf products, and begin to deliver
satellite communications systems at scale. Our ability to generate revenue and profits is subject to numerous contingencies and uncertainties,
including those discussed below under “— Key Factors and Trends Affecting our Performance”
and “— Liquidity and Capital Resources” and in the section of this prospectus
titled “Risk Factors.”
Key Factors and Trends Affecting our Performance
We believe that our performance and future success depend on several factors that present
significant opportunities for us but also pose risks and challenges, including those discussed below and in the section titled “Risk
Factors.”
Expanding our Customer Base and Relationships
We are focused on attracting new customers and expanding our relationships and revenue
with existing customers, which we believe will be driven by our ability to continue to improve our technologies and products that make
our offerings compatible with the latest advances in satellite-enabled communications. As of December 31, 2022, we had binding contracts
with our 12 customers under which we recorded revenues in the 2022 or in 2021, or expect to record future revenues. Ongoing business developments
discussed elsewhere herein continue to impact our customer base and plans for expansion.
Backlog
As of December 31, 2022, we had signed contracts representing revenue backlog of approximately
$45 million. Our backlog consists of estimated revenue pursuant to customer orders and signed contracts. Our customer orders may be terminated
under certain circumstances, including if we fail to meet delivery deadlines or otherwise breach our contracts and most of our customer
contracts are terminable upon prior notice to us, without penalty. There is no assurance that we will be able to expand our customer relationships
with existing customers, and therefore our backlog, or that our backlog will translate into revenue or cash flows. Additionally, we previously
reported estimates of our potential future revenue pipeline, however, due to the cessation or narrowing of negotiations of new contracts
with existing and prospective customers, our potential revenue pipeline is uncertain and we do not plan to report this metric in future
periods unless and until these circumstances change, as such pipeline information would be of limited utility to investors.
Development of New Products
Since commencing operations in 2012, we have invested a total of approximately $209
million in R&D as of December 31, 2022, a substantial portion of which has been defrayed by government and public entity grants (recognized
in our statement of operations as reductions in research and development expenses). To date, we have received over $77.5 million in grants
from the ESA, sponsored by the UKSA, and over $6.3 million in grants from the Israeli Innovation Authority (“IIA”). Our net
research and development expenses amounted to $17.0 million, $17.9 million and $16.6 million in the years ended December 31, 2022, 2021
and 2020, respectively. Our gross R&D spend, exclusive of the impact of offsetting government and public entity grants, amounted to
$29.3 million, $31.7 million and $30.9 million in 2022, 2021 and 2020, respectively. In some cases, such as with grants from the IIA,
we are required to repay a portion of the grants at a future date in the form of a royalty on the sales of products developed with the
assistance of such grants. See “Item 5. Operating and Financial Review and Prospects Liquidity
and Capital Resources—Commitments." Our R&D efforts also benefit from our experience on customer projects, including
collaborations with leading companies in the satellite communications industry. We have generated $10.1 million, $19.2 million and $10.3
million in revenues from the provision of R&D services (recorded under “Development services and preproduction” in our
statements of income) in the years ended December 31, 2022, 2021 and 2020, respectively, while maintaining ownership of our intellectual
property developed in connection with such projects and licensing such intellectual property to our customers.
Our R&D efforts focus primarily on developing new chips, systems and technologies,
as well as improving our existing systems with additional innovative features and functionality. For example, based on our SX-3099 chip,
we developed the SX-4000 chip to be used in space by applying a radiation hardening process. The development of modem and antenna chips
requires us to improve the performance, size, power consumption, product roadmap, resilience and cost of our chips. We combine technologies,
such as beamforming, beam-hopping and silicon development processes with our proprietary design methods, intellectual property and our
expertise to develop new technologies and advanced systems. To date, our R&D efforts have yielded, in addition to our proprietary
chips, satellite-capable modems that are in production and several products, including satellite payloads, Aero/IFC terminals and ground
terminals and hubs, that are in late stage development or nearing the prototype phase.
As of December 31, 2022, we had a team of over 160 engineers supporting our mission
to innovate the satellite communications industry, including hardware and software, VLSI, product and antenna and algorithm engineers.
We conduct our R&D across centers in Israel, the United Kingdom and Bulgaria. By spreading our R&D team across multiple locations,
we increase our access to highly skilled engineering talent, which we believe provides us with opportunities for evolution and growth.
We believe that continued investment in R&D is critical to our business, and accordingly
expect to continue expanding the scope and scale of our R&D activities, including with the proceeds of the Business Combination, and
also anticipate continued R&D funding from the ESA, although there can be no assurance as to when or if such funding occurs, or to
what the amount and terms of such funding may be. Notwithstanding our continued investment, there is no assurance that our R&D efforts
will be successful in yielding new or improved satellite communications products.
Market Trends and Uncertainties
The markets in which our customers operate, including the satellite payloads, ground
terminals and IFC markets, are characterized by increasingly rapid technological changes, product obsolescence, competitive pricing pressures,
evolving standards and fluctuations in product supply and demand. New technology may result in sudden changes in system designs or platform
changes that may render our products obsolete and require us to devote significant additional R&D resources to compete effectively.
We believe we have a significant opportunity ahead of us, with an aggregate TAM across our key markets that is expected to reach approximately
$18 to $22 billion by the end of the current decade (see “Business — Market Opportunity”).
However, we have no control over market demand and there is no assurance that we will be successful in capturing a substantial portion
of the TAM, and our ability to do so will be contingent on numerous factors, including developments in the satellite communications industry
and geopolitical and macroeconomic conditions and our ability to meet demand, to overcome chip supply shortages and other supply chain
capacity challenges, among others. See “Risk Factors — Our estimates, including market opportunity
estimates and growth forecasts, are subject to inherent challenges in measurement and significant uncertainty, and real or perceived inaccuracies
in those metrics and estimates may harm our reputation and negatively affect our business.”
Our revenues amounted to $10.6 million, $21.7 million and $10.6 million in the years
ended December 31, 2022, 2021 and 2020, respectively, while our net losses amounted to $398 million (reflecting a $333 million non-recurring
listing expense, of which $318 million was attributable to a non-recurring, non-cash listing expense due to the application of IFRS 2
(Share-based Payments)) and $37 million was attributable to non-cash finance expense reflecting the revaluation of a derivative contract
relating to the transactions under the Forward Purchase Agreement, neither of which non-cash items had any tax impact, see Notes 16 and
24 to our audited consolidated financial statements included elsewhere herein, $17.1 million and $17.6 million, for the years ended
December 31, 2022, 2021 and 2020, respectively. We had an accumulated deficit (i.e., negative retained earnings) of $482 million as of
December 31, 2022. There is no assurance that we will achieve profitability in the near future, if at all, and may require additional
funding to support our continuing operations, fund our R&D and capital expenditure requirements and service our debt obligations.
See “— Liquidity and Capital Resources” below for more information.
We currently rely on third parties for a substantial amount of our chip manufacturing
and system assembly operations, and for assemblies and chip development software. The majority of our chips are supplied by a single foundry,
GlobalFoundries, and we purchase chip development software and software libraries from a limited number of providers, such as Cadence
Design Systems, Inc. and Siemens. The majority of our chips are designed to be compatible with the manufacturing processes and equipment
employed by GlobalFoundries and switching to a new foundry vendor for these chips may require significant cost and time. The current global
shortage in semiconductor and related electronic components and assemblies, resulting mainly from macro trends such as strong demand for
5G devices and high-performance computing, as well as the impact of the COVID-19 pandemic, has resulted in increases in the prices we
pay for the manufacturing of our chips and assemblies, disruptions in our supply chain and disruptions in the operations of our suppliers
and customers. If one or more of our vendors terminates its relationship with us, or if they fail to produce and deliver our products
or provide services according to our requested demands in specification, quantity, cost and time, our ability to ship our chips or satellite
communications systems to our customers on time and in the quantity required could be adversely affected, which in turn could cause an
unanticipated decline in our sales and damage our customer relationships. While in some cases we may be able to leverage our relationships
with certain large, well-known customers to secure contract manufacturing capacity on better price and delivery terms, this cannot be
assured and our ability to mitigate potential adverse impacts of supply chain constraints is limited at this time.
Additionally, we may experience supply chain and other disruptions to our business
that may be caused by a range of factors beyond our control, including, but not limited to, COVID-19 related impacts, geopolitical uncertainty,
international trade disputes, armed conflicts and sanctions, such as the ongoing Russia-Ukraine war and the related sanctions, or economic
and political instability in Southeast Asia, such as the military threat posed by China against Taiwan, climate change, increased costs
of labor, freight cost and raw material price fluctuations, a shortage of qualified workers or material changes in macroeconomic conditions.
The effects of the ongoing Russia-Ukraine war, including the changes for the timing
of new satellite launches by SatixFy’s current and prospective customers that previously launched from Russia, increased supply
chain difficulties for SatixFy and its customers, and recent developments in SatixFy’s discussions with prospective customers, pose
challenges to SatixFy’s business and future financial results, particularly in the near-term. For example, in March 2022, OneWeb,
one of our significant customers, announced that it was suspending all satellite launches from Russia’s Baikonur Cosmodrome and
recently announced that it would partner with companies in other countries, which may result in a significant delay of its test launch
of satellites equipped with our payload systems if it is unable to transition its expected satellite launches on a timely basis. See “Risk
Factors — Risks Related to SatixFy’s Business, Operations and Industry — We are currently experiencing, and may continue
to experience, increased risks and costs associated with volatility in labor or component prices or as a result of supply chain or procurement
disruptions, which may adversely affect our operations.” Industry supply chain challenges may be exacerbated and the demand
for our products may be adversely affected as a result of the indirect effects of the Russia-Ukraine war, related sanctions or their impacts
on global and regional economies. Recent global inflationary trends, higher interest rates and financial markets volatility have also
resulted in funding constraints that have affected and created more uncertainty about the timing and scale of investments in new communications
satellite constellations, new aircraft fleets and updated IFC solutions and related infrastructure by some of our existing and prospective
customers. For example, the scale and timing of Telesat’s plans to launch a new LEO communications satellite constellation will
depend on its ability to obtain the necessary funding for this project. The effects of recent macroeconomic uncertainties on our customers
have also resulted in delays to contract negotiations or customer orders, and may result in further delays. See “Risk
Factors — Risks Related to SatixFy’s Business, Operations and Industry — Deterioration of the financial condition of
our customers could adversely affect our operating results.” SatixFy believes that recent media and regulatory scrutiny of
SPAC business combinations may lead customers to view SatixFy as a riskier or undercapitalized partner. Prior to the consummation of the
Business Combination, two customers (including a significant customer that recently announced an agreement to enter into a merger of equals
with another major satellite operator) with whom SatixFy was discussing prospective new contracts informed SatixFy that they selected
SatixFy’s larger competitors with longer track records of providing space-based and aircraft-based satellite communications solutions
as principal contractors for their satellite communications needs. While SatixFy’s management believes that these developments are
unlikely to materially impact the long-term demand for our products or our long-term customer relationships (including with the two customers
that terminated new contract discussions, for whom SatixFy believes it may be selected as the provider of satellite communication chips
in connection with these ongoing projects in the future), they make it more difficult for us to budget for expected customer demand and
therefore may adversely impact our results of operations and financial condition, especially in the near-term. Our ability to mitigate
these supply chain and other disruptions, including the potential adverse impacts of the Russia-Ukraine conflict on our supply chain or
the supply chains of our customers, is limited, as the impacts are largely indirect and it is difficult for us to predict at this time
how our suppliers and customers will adjust to the new challenges or how these challenges will impact our costs or demand for our products
and services. See “Risk Factors — Risks Related to SatixFy’s Business, Operations and
Industry — We are currently experiencing, and may continue to experience, increased risks and costs associated with volatility in
labor or component prices or as a result of supply chain or procurement disruptions, which may adversely affect our operations,”
“ — We rely on third parties for manufacturing of our chips and other satellite communications
system components. We do not have long-term supply contracts with our foundry or most of our third-party manufacturing vendors, and they
may not allocate sufficient capacity to us at reasonable prices to meet future demands for our solutions” and “—
Deterioration of the financial condition of our customers could adversely affect our operating results.”
Competition
The satellite communications industry is competitive and characterized by rapid advances
in technology, new product introductions, high levels of investment in R&D and high costs associated with generating marketable products.
Our competitiveness depends on our ability to develop and launch products superior in performance and SWaP-C than our competitors and
our ability to anticipate and adjust to changes in our customers’ requirements. The competition in the satellite communications
market focuses primarily on performance, size, power consumption, product roadmap resilience and cost. Our customers’ selection
processes are often highly competitive, and there are no guarantees that our products will be included in the next generation of our customers’
products and systems.
Many of our current and potential competitors have existing customer relationships,
established patents and other intellectual property, a longer track record in supplying satellite communications solutions and substantial
technological capabilities. For example, two customers with whom we were discussing prospective new contracts recently informed us that
they selected our larger competitors with longer track records of providing space-based and aircraft-based satellite communications solutions
as principal contractors for their satellite communications needs. In some cases, our competitors are also our customers or suppliers.
Some of our competitors have recently introduced products with more advanced technologies than in the past, which increases competition
with our products. Additionally, many of our competitors may have significantly greater financial, technical, manufacturing and marketing
resources than we do, which may allow them to invest more in R&D, implement new technologies and develop new products more quickly
than we can. For further information, see “Risk Factors — We operate in a highly competitive
industry and may be unsuccessful in effectively competing in the future.”
Basis of Presentation
We currently conduct our business through one reportable operating segment. We prepare
our consolidated financial statements under IFRS as issued by the IASB.
Our functional and reporting currency is the U.S. dollar (which is also the functional
currency of our Israeli subsidiary), as the demand for satellite communications chips and systems, and many of the development costs with
respect thereto, are priced in U.S. dollars. Certain of our subsidiaries, on the other hand, have other functional currencies (being the
currencies in which their assets, liabilities, revenues and expenses are recorded). The functional currency of our U.K. subsidiaries is
the GBP and the functional currency of our Bulgarian subsidiary is the EUR. Accordingly, in the preparation of our consolidated financial
statements, we are required to translate these subsidiaries’ GBP and EUR balances to U.S. dollars. Assets and liabilities are generally
translated at year-end exchange rates, while revenues and expenses are generally translated at the average exchange rates for the period
presented. The differences resulting from translation are presented in our consolidated statement of comprehensive loss, under Exchange
gains (losses) arising on translation of foreign operations, but are not reflected in our net loss. As a result of our foreign currency
translation exposure, certain amounts in our consolidated financial statements may not be comparable between periods. Additionally, subsidiary
cash and financial asset and liability balances that are denominated in currencies other than the functional currency of the subsidiary
are remeasured into the functional currency, with the resulting gain or loss recorded in the financial income or financial expenses line-items
in our statements of income. For more information about the comparability impact of our foreign currency translation exposure, see below
under “— Quantitative and Qualitative Disclosure About Market Risk — Foreign Currency
Exchange Risk.”
Key Financial and Operating Metrics
We monitor several financial and operating metrics in order to measure our current performance
and project our future performance. These metrics are presented in the following table.
|
|
Year Ended December 31 |
|
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
|
(U.S.$ in thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
10,626 |
|
|
$ |
21,720 |
|
|
$ |
10,632 |
|
Gross profit |
|
$ |
6,128 |
|
|
$ |
12,877 |
|
|
$ |
7,572 |
|
Gross margin |
|
|
58 |
% |
|
|
59 |
% |
|
|
71 |
% |
Net loss (1) |
|
$ |
(397,789 |
) |
|
$ |
(17,050 |
) |
|
$ |
(17,563 |
) |
(1) Net loss for the year ended December 31, 2022 reflects the
impact of a $333 million non-recurring listing expense, of which $318 million was a non-cash expense due to the application of IFRS 2
(Share-based Payments), and a $37 million non-cash finance expense reflecting the revaluation of a derivative contract relating to the
transactions under the Forward Purchase Agreement. Neither of the aforementioned non-cash expenses had any impact on our income tax expense
or benefit for the year ended December 31, 2022 or on our deferred tax assets or liabilities as of that date. See Notes 16 and 24
to our consolidated financial statements included elsewhere herein for more information.
Principal Components of Our Results of Operations
Revenues
In the periods discussed in this prospectus, we have generated substantially all of
our revenues from development services and preproduction provided to our customers in connection with projects on which we are engaged
(although we maintain ownership of the intellectual property developed in connection with such projects). Our revenue from sales of products
consisted mostly of revenue from contracts for the provision of products, including product prototypes, and components, including our
proprietary chips.
We expect our mix of revenue to shift to sales of products in the near term, as we attract
more customers, develop custom-tailored and off-the-shelf products, and begin to deliver satellite communications systems at scale.
Cost of sales and services
Our cost of sales and services includes mainly salaries (including bonuses, benefits
and related expenses) of our service personnel and the costs of our chip manufacturing subcontractors, chip manufacturing tools and materials
and models, shipping cost, and related depreciation and amortization, including amortization of intangible assets, if any.
Research and development expenses
Research and development expenses consist primarily of salaries (including bonuses,
benefits and related expenses) of personnel involved in R&D and the cost of development tools, third-party intellectual property licenses,
and subcontractors, net of public sector grants, including from ESA, which offset some of our research and development expenses. See Note
21 to SatixFy’s consolidated financial statements included elsewhere in this prospectus.
To date, we have expensed all of our R&D costs as incurred. See “— Critical
Accounting Policies and Estimates — Research and Development Costs.” We expect to continue investing in R&D and,
accordingly, expect our research and development expenses to increase. We also expect to benefit from additional funding from the ESA
and other government and public sector entities, which, if obtained, would offset a portion of our research and development expenses.
Selling and marketing expenses
Selling and marketing expenses consist mainly of salaries (including bonuses, benefits
and related expenses) of our personnel involved in the sales and marketing of our products, as well as advertising, exhibition and related
expenses (including related travel).
We expect our sales and marketing costs to increase as we bring more products to market,
the demand for our products increases and we hire more sales and marketing personnel.
General and administrative expenses
General and administrative expenses consist mainly of salaries (including bonuses, stock-based
awards, benefits and related expenses) of management and administrative personnel, overhead costs (including facilities rent and utilities)
and depreciation and amortization of property and equipment not used in the manufacturing of our products or provisions of our services.
We expect our general and administrative costs to increase as a result of becoming a
public company, potentially substantially, as we expect to incur customary public company costs related to director and officer liability
insurance, director fees and public company-related auditing and compliance costs. We also expect higher costs in connection with the
expansion of our management team and finance and administrative functions in connection with the Business Combination.
Share in the loss of a company accounted by
equity method, net
This represents our share in the loss of a company accounted by equity method, net,
which reflects our proportionate share of the loss of Jet Talk, a joint venture with STE. We own 51% of Jet Talk’s equity, but do
not control the company, as STE controls the company’s financing and participates substantially in directing its marketing and R&D
activities (the latter generally being contracted to us) and also participates in the appointment of the chief executive officer, among
other senior management personnel. We are committed to provide Jet Talk with future development services for an Aero/IFC terminal, exclusive
marketing rights for the commercial aviation market, technical skills, staff expertise, R&D facilities and a non-exclusive, royalty-free,
world-wide, perpetual, non-transferable, irrevocable license to use and commercially exploit our intellectual property for the development,
production, sales and marketing of satellite antenna systems for the commercial aviation market. While Jet Talk has generated losses to
date, we expect Jet Talk to contribute significantly to our results of operations in the future. See Note 6 to SatixFy’s consolidated
financial statements included elsewhere in this prospectus.
Finance Income and Expenses
Finance income includes mainly the impact of foreign exchange remeasurement of certain
subsidiary financial assets and liabilities (see “— Basis of Presentation”),
fair value adjustments related to financial assets and liabilities (including, in 2020 and 2021, a deemed gain resulting from a discounted
bank loan obtained in connection with the COVID-19 pandemic) and interest on bank deposits.
Finance expenses include mainly interest on loans and bank fees, depreciation of our
right-of-use assets, amortization of debt and warrant discounts, fair value adjustments related to financial assets and liabilities (including,
in 2020 and 2021, our outstanding warrants and repayable grants from the IIA) and the impact of foreign exchange remeasurement of certain
subsidiary financial assets and liabilities.
Income taxes
To date, we have not been subject to income taxes, due to the fact that we have incurred
losses in every year since commencing operations, and we have not recorded any income tax benefits since there is uncertainty as to our
ability to utilize our tax loss carryforwards in future periods. See Note 2 to SatixFy’s consolidated financial statements included
elsewhere in this prospectus.
Results of Operations
Results of Operations for the Year Ended December 31, 2022 Compared
with the Year Ended December 31, 2021
The following table provides our consolidated statements of operations for the years
ended December 31, 2022 and 2021:
|
|
Year Ended December 31, |
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% |
|
|
|
(U.S.$ in thousands, except percentages) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Development services and preproduction |
|
|
10,081 |
|
|
|
19,237 |
|
|
|
(9,156 |
) |
|
|
(48 |
)% |
Sale of products |
|
|
545 |
|
|
|
2,483 |
|
|
|
(1,938 |
) |
|
|
(78 |
)% |
Total revenues |
|
|
10,626 |
|
|
|
21,720 |
|
|
|
(11,094 |
) |
|
|
(51 |
)% |
Cost of sales and services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development services and preproduction . |
|
|
4,166 |
|
|
|
7,326 |
|
|
|
(3,160 |
) |
|
|
(43 |
)% |
Sale of products |
|
|
332 |
|
|
|
1,517 |
|
|
|
(1,185 |
) |
|
|
(78 |
)% |
Total cost of sales and services |
|
|
4,498 |
|
|
|
8,843 |
|
|
|
(4,345 |
) |
|
|
(49 |
)% |
Gross profit |
|
|
6,128 |
|
|
|
12,877 |
|
|
|
(6,749 |
) |
|
|
(52 |
)% |
Research and development expenses |
|
|
16,842 |
|
|
|
17,944 |
|
|
|
(1,102 |
) |
|
|
(6 |
)% |
Selling and marketing expenses |
|
|
2,335 |
|
|
|
1,752 |
|
|
|
583 |
|
|
|
33 |
% |
General and administrative expenses |
|
|
9,249 |
|
|
|
3,735 |
|
|
|
5,513 |
|
|
|
148 |
% |
Loss from regular operations |
|
|
(22,298 |
) |
|
|
(10,554 |
) |
|
|
(11,743 |
) |
|
|
111 |
% |
Finance Income |
|
|
17 |
|
|
|
- |
|
|
|
17 |
|
|
|
— |
|
Finance Expenses |
|
|
(47,296 |
) |
|
|
(4,598 |
) |
|
|
(42,671 |
) |
|
|
928 |
% |
Other Incomes |
|
|
5,474 |
|
|
|
- |
|
|
|
5,474 |
|
|
|
- |
|
Listing Expenses |
|
|
(333,326 |
) |
|
|
- |
|
|
|
(333,326 |
) |
|
|
- |
|
Share in the loss of a company accounted by equity method, net |
|
|
(360 |
) |
|
|
(1,898 |
) |
|
|
1,538 |
|
|
|
(81 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(397,789 |
) |
|
|
(17,050 |
) |
|
|
(380,740 |
) |
|
|
2,233 |
% |
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Loss for the period (1) |
|
|
(397,789 |
) |
|
|
(17,050 |
) |
|
|
(380,740 |
) |
|
|
2,233 |
% |
(1) |
Net loss for the year ended December 31, 2022 reflects the impact of a $333 million non-recurring, listing expense, of which $318
million was a non-cash expense due to the application of IFRS 2 (Share-based Payments), and a $37 million non-cash finance expense reflecting
the revaluation of a derivative contract relating to the transactions under the Forward Purchase Agreement. Neither of the aforementioned
non-cash expenses had any impact on our income tax expense or benefit for the year ended December 31, 2022 or on our deferred tax assets
or liabilities as of that date. See Notes 16 and 24 to our consolidated financial statements included elsewhere herein for more information.
|
Total Revenues
Total revenues decreased by $11.1 million, or 51%, for the year ended December 31,
2022 compared to the year ended December 31, 2021. We have experienced lower revenues in 2022, primarily due to extended delays in the
manufacturing cycle of our third-party manufacturer and related delays in our ability to deliver chips, payloads and terminals and/or
related development work to customers, a strategic decision by management to reduce sales in China due to concerns about the regulatory
environment and the deferrals of orders under contracts with certain existing customers. See “Item
3. Key Information - D. Risk Factors — Risks Related to SatixFy’s Business, Operations
and Industry.”
Development services and preproduction
Development services and preproduction decreased by $9.1 million, or 48%, for the
year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease was primarily driven by reasons discussed above,
resulting in delays in the initiation of new Development services during the year ended December 31, 2022.
Sale of products
Sale of products decreased by $1.9 million, or 78%, for the year ended December 31,
2022 compared to the year ended December 31, 2021. The decrease was primarily driven by delays in delivery to one of our customers in
2022, primarily due to supply chain constraints with our third-party manufacturer (see “Item 3.
Key Information - D. Risk Factors — Risks Related to SatixFy’s Business, Operations and Industry — We are currently
experiencing, and may continue to experience, increased risks and costs associated with volatility in labor or component prices or as
a result of supply chain or procurement disruptions, which may adversely affect our operations”).
Cost of sales and services
Cost of sales and services decreased by $4.3 million, or 49%, for the year ended December
31, 2022 compared to the year ended December 31, 2021. The decrease reflects the decreased revenues described above.
Gross profit
Gross profit decreased by $6.7 million, or 52%, for the year ended December 31, 2022
compared to the year ended December 31, 2021, reflecting our decrease in revenue.
Our gross margin in the year ended December 31, 2022 is in line with the year ended
December 31, 2021.
Research and development expenses
Net Research and development expenses decreased by $1.1 million, or 6%, for the year
ended December 31, 2022 compared to the year ended December 31, 2021. Our gross R&D expenditure decreased by $2.6 million or 8% for
the year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease was mostly driven by a decrease in initial
production cost associated with our ASIC, combined with a decrease in payroll and related expenses. Net Research and development expenses
were affected mostly by a net decrease in ESA grants and tax credits for the year ended December 31, 2022, and a decline in contributions
from government support and grants, which are recorded as offsets to R&D expenses, by $1.5 million, to $12.3 million in the year ended
December 31, 2022 from $13.8 million in the year ended December 31, 2021.
Selling and marketing expenses
Selling and marketing expenses increased by $0.6 million, or 33%, for the year ended
December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily driven by our increased participation in trade
shows and related travel costs.
General and administrative expenses
General and administrative expenses increased by $5.5 million, or 148%, for the year
ended December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily driven by a salary increase and bonuses
paid to our Chairman, following Board and shareholder approval, in consideration of his contributions to securing additional financing
in 2022 and an increase in legal and audit fees.
Loss from operations
Loss from operations increased by $11.7 million, or 111%, for the year ended December
31, 2022 compared to the year ended December 31, 2021, reflecting the factors discussed above.
Finance Expenses
Finance expenses increased by $42.7 million, to $47.3 million for the year ended December
31, 2022 compared to $4.6 million for the year ended December 31, 2021. The increase was primarily driven by a valuation of the Forward
Purchase Agreement we signed with Vellar Opportunities Fund in the amount of $37 million, increase in interest payments associated
with the 2022 Credit Agreement and the effect of changes in currency exchange rates.
Other Income
Other income was $5.5 million in 2022 (nil in 2021) due to a one-time life insurance
payment associated with the passing of the Company’s founder and CEO, Mr. Yoel Gat.
Listing Expenses
Listing expense of $333.3 million in 2022
(nil in 2021) reflects costs related to the business combination with Endurance, a substantially majority of which reflects a non-cash,
non-recurring expense due to the application of share-based transaction accounting pursuant to IFRS 2. The share listing expense is determined
as the excess of the fair value of the equity instruments issued over the fair value of the identified net assets of the Company in the
business combination. For further information regarding listing expense, see Note 24 to our audited consolidated financial statements
for the fiscal year ended December 31, 2022, included elsewhere herein.
Share in the loss of a company accounted by equity method, net
Share in the loss of a company accounted by equity method, net, decreased by $1.5
million, or 81%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease reflects a decrease in
R&D expenses by Jet Talk due to the substantial completion of its development project and lower activity levels at Jet Talk in the
absence of commercial production of IFC terminals.
Income taxes
We did not record tax benefits or expenses in the year ended December 31, 2022 or
the year ended December 31, 2021.
Net loss for the period
Net loss for the period increased by $381 million, or 2,233%, for the year ended December
31, 2022 compared to the year ended December 31, 2021, reflecting the factors discussed above.
Results of Operations for Year Ended December
31, 2021 Compared with Year Ended December 31, 2020
The following table provides our consolidated statements of operations for the year
ended December 31, 2021:
|
|
Year-Ended December 31 |
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
|
% Change |
|
|
|
(U.S.> $ in thousands, except percentages) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Development services and preproduction
|
|
|
19,237 |
|
|
|
10,319 |
|
|
|
8,918 |
|
|
|
86 |
% |
Sale of products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
21,720 |
|
|
|
10,632 |
|
|
|
11,088 |
|
|
|
104 |
% |
Cost of sales and services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development services and preproduction
|
|
|
7,326 |
|
|
|
2,966 |
|
|
|
4,360 |
|
|
|
147 |
% |
Sale of products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales and services
|
|
|
8,843 |
|
|
|
3,060 |
|
|
|
5,783 |
|
|
|
189 |
% |
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses, net
|
|
|
17,944 |
|
|
|
16,637 |
|
|
|
1,307 |
|
|
|
8 |
% |
Selling and marketing expenses
|
|
|
1,752 |
|
|
|
1,088 |
|
|
|
664 |
|
|
|
61 |
% |
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from
regular operations |
|
|
(10,554 |
) |
|
|
(12,765 |
) |
|
|
(2,211 |
) |
|
|
(17 |
)% |
Finance Income
|
|
|
— |
|
|
|
1,260 |
|
|
|
(1,260 |
) |
|
|
(100 |
)% |
Finance Expenses
|
|
|
(4,598 |
) |
|
|
(2,163 |
) |
|
|
2,435 |
|
|
|
113 |
% |
Share in the loss of a company accounted
by equity method, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
Total revenues increased by $11.1 million, or 104%, for the year ended December 31,
2021 compared to the year ended December 31, 2020.
Development services and preproduction
Development services and preproduction increased by $8.9 million, or 86%, for the year
ended December 31, 2021 compared to the year ended December 31, 2020. The increase was primarily driven by new engagements for two customers
in 2021 for which we are developing ground equipment, based on our modems and chips, to be used for communication with their LEO constellations.
Sale of products
Sale of products increased by $2.2 million, or 693%, for the year ended December 31,
2021 compared to the year ended December 31, 2020. The increase was primarily driven by an increase in product orders from one of our
existing customers.
Cost of sales and services
Cost of sales and services increased by $5.8 million, or 189%, for the year ended December
31, 2021 compared to the year ended December 31, 2020. The increase was primarily driven by the increased revenues described above.
Gross profit
Gross profit increased by $5.3 million, or 70%, for the year ended December 31, 2021
compared to the year ended December 31, 2020, reflecting our increase in revenue.
Our gross margin declined to 59% in 2021 from 71% in 2020, mainly attributable to the
lower margin profile of our development services contracts performed in 2021 relative to 2020 and, to a lesser extent, the substantial
increase in the sale of products (chips and modems), as our products typically carry a lower gross margin compared to the provision of
development services and preproduction.
Research and development expenses
Research and development expenses, net increased by $1.3 million, or 8%, for the year
ended December 31, 2021 compared to the year ended December 31, 2020. While our gross R&D expenditure remained relatively steady,
at $31.7 million and $30.9 million in 2021 and 2020, respectively, contributions from government support and grants, which are recorded
as offsets to R&D expenses, declined by $0.4 million, to $13.8 million in 2021 from $14.2 million in 2020. Our total R&D salary
expenses increased by 3% between periods.
Selling and marketing expenses
Sales and marketing expenses increased by $0.7 million, or 61%, for the year ended December
31, 2021 compared to the year ended December 31, 2020. The increase was primarily driven by an increase in salaries and commissions related
provisions driven by our improved sales.
General and administrative expenses
General and administrative expenses increased by $1.1 million, or 43%, for the year
ended December 31, 2021 compared to the year ended December 31, 2020. The increase was primarily driven by higher legal and audit fees
related to our financing activities.
Profit (loss) from regular operations
Loss from regular operations decreased by $2.2 million, or 17%, for the year ended December
31, 2021 compared to the year ended December 31, 2020, reflecting the factors discussed above.
Finance Income
We did not record any finance income in 2021, compared to $1.3 million in finance income
in 2020. The 2020 finance income was attributable mainly to gains on remeasurement of certain financial balances held by our U.K. subsidiary
into U.S. dollars, reflecting the appreciation of the British Pound, the functional currency of the subsidiary, relative to the U.S. dollar,
our reporting currency, in 2020, as well as an income provision relating to the spread between market interest rates and the actual interest
rate on a subsidized COVID-19 loan received during 2020.
Finance Expenses
Finance expenses increased by $2.4 million, or 113%, for the year ended December 31,
2021 compared to the year ended December 31, 2020. The increase was primarily driven by increased interest reflecting our increased amount
of bank and other financial debt, as well as the amortization of the aforementioned finance income provision relating to the subsidized
COVID-19 loan received during 2020.
Share in the loss of a company accounted by
equity method, net
Share in the loss of a company accounted by equity method, net, decreased by $2 million,
or 51%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. The decrease was primarily driven by a decrease
in R&D expenses by Jet Talk due to the recent substantial completion of its development project.
Income taxes
We did not record tax benefits or expenses in 2020 or 2021.
Net loss for the period
Net loss for the period decreased by $0.5 million, or 3%, for the year ended December
31, 2021 compared to the year ended December 31, 2020, reflecting the factors discussed above.
Liquidity and Capital Resources
Our primary cash needs are for working capital, including funding our R&D and meeting
our contractual obligations and other commitments, and payment of principal and interest on our outstanding debt. To date, we have funded
these working capital requirements and other expenses mainly through issuances of equity capital and borrowings, as further discussed
below, as well as grants and other funds received from the ESA and the IIA. Our ability to expand our business and become cash flow positive
will depend on many factors, including our working capital needs, the availability of equity or debt financing and, over time, our ability
to generate positive cash flows from operations, all of which depend on our ability to attract and retain customers, develop new products
and compete effectively, as well as certain factors outside of our control. See “— Key Factors
and Trends Affecting our Performance.”
As of December 31, 2022, our cash and cash equivalents amounted to $11.9 million and
our financial debt amounted to $54.9 million.
Accordingly, we plan to try to raise additional capital, whether in the public or
private markets, and are currently examining different alternatives. If the financing is not available, or if the terms of financing are
less desirable than we expect, we may be forced to decrease our level of investment in product development or scale back our operations,
which could have a material adverse impact on our business and financial prospects, seek protection under insolvency laws or cease our
operations altogether. “Risk Factors—We are an early stage company with a history of losses,
have generated less revenues than our prior projections, and have not demonstrated a sustained ability to generate predictable revenues
or cash flows. If we do not generate revenue as expected, our financial condition will be materially and adversely affected.”
As discussed above under “Risk Factors—Risks
Related to Ownership of Our Securities —The market price of our equity securities may be volatile, and your investment could suffer
or decline in value” and elsewhere herein, the sales by the selling shareholders listed in the Registration Statement of
the SatixFy Ordinary Shares under the Registration Statement, or sales of SatixFy Ordinary Shares by us under the Equity Line of Credit,
could materially adversely affect the market price for our securities, which could, in turn, materially adversely affect our ability to
raise additional capital in the public or private markets or the terms on which such capital could be raised. Further, recent declines
in our stock price mean that our ability to raise new capital under the Equity Line of Credit Facility, which limits the number of shares
we can sell based on their daily average trading volume, could be substantially less than we initially expected.
We have based our estimates on assumptions that may prove to be wrong, and we could
utilize our available capital resources sooner than we expect. Changing circumstances could also cause us to consume capital faster than
we currently anticipate, and we may need to spend more than currently expected.
If we are successful in overcoming our short-term funding challenges, over the long
term, we may decide to develop new products, enter new markets or build additional or expand current manufacturing facilities, any of
which would require substantial additional capital. The timing of the completion of the development and engineering, and commercial launch
of our satellite communications systems that are expected to drive our future results is uncertain. The commercialization of these products
may also entail unpredictable costs and delays and is subject to significant risks, uncertainties and contingencies, many of which are
beyond our control. Certain of these risks and uncertainties are described in more detail in this prospectus under the section entitled
“Risk Factors,” and include, but are not limited to, changed business conditions,
continued supply chain challenges, other disruptions due to the COVID-19 pandemic and governmental responses thereto, geopolitical uncertainty,
competitive pressures, regulatory developments or the cessation of public sector R&D funding, among other potential developments.
Debt and other financing arrangements
As of December 31, 2022, we had total borrowings (not including lease liabilities) of
approximately $55.0 million, all of which is long-term debt under the 2022 Credit Agreement entered into in connection with the Debt Financing,
a portion of the proceeds from which we used to repay our prior borrowings.
2022 Debt Financing
In anticipation of the Business Combination, on February 1, 2022, we entered into the
2022 Credit Agreement with Wilmington Savings Fund Society, FSB, as Agent, and affiliates of Francisco Partners L.P., as lenders, pursuant
to which we borrowed an aggregate principal amount of $55.0 million in the form of a term loan, which is guaranteed by certain of our
subsidiaries. The obligations under the 2022 Credit Agreement are secured by a lien and security interest over substantially all of our
and the guarantors’ assets. In order to preserve liquidity and allow us more time to evaluate our financing and strategic alternatives,
on April 23, 2023, we entered into the Waiver and Second Amendment to the Credit Agreement, which, among other things, (i) provided a
waiver of certain defaults or potential defaults, (ii) permitted us to make our interest payments for 2023 on a pay-in-kind basis if its
cash balance is less than $12.5 million, (iii) temporarily reduced our minimum cash requirement from $10 million to $8 million and $7
million for the months of April and May 2023, respectively, and thereafter to $10 million, in each case plus an amount sufficient to cover
our and our subsidiaries’ accounts payable that are past 60 days due, (iv) increased the interest rate of the loan to SOFR + 9.50%
(with a 3% SOFR floor), and (v) provided for certain additional reporting obligations by us. The 2022 Credit Agreement provides that the
term loan matures on February 1, 2026.
The 2022 Credit Agreement contains customary covenants that restrict the way in which
we may conduct our business and our ability to take certain actions. In particular, it limits our ability to incur additional indebtedness
or liens, dispose of assets to third parties, repurchase our shares and pay dividends. The 2022 Credit Agreement also imposes a financial
maintenance covenant, requiring that, for so long as we have a leverage ratio (debt to Consolidated Adjusted EBITDA (as defined in the
2022 Credit Agreement)) greater than or equal to 6.00 to 1.00, SatixFy must maintain a minimum cash balance of $8 million and $7 million
for the months of April and May 2023, respectively, and thereafter to $10 million, in each case plus an amount sufficient to cover its
and its subsidiaries’ accounts payable that are 60 days past due, which cash is held in deposit accounts subject to a security interest
in favor of the Agent. The 2022 Credit Agreement also contains customary events of default, which provide that the lenders are entitled
to automatically accelerate payment of the loans upon the occurrence of an event of default.
In connection with the Debt Financing, SatixFy also entered into an equity grant agreement,
dated February 1, 2022, pursuant to which it issued 808,907 SatixFy Ordinary Shares (before giving effect to the Pre-Closing Recapitalization)
to the lenders under the 2022 Credit Agreement in consideration for the funds borrowed.
Equity Line of Credit
Concurrently with the execution of the Business Combination Agreement, SatixFy and
CF Principal Investments entered into that certain CF Purchase Agreement and that certain CF Registration Rights Agreement in connection
with the Equity Line of Credit. Pursuant to the CF Purchase Agreement, following the Closing, the Company has the right to sell to CF
Principal Investments up to the lesser of (i) $77,250,000 aggregate principal amount of newly issued SatixFy Ordinary Shares (before the
3.0% purchase price discount on sales under the Equity Line of Credit discussed below) and (ii) the number of shares equal to 19.99% of
the voting power or number of SatixFy Ordinary Shares issued and outstanding after giving effect to the Business Combination and other
transactions contemplated by the Business Combination Agreement (the “Exchange Cap”), subject to certain exceptions as provided
in the CF Purchase Agreement.
Upon the satisfaction of the conditions to CF Principal Investments’ purchase
obligation set forth in the CF Purchase Agreement (the “Commencement”), including, pursuant to the CF Registration Rights
Agreement, having a registration statement covering the resale of the shares to be purchased pursuant to the CF Purchase Agreement declared
effective by the SEC and a final prospectus relating thereto filed with the SEC, SatixFy will have the right, but not the obligation,
from time to time at its sole discretion over the 36-month period from and after the Commencement, to direct CF Principal Investments
to purchase up to a specified maximum amount of its ordinary shares as set forth in the CF Purchase Agreement by delivering written notice
to CF Principal Investments prior to the commencement of trading of the SatixFy Ordinary Shares on the NYSE on any trading day, so long
as all of its ordinary shares subject to all prior purchases by CF Principal Investments under the CF Purchase Agreement have theretofore
been received by CF Principal Investments electronically as set forth in the CF Purchase Agreement. The purchase price of the ordinary
shares that SatixFy may elect to sell to CF Principal Investments pursuant to the CF Purchase Agreement will be determined by reference
to the VWAP defined for this agreement of the SatixFy Ordinary Shares on the date of purchase, which is when SatixFy has timely delivered
written notice to CF Principal Investments directing it to purchase its ordinary shares under the CF Purchase Agreement, less a fixed
3.0% discount to such VWAP.
From and after Commencement, SatixFy will control the timing and amount of any sales
of its ordinary shares to CF Principal Investments. Actual sales of its ordinary shares to CF Principal Investments under the CF Purchase
Agreement will depend on a variety of factors to be determined by SatixFy from time to time, including, among other things, market conditions,
the trading price of its ordinary shares and SatixFy’s needs for financing resources.
Forward Purchase Agreement
On October 24, 2022, Endurance, SatixFy, Merger Sub and Vellar Opportunity Fund SPV
LLC — Series 7 (“Vellar”) entered into an agreement for an OTC Equity Prepaid Forward Transaction (the “Forward
Purchase Transaction”), which was subsequently amended on October 25, 2022 (as amended, the “Forward Purchase Agreement”).
Subsequent to entering into the Amendment, Endurance, SatixFy, Merger Sub and Vellar entered into an Assignment and Novation Agreement
with ACM ARRT G LLC (together with Vellar, the “Sellers”), pursuant to which Vellar assigned its rights and obligations with
respect to up to 4,000,000 Subject Shares under the Forward Purchase Agreement to ACM ARRT G LLC.
Pursuant to the terms of the Forward Purchase Agreement, the Sellers thereunder purchased,
through a broker in the open market, (i) 8,294,284 Endurance Class A ordinary shares (such shares, the “Recycled Shares”)
before the Closing, from holders of Endurance Class A ordinary shares (other than Endurance or affiliates of Endurance) including from
holders who have previously elected to redeem their Endurance Class A ordinary shares pursuant to the redemption rights set forth in Endurance’s
Amended and Restated Memorandum and Articles of Association (the “Governing Documents”) in connection with the Business Combination
(such holders, “Redeeming Holders”) and (ii) an additional 250,000 Endurance Class A ordinary shares in the aggregate which
comprise the “Share Consideration”. Additionally, following the closing of the Business Combination, we issued to Vellar,
in a private placement pursuant to the Forward Purchase Agreement, 1,605,100 additional ordinary shares of SatixFy (the “Additional
Shares”). The aggregate total number of shares subject to the Forward Purchase Agreement (the “Number of Shares”) will
be the sum of (a) the number of Recycled Shares and (b) the number of any Additional Shares (together, the “Subject Shares”).
The Subject Shares do not include the Share Consideration. The Number of Shares is subject to reduction following sales of shares under
certain conditions, as described below. The Sellers agreed to hold the Subject Shares in a bankruptcy remote special purpose vehicle for
the benefit of SatixFy and not to redeem such shares in connection with the Business Combination, which had the effect of reducing the
number of shares redeemed in connection with the Business Combination. The Sellers also may not beneficially own greater than 9.9% of
SatixFy’s outstanding ordinary shares.
Pursuant to the Forward Purchase Agreement, the Sellers were paid directly, out of
the funds held in Endurance’s trust account, approximately $86.5 million, which is equal to the sum of (i) the product of the redemption
price per share indicated to investors ahead of Endurance’s redemption notice deadline (the “Redemption Price”) multiplied
by the Recycled Shares (the “Prepayment Amount”) and (ii) the product of any Share Consideration (as defined below) multiplied
by the Redemption Price. The Sellers have no further obligations with respect to the Share Consideration shares other than to sell such
shares pursuant to an effective registration statement (or an available exemption under the Securities Act). Accordingly, there was no
net increase in cash as a result of the Forward Purchase Agreement at the time of the Closing of the Business Combination.
Pursuant to the Forward Purchase Agreement, we have filed the registration statement
of which this prospectus forms a part with the SEC registering, among others, the resale of the Subject Shares and the Share Consideration
under the Securities Act. The Sellers paid to SatixFy approximately $10.0 million (including $8.4 million with respect to the Subject
Shares purchased by the Sellers prior to the closing of the Business Combination and $1.6 million with respect to the Additional Shares
issued to Vellar following the closing of the Business Combination). From time to time the Sellers may, at their discretion, sell Subject
Shares without a payment obligation to SatixFy (the “Shortfall Sales”) until such time as the gross proceeds from such Shortfall
Sales equal 10% of the product of (x) the Number of Shares and (y) the redemption price per Endurance Class A ordinary share payable in
connection the Business Combination (approximately $10.13 per share) (the “Prepayment Shortfall”). At such time that the amount
of gross proceeds generated from Shortfall Sales is equal to the Prepayment Shortfall, the Sellers shall pay to SatixFy an amount equal
to 25% of the Prepayment Shortfall amount and all proceeds from subsequent Shortfall Sales shall be split between SatixFy (25%) and the
Sellers (75%), until the foregoing gross proceeds from the Shortfall Sales reach an amount equal to 133.33% of the Prepayment Shortfall
and at such time the Sellers may not make any additional Shortfall Sales. SatixFy has agreed that it will not issue any SatixFy Ordinary
Shares, or securities or debt that is convertible, exercisable or exchangeable into SatixFy Ordinary Shares until the gross proceeds generated
from Shortfall Sales equal the Prepayment Shortfall, except issuances under SatixFy’s active equity compensation plans and pursuant
to the Equity Line of Credit.
The Sellers may also, at their discretion, make sales of Subject Shares designated
as “OET Sales”, which sales may be made before the Sellers recoup the Prepayment Shortfall through Shortfall Sales. SatixFy
shall be entitled to proceeds from OET Sales equal to the product of (x) the number of Subject Shares sold pursuant in the OET Sale multiplied
by (y) the Reset Price (as defined below), with the remainder of the proceeds going to the Seller. Following the Closing, the reset price
(the “Reset Price”) was initially the redemption price per Endurance Class A ordinary share payable in connection the Business
Combination, but will be adjusted on the first scheduled trading day of each month (each a “Reset Date”) commencing on the
first calendar month following the Closing to the lowest of (a) the then-current Reset Price, (b) $10.00 and (c) the volume weighted average
price (“VWAP Price”) of the SatixFy Ordinary Shares of the last ten (10) trading days immediately prior to the applicable
Reset Date, but not lower than $6.00 (the “Floor Price”); provided, however, that the Reset Price may be further reduced to
the price at which SatixFy sells, issues or grants any SatixFy Ordinary Shares or securities convertible or exchangeable into SatixFy
Ordinary Shares (other than grants or issuances under SatixFy’s equity compensation plans or shares underlying warrants issued in
connection with the Business Combination); provided, further, that, after October 25, 2023, the Floor Price will automatically be increased
from $6.00 to $8.00 if after such date the then current Reset Price is below $8.00 and SatixFy’s shares trade at prices above $10.00
per share for any 20 out of 30 trading day period between October 25, 2023 and the Maturity Date, effective as of the trading day immediately
following the 30-day period that would result in a Floor Price increase.
As of April 1, 2023, the Sellers have informed us that they sold 5,362,440 Subject
Shares pursuant to Shortfall Sales and 4,536,944 Subject Shares remain available for sale under the Forward Purchase Agreement. The Reset
Price, as of April 1, 2023, is $6.00.
The maturity date will be the third anniversary of the Closing (the “Maturity
Date”), subject to acceleration as discussed below. Upon the occurrence of the Maturity Date, SatixFy is obligated to pay to the
Sellers an amount equal to the product of (a) 10,000,000 less the number of Subject Shares sold pursuant to OET Sales (but not any Subject
Shares sold pursuant to Shortfall Sales) multiplied by (b) $1.50 (the “Maturity Consideration”). At the Maturity Date, SatixFy
will be entitled to deliver the Maturity Consideration to the Sellers in SatixFy Ordinary Shares or in cash calculated based on the average
daily VWAP Price over 30 trading days commencing on (i) the Maturity Date, to the extent the SatixFy Ordinary Shares used to pay the Maturity
Consideration are freely tradeable by Seller, or (ii) if not freely tradeable by Seller, the date on which the SatixFy Ordinary Shares
used to pay the Maturity Consideration are registered under the Securities Act and delivered to Seller, provided that if such SatixFy
Ordinary Shares comprising the Maturity Consideration are not registered with the SEC within 120 days following the Maturity Date (which
period may be extended for up to 30 days in certain circumstances), SatixFy shall pay to the Sellers an additional amount equal to 25%
of the Maturity Consideration. The Maturity Date may be accelerated by Seller, at its discretion, if, following the Closing, (x) during
the 12 months following Closing, for any 90 trading days during a 120-consecutive day period occurring during such 12-month period, the
VWAP Price for 90 trading days during such period shall be less than $1.50 per share or (y) during the subsequent 24 months following
Closing, for any 45 consecutive trading day-period occurring during such 24 month period, the VWAP Price for 30 trading days during such
period shall be less than $2.50 per Share or (B) (x) the registration statement is not declared effective by the 45th day following the
Closing (or the 90th day if the SEC notifies SatixFy it will “review” the registration statement) or (y) SatixFy does not
maintain effectiveness of the registration statement (subject to customary blackout period exceptions as provided in the Forward Purchase
Agreement) and in the case of (B) SatixFy shall pay the Break-up Fee (as defined below).
If the Forward Purchase Transaction is terminated prior to the Maturity Date, except
if due to a material breach by Sellers, Endurance and SatixFy, jointly and severally, will be obligated to pay a break-up fee equal to
$0.5 million plus certain fees and expenses (the “Break-up Fee”).
We have agreed to indemnify and hold harmless Sellers, their affiliates, assignees
and other parties described therein (the “Indemnified Parties”) from and against all losses, claims, damages and liabilities
under the Forward Purchase Agreement (excluding liabilities relating to the manner in which the Sellers sell any SatixFy Ordinary Shares
they own) and reimburse the Indemnified Parties for their reasonable expenses incurred in connection with such liabilities, subject to
certain exceptions described therein, and have agreed to contribute to any amounts required to be paid by any Indemnified Parties if such
indemnification is unavailable or insufficient to hold such party harmless
The Sellers waived any redemption rights with respect to any Recycled Shares in connection
with the Business Combination.
PIPE Financing
Concurrently with the execution of the Business Combination Agreement, Endurance and
SatixFy entered into Subscription Agreements with certain investors. Pursuant to the Subscription Agreements, the PIPE Investors agreed
to subscribe for and purchase, and SatixFy agreed to issue and sell to the PIPE Investors, immediately prior to the closing of the Business
Combination, an aggregate of 2,910,000 PIPE Units consisting of (i) one PIPE Share and (ii) one-half of one PIPE Warrant exercisable for
one SatixFy Ordinary Share at a price of $11.50 per share for a purchase price of $10.00 per PIPE Unit, for gross proceeds of $29,100,000,
on the terms and subject to the conditions set forth in the applicable Subscription Agreement. Affiliates of the Sponsor agreed to purchase
$10,000,000 of PIPE Units on the same terms and conditions as all other PIPE Investors. Each PIPE Warrant will entitle the holder to one
SatixFy Ordinary Share at an exercise price $11.50 per share. The terms of the PIPE Warrants are substantially the same as the existing
Endurance warrants.
On October 27, 2022, Sensegain Prodigy Cayman Fund SP3 (“Sensegain”) defaulted
on its commitment to purchase units it had subscribed for in connection with the PIPE financing pursuant to its Subscription Agreement
with SatixFy and Endurance. As a result of the default, out of the $29,100,000 previously committed by subscribers pursuant to the Subscription
Agreements, SatixFy received $20 million in proceeds from the PIPE financing. On December 12, 2022, we filed a complaint against Sensegain
in the New York Supreme Court, County of New York, seeking specific performance by Sensegain under the Subscription Agreement or, in the
alternative, damages in the amount Sensegain owes pursuant to the Subscription Agreement (plus applicable interest and fees). SatixFy
intends to enforce Sensegain’s obligations under the Subscription Agreement.
Pursuant to the terms of the Subscription Agreements, concurrently with the Closing,
SatixFy delivered 1,175,192 ordinary shares issuable to SatixFy shareholders and 391,731 ordinary shares on behalf of the Sponsor into
an escrow account (collectively, the “Escrow Shares”). Of such amount, the 490,000 Escrow Shares which may have been issuable
to Sensegain were required to be released to SatixFy’s shareholders from prior to the Business Combination and the Sponsor under
the conditions described in the Subscription Agreements.
As described above, pursuant to the terms of the Subscription Agreements, SatixFy
delivered the Escrow Shares into the escrow account , and on or about March 31, 2023, subsequently released the Escrow Shares to the PIPE
Investors and SatixFy shareholders pursuant to the terms thereof.
In connection with the Subscription Agreements pursuant to which SatixFy has agreed
to sell the PIPE Units to the PIPE Investors, SatixFy and Continental entered into a warrant agreement, pursuant to which SatixFy issued
1,000,000 warrants, each entitling the warrant holder to purchase one (1) SatixFy Ordinary Share at an exercise price of $11.50 per share,
subject to adjustment and on the terms and subject to the limitations described therein. The original PIPE Warrants were issued on terms
identical to the Endurance Public Warrants (and, accordingly, the SatixFy Public Warrants) in all material respects, except for a distinct
CUSIP, certain resale restrictions and registration rights set forth in the Subscription Agreements, and a book entry restrictive legend.
On January 12, 2023, we exchanged, on a one-for-one and cashless basis, the 1,000,000 original PIPE Warrants previously issued to the
Sponsor and Cantor in connection with the PIPE Financing for new PIPE Warrants under the terms of the SatixFy A&R Warrant Agreement.
The new PIPE Warrants have the same terms as the Public Warrants and are identical to the Public Warrants, except that they will bear
restrictive legends until they are resold by the applicable PIPE Investors pursuant to an effective registration statement or Rule 144
under the Securities Act.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
|
|
Year Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
|
(U.S.$ in thousands) |
|
Cash Flow Data: |
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(31,480 |
) |
|
|
(5,866 |
) |
|
|
(5,604 |
) |
Net cash used in investing activities |
|
|
(582 |
) |
|
|
(10 |
) |
|
|
(299 |
) |
Net cash provided by financing activities |
|
|
40,523 |
|
|
|
2,755 |
|
|
|
7,947 |
|
Increase (decrease) in cash and cash equivalents |
|
|
8,461 |
|
|
|
(3,121 |
) |
|
|
2,044 |
|
Cash and cash equivalents balance at the beginning of the year |
|
|
3,854 |
|
|
|
6,983 |
|
|
|
4,961 |
|
Effect of changes in foreign exchange rates on cash and cash |
|
|
|
|
|
|
|
|
|
|
|
|
equivalents |
|
|
(381 |
) |
|
|
(8 |
) |
|
|
(22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents balance at the end of the period |
|
|
11,934 |
|
|
|
3,854 |
|
|
|
6,983 |
|
Operating Activities
During the year ended December 31, 2022, net cash used in operating activities was
$31 million, compared to $5.8 million in the year ended December 31, 2021, reflecting the factors discussed under “— Results
of Operations” above and the evolution of our working capital. The principal drivers of working capital were prepayment from
customers, which increased by $11.8 million in 2022 compared to a $ 1.5 million increase in 2021, offset by advances from ESA, which decreased
by $7.6 million in 2022 compared to a $1.9 million increase in 2021, other current assets (comprised mainly of prepaid expenses and accruals
for tax credits), which increased by $7.0 million in 2022 compared to a $3.3 million decrease in 2021, and trade account payables, accounts
payable and accrued expenses, which together decreased by $7.8 million in 2022 compared to an increase of $4.7 million in 2021.
During the year ended December 31, 2021, net cash used in operating activities was $5.8
million, compared to $5.6 million in the year ended December 31, 2020, reflecting the factors discussed under “— Results
of Operations” above and the evolution of our working capital. The principal drivers of working capital were contract assets,
which increased by $4.1 million in 2021 compared to a $1.0 million decrease in 2020, other current assets (comprised mainly of prepaid
expenses and accruals for tax credits), which decreased by $3.2 million in 2021 compared to a $1.2 million decrease in 2020, deferred
revenues, which decreased by $0.6 million in 2021 compared to a decrease of $5.0 million in 2020, and accounts payable and accrued expenses,
which together increased by $3.3 million in 2021 compared to an increase of $2.6 million in 2020.
Investing Activities
During the year ended December 31, 2022, net cash used in investing activities was $0.6
million.
During the year ended December 31, 2021, net cash used in investing activities was negligible,
reflecting $0.2 million in purchases of property and equipment, offset by a decrease of approximately the same amount in long-term bank
deposits.
During the year ended December 31, 2020, net cash used in investing activities was $0.3
million, consisting of purchases of property and equipment.
Financing Activities
During the year ended December 31, 2022, net cash from financing activities amounted
to $41 million, consisting mainly of proceeds under our 2022 Credit Agreement and issuance of shares due to conversion of warrants of
$6.5 million net of repayment of existing loans in the sum of $18.8 million.
During the year ended December 31, 2021, net cash from financing activities amounted
to $2.8 million, consisting mainly of a receipt of a $7.3 million loan from a financial institution, net of repayment of existing loans
from banks and repayment of lease and royalty labilities.
During the year ended December 31, 2020, net cash from financing activities amounted
to $7.9 million, consisting mainly of bank borrowings and the proceeds of a shareholder loan.
Commitments
As of the date of this prospectus, our material financial commitments were comprised
of the amounts outstanding under the Debt Facility, as described above, and the lease liabilities described in Note 7 to our consolidated
financial statements included elsewhere in this prospectus.
In connection with the ESA grants described above, which are intended to fund 50%-75%
of the cost of development of integrated chip sets for several industries (depending on the nature of the engagement), including both
hardware and software, our agreement stipulates that the resulting intellectual property will be available to ESA on a free, worldwide
license for its own requirements. In addition, ESA can require us to license the intellectual property to certain bodies that are part
of specified ESA programs, for ESA’s own requirements on acceptable commercial terms, and can also require us to license the intellectual
property to any other third party for purposes other than ESA’s requirements, subject to our approval that such other purposes do
not contradict our commercial interests.
Additionally, approximately $3.3 million of the $6.3 million in R&D grants we
obtained from the IIA is subject to repayment through royalties. We are required to pay the IIA royalties of 3% to 4% of total sales of
products resulting from R&D funded by such grants, up to a maximum amount of 100% of total grants received, plus interest calculated
at LIBOR. We record the royalty liability once the repayment obligation is deemed probable. Our royalty liability to the IIA amounted
to $1.6 million as of December 31, 2022. Of the $1.6 million subject to repayment through royalties, approximately $1.1 million represented
a contingent liability (fair value measured based on discounted future royalties and an interest rate of 20%).
Other than the commitments and contingencies disclosed in this discussion and analysis
and our consolidated financial statements included elsewhere in this prospectus, we did not have material contractual commitments or contingencies
for payments of cash as of the date of this prospectus.
Off-balance Sheet Arrangements
Other than the contingencies described above, we did not have any off-balance sheet
arrangements as of the date of this prospectus.
Seasonality
We do not believe that demand for our products and services is seasonal. As an early
stage company, most of our revenue to date has been project-based. Accordingly, our revenue and results of operations may fluctuate from
period to period based on the number of customer projects or the achievement of key milestones under our customer contracts.
Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition results of operations are based upon
our consolidated financial statements included elsewhere in this prospectus. The preparation of our consolidated financial statements
in accordance with IFRS requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue
and expenses. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and
we evaluate these estimates on an ongoing basis. Actual results may differ from those estimates.
Our critical accounting policies are those that materially affect our consolidated financial
statements and involve difficult, subjective or complex judgments by management. A thorough understanding of these critical accounting
policies is essential when reviewing our consolidated financial statements. We believe that the critical accounting policies listed below
involve the most difficult management decisions because they require the use of significant estimates and assumptions as described above.
See Note 2 to SatixFy’s consolidated financial statements included elsewhere in this prospectus for a summary of our significant
accounting policies. Our critical accounting policies are the following.
Revenue Recognition
We recognize revenue using the five-step model set forth in IFRS 15, Revenue from Contracts
with Customers. To date, we have earned revenue mainly from providing customers with development services and the sale of ground-based
modems for satellite communications and related products.
We recognize revenue from the provision of NRE services at the time the service is transferred
to the customer and measure the revenue in an amount that represents the consideration that we expect to be entitled to for the same goods
or services, while revenue from the sale of satellite communications modems and related products is recognized when control of the products
is transferred to our customers, both as described in Note 2 to our consolidated financial statements included elsewhere in this prospectus.
In connection with the recognition of revenue from NRE services, we measure the progress of our performance commitments based on the portion
of completion of each project or project deliverable. Changes in these estimates could have a material impact on the amount of revenue
recognized for a given period.
Research and Development Costs
To date, we have recognized all expenditures on R&D activities in our statement
of operations as they were incurred. Going forward, we may elect to capitalize expenditures incurred on development activities where the
expenditure will lead to new or substantially improved products and only if all the following can be demonstrated:
|
• |
the product is technically and commercially feasible; |
|
• |
we intend to complete the product so that it will be available for use or sale; |
|
• |
we have the ability to use or sell the product; |
|
• |
we have the technical, financial and other resources to complete the development and to use or sell the product; |
|
• |
we can demonstrate the probability that the product will generate future economic benefits; and |
|
• |
we are able to reliably measure the expenditure attributable to the product during its development. |
Capitalized development costs are included in the carrying amount of an intangible asset,
and the capitalization of costs ceases when the asset is in the condition necessary for it to be capable of operating in the manner intended
by management. Capitalized development costs are amortized on a straight-line basis over their estimated useful lives once the development
is completed and the assets are in use. Subsequent expenditure on capitalized intangible assets is capitalized only where it clearly increases
the economic benefits to be derived from the asset to which it relates. All other expenditure, including that incurred in order to maintain
an intangible asset’s current level of performance, is expensed as incurred. As of December 31, 2022, our management concluded that
we did not meet the aforementioned requirements for capitalization of any research and development expenses. Management’s conclusions
may change in future periods, which could have a material impact on the comparability of our financial results for future periods with
the results presented in this prospectus.
Share-based payments
We record share-based payments to employees, which are measured at the value of the
equity instrument at the time of grant, and record a corresponding expense.
As our ordinary shares are not listed on a public market, the calculation of the fair
value of our ordinary shares is subject to a greater degree of estimation in determining the basis for share-based grants. Accordingly,
we are required to estimate the fair value of both the instrument entitling the recipient to purchase shares, as well as the shares themselves,
at the time of each grant. We consider objective and subjective factors in determining the estimated fair value of our shares, with input
from management and an independent valuation firm. We determined the value of our shares based on interpolating from the valuations in
our most recent external equity financing rounds and, when applicable, an expected valuation for a public offering, subject to discounts
for the probability and timing of an exit event and lack of marketability, among other factors.
In turn, we measure the value of options or warrants to purchase our shares based on
the value of the shares and an option pricing or hybrid model. We used the Black-Scholes model to determine the fair value of options
to buy our shares, based on assumptions as to dividend yield (0%), expected volatility (56.43%), risk-free interest rate (1.6%) and expected
life of the instrument (3 years). We used a hybrid of the Black-Scholes and Merton (Structural Model) models for the purpose of determining
the fair value of our warrants, based on assumptions as to risk-free interest rate (0.59%), expected exercise period (between 5 and 8
years) and expected volatility (approximately 40%).
The assumptions underlying the valuations represent our best estimates, which involve
inherent uncertainties and the application of management judgment. As a result, if we used significantly different assumptions or estimates,
our share-based compensation expense for prior periods could have been materially different.
We expect to use the market price of our ordinary shares as the basis for the valuation
of future grants, based on the reported closing price of such shares on the date of grant. We expect to record a substantial expense in
our future financial statements for periods that include the date of consummation of the Business Combination as a result of the issuance
of the Price Adjustment Shares and IFRS accounting for Founder Shares.
Inventory
Inventories are recognized at the lower of cost and net realizable value. Cost comprises
all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
We measure the cost of raw materials on a first-in, first-out basis and finished goods according to costs based on direct costs of materials
and labor. We review the net realizable value of our inventory at the end of each reporting period. Factors that may affect inventory
selling prices include the existing market demand, competition, the availability of superior technology in the market, the prices of raw
materials and the solvency of customers and suppliers. Write-downs in the value of inventory are also expensed on our statement of operations.
While we have not historically held significant inventory on hand, and have not experienced inventory write-downs, we expect this to change
over time as develop more customer relationships and commercialize more products.
Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of loss that may impact our financial position because
of adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure resulting from potential
changes in inflation, exchange rates or interest rates. We do not hold financial instruments for trading purposes.
Foreign Currency Exchange Risk
As discussed above under “— Basis of
Presentation,” we have been and continue to be exposed to foreign currency translation effects, which may be material. In
2022, a hypothetical 10% increase or decrease in the average value of each of the NIS, GBP and EUR against the U.S. dollar in 2022 would
have reduced or increased our operating loss by approximately $0.4 million.
In addition, we are also exposed to foreign exchange remeasurement with respect to our
subsidiaries financial assets and liabilities denominated in currencies other than such subsidiaries’ functional currencies. See
“— Basis of Presentation.” We may also be exposed to foreign currency transaction
risk as a result of funding our operations in one currency and paying our expenses in another, and consequently our earnings or losses
may fluctuate from period to period as a result of changes in exchange rates.
Interest Rate Risk
Fluctuations in interest rates may impact the level of interest income we earn on short-term
deposits. All of our outstanding debt bears interest at fixed rates, although the interest rate on our term loan under the 2022 Credit
Agreement is subject to adjustment in certain cases, as described under “— Liquidity and
Capital Resources — Debt and other financing arrangements” above. We do not enter into derivative financial instruments,
including interest rate swaps, for hedging or speculative purposes.
Emerging Growth Company Status
We are an emerging growth company, as defined in Section 102(b)(1) of the JOBS Act.
The JOBS Act exempts emerging growth companies from certain SEC disclosure requirements and standard and we intend to take advantage of
some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act so long as we qualify
as an emerging growth company, including, but not limited to, (1) not being required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act of 2002 and (2) not being required to comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or current or future PCAOB rules requiring supplements to the auditor’s report providing
additional information about the audit and the consolidated financial statements (critical audit matters or auditor discussion and analysis).
Although under the JOBS Act emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the
enactment of the JOBS Act until such time as those standards apply to private companies, this exemption does not apply to companies, such
as us, reporting under IFRS since IFRS does not provide for different transition periods for public and private companies.
BUSINESS
Before investing in our ordinary shares, you should read this entire
prospectus carefully, including the information presented under the headings “Risk Factors,” “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes thereto included
elsewhere in this prospectus. In this prospectus, unless we indicate otherwise or the context requires, “SatixFy,” “the
company,” “our company,” “the registrant,” “we,” “our,” “ours” and “us”
refer to SatixFy Communications Ltd. and its consolidated subsidiaries.
Our Mission
Our mission is to be the leading global provider of digital satellite communications
systems that enable satellite-based broadband delivery to markets across the globe.
Our Company
We are a vertically integrated satellite communications systems provider using our own
semiconductors, focused on designing chips and systems that serve the entire satellite communications value chain — from the satellite
payload to user terminals. We create chip technologies capable of enabling satellite-based broadband delivery to markets around the world.
Since we commenced operations in June 2012, through December 31, 2022 we have invested over $209 million in research and development (“R&D”)
to create what we believe are the most advanced satellite communications and ground terminal chips in the world.
We develop advanced Application-Specific and Radio Frequency Integrated Circuit chips
(“ASICs” and “RFICs”) based on technology
designed to meet the requirements of a variety of satellite communications applications, mainly for LEO, MEO and GEO satellite communications
systems, Aero/IFC systems and certain COTM applications. Our chip technology supports Electronically Steered Multibeam Antennas (“ESMA”),
digital beamforming and beam-hopping, on- board processing for payloads and Software Defined Radio (“SDR”)
modems — each of which will be critical for providing optimized access to LEO satellite constellations.
We believe we are the only vertically integrated maker of satellite communications systems
selling products across the entire satellite communications value chain (depicted in the graphic below). All of our systems integrate
our proprietary semiconductor chips, of which we are a fabless manufacturer. We design our chips, code our software and design end-to-end
communications systems for use in various satellite communications applications.
Our end-to-end solutions for the satellite communications industry include satellite
payloads, user terminals (ground and Aero/IFC) and hubs, each built around our advanced ASICs and RFICs. We have a diverse customer base,
including satellite operators, airlines, manufacturers of satellite communications systems, and other connectivity service providers that
integrate our chips and systems in their satellite communications infrastructure. We believe that our modular, scalable and software controllable
technology, our focus on producing products for the entire satellite communications value chain and our ability and experience in designing
our systems to meet our customers’ specifications, differentiate us from our competitors.
In March 2018, we entered into a strategic partnership with ST Electronics (Satcom &
Sensor Systems) Pte Ltd. (“STE”), a public company with approximately $9.0 billion
of revenue in 2022, pursuant to which we formed a joint venture, Jet Talk, which was funded by a $20.0 million investment by STE intended
to fund our R&D related to and commercialization of our Aero/IFC satellite communications terminals. We hold 51% of the equity in
Jet Talk, and STE participates in significant financial and operational decisions, including the right to appoint its chief executive
officer and direct Jet Talk’s R&D (which is performed by us) and marketing activities, and controls Jet Talks funding. Pursuant
to our joint venture agreement with STE, once we complete the development of our Aero/IFC satellite communications terminal product, they
will be commercialized to the commercial aviation market exclusively through Jet Talk. We anticipate that our partnership with STE will
allow us to benefit from STE’s deep aerospace industry experience and large presence in East Asia. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Our Revenue Model and Prospects” and Note
8 to our consolidated financial statements included elsewhere in this prospectus.
We expect that our growth in the coming years will be driven by continued rapid increases
in demand for high-speed broadband services across the globe, which will be propelled by an increasing number of internet users, broadband
connected devices, amount of global data usage and the need for ubiquitous connectivity. We believe that our technologies are well positioned
to meet the need for compatible chips and systems to connect new satellite technologies with existing systems and maximize their innovative
potential.
Our revenues for the years ended December 31, 2022 and December 31, 2021 were $10.6
million and $21.7 million, respectively.
Satellite Communications Chips
There is a current trend in the satellite communications industry to transition from
traditional analog devices and components to modern digital devices, integrating multiple functions into miniaturized and low-cost integrated
circuit modules (chips), which is having a material impact on the satellite communications value-chain. The chips themselves are the critical
technology needed to implement this transition — enabling application-specific functionality and defining the capabilities of the
communications systems in which they are integrated.
We believe we are a leader in developing advanced, digital silicon ASICs and RFICs for
modems and antennas that can be deployed across the entire satellite communications value chain. We have developed advanced lines of modem
and antenna chips that enable critical functions for satellite communications systems, such as our PRIME and BEAT antenna chips, which
enable multi-beamforming and beam-hopping for satellite payloads and user terminals, and our recent software-defined SX-4000 satellite
payload chip, which enables digital on-board processing, beam-hopping and enhanced connectivity needs, including positioning, navigation
and timing. We design each of our chips to provide a desirable ratio of size, weight, power and cost (“SWaP-C”),
while also aiming to maximize data transmission rates for the communication applications that our chips serve.
We developed our chip set with the help of substantial grants from the European Space
Agency (“ESA”), sponsored by the U.K. Space Agency (“UKSA”),
through ESA’s Advanced Research in Telecommunication Systems (“ARTES”) program,
which have amounted to over $75 million through December 31, 2022.
The functionality of our chips has been designed to meet key anticipated market trends
in satellite communications, leveraging our know-how and additional insight and expertise from ESA industry specialists and other leading
market participants in these programs throughout the development process. We believe the significant time and cost associated with the
development of a new ASIC creates a significant barrier to entry and endows us with a market advantage over competitors that would need
to invest large sums and spend years to attempt to catch up with our current capabilities. We intend to continue investing in new chip
development to meet the future needs of our customers and ensure that we maintain our technological market advantage.
Our chips are compatible with the emerging communication LEO, MEO and GEO satellite
constellations and are also designed to be utilized for satellite communications applications such as IFC. We believe our chips are some
of the most advanced on the market in terms of their ability to provide wide bandwidths, beamforming and beam-hopping functions in satellite
payloads and user terminals, while also being among the most attractive chips in terms of SWaP-C characteristics, as we believe our chips
have higher capacity, lower power usage, lower weight and are lower cost than competing products. See the below graphic for an overview
of our chipsets.
Satellite Communications Systems
A satellite communications system is comprised of the three following constituent subsystems
(depicted in the graphic below):
|
• |
The satellite payload, which is the system
integrated to the satellite platform that provides in-space data receiving, processing and transmitting capabilities. |
|
• |
The user terminal, which is the system on
the ground (or aircraft, in the case of IFC), comprised of an antenna and modem, that digitally links to the satellite payload and provides
data receiving, processing and transmitting capabilities. |
|
• |
The hub, which is the system that enables
the network operator to control and manage its communication network and the interaction between the satellite payload and the ground
terminal. |
We design systems in each of these three categories powered by our own proprietary chips,
providing satellite communications network operators and manufacturers of satellites with advanced solutions for their satellite communications
needs.
Satellite Payloads
Our satellite payloads consist of an On-Board Processor (“OBP”)
using our advanced SDR SX-4000 payload chip, and our satellite ESMA powered by our PRIME2 digital beamforming chip. Our satellite payloads
are designed for LEO, MEO and GEO satellite applications and are fundamentally flexible, enabling the transmission of large amounts of
data that can support in-flight and other remote and mobile communication services, among other applications. Our satellite payloads have
a digital regenerative onboard processing capability (involving demodulation, processing and remodulation of the signals) that enables
handling of communications coming from the ground and communications transmitted from the satellite to the ground, thereby supporting
satellite interconnectivity, while ensuring more effective use of the communication bandwidth, and improving system performance. Our payload
chips also support transparent modes used in more traditional satellite systems.
Satellite payloads must be engineered to meet the technical specifications of the satellite
mission for which it is intended. We have completed our prototype payload, sponsored by ESA, which is planned to be launched in the second
quarter of 2023, although there can be no assurance as to when or if it will launch or whether it will perform as expected.
User Terminals, Modems
and Antennas
Our user terminals consist of a modem and antenna.
|
• |
Modems. We have developed our modems based on our proprietary SX-3000 and SX-3099 Very Small
Aperture Terminal (“VSAT”) chips, a part of our ASIC technology and one of the base
building blocks for all our terminal products. We produce modem modules designed to bring the fastest performance available today in a
compact form factor and with low power. All of our modems are designed for easy integration with our customers’ hardware, and software
solutions and are available for a variety of applications. Our modems are designed to natively support the entire DVB-RCS2 / DVB-S2X industry
standards as well as a complete SDR for any other waveform, to ensure maximum flexibility and relevance to our customer base. These industry
standards are intended to ensure that systems that utilize them perform with better efficiency, more throughput and better network reliability.
We were directly involved in writing the DVB-S2X standard which is based in part on our technology and patents. |
|
• |
Antennas. We offer a line of advanced ESMA products based on our proprietary BEAT and PRIME
ASIC chip technologies for both ground and Aero/IFC terminal connectivity. |
|
To date, we have sold over approximately an aggregate of 174,600 units of our S-IDU modems based on our
SX-3000 chip and of our SX-3000 chips on a standalone basis, have recently begun to offer our Terminal on Module (“ToM”)
modems based on our SX-3099 chips and are in the process of engineering SX-3099-based ToM products for certain customers. In some cases,
we engineer and sell our SX-3099 chip to customers that prefer to design their own case and board. |
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Through Jet Talk, we are at an advanced stage of developing Aero/IFC terminals that enable in-flight broadband
connectivity via connection with multiple satellites, including LEO satellites, enabling high performance broadband communications for
hundreds of passengers in commercial or private flights. We are testing a prototype, although there can be no assurance as to when or
if the prototype will be ready for commercial use or whether it will perform as expected. |
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We are developing a COTM user terminal capable of delivering broadband Internet capacity to vehicles, serving
markets such as public transportation and emergency services. |
Additionally, we are also developing a direct-to-home broadband user terminal in connection
with our ESA-sponsored project with OneWeb, which is designed as a low-cost user terminal variant that we believe can be the lowest-cost
ESMA on the market, providing large data transfer rates and low latency via LEO constellation operators.
Hubs and Gateways
We offer our Shepherd managed communications system, known as a hub, which serves as
a smart satellite resource manager that uses a common forward channel to transmit data and allows our customers to monitor and manage
advanced terminals in their networks. We also offer gateway modem products based on our SX-3099 modem chips, supporting high-capacity
links and beam-hopping with reduced power consumption and cell size.
Market Opportunity
The space industry is undergoing a dramatic transformation due to lower cost communication
solutions and miniaturization in the small satellite sector, which is driven by the increasing capability of small electronics, materials
and sensors. We believe this paradigm shift in the industry represents a significant opportunity for SatixFy. Within the broader satellite
communications industry, we are positioned to target three markets with our advanced satellite chips and communications systems: the satellite
communications systems market, the Aero/IFC market and the COTM market.
We believe our technology, which is built on our advanced ASICs and RFICs, enables customers
to unlock the full potential of LEO, MEO and GEO satellites. Our satellite and ground ESMA, and advanced chips with beamforming and beam-hopping
capabilities, will be especially advantageous to overcoming the technological challenges of connecting with, and maximizing the utility
of, the new LEO constellations. We anticipate, based on internal estimates using data published in a May 2020 McKinsey article titled
“Large LEO satellite constellations: Will it be different this time?” (the “McKinsey data”) and our own estimates
of the projected demand for satellite communications systems and unit pricing, that our total addressable market (“TAM”) for
our products can exceed $20 billion by the end of the current decade.
While the McKinsey data estimated that approximately 50,000 LEO and other communications
satellites are expected to be in operation by 2028, recent developments, including geopolitical instability and economic uncertainty,
has led us to believe that it may take longer for this estimate to be achieved. See “Risk Factors
— Risks Related to SatixFy’s Business, Operations and Results — Our estimates, including market opportunity estimates
and growth forecasts, are subject to inherent challenges in measurement and significant uncertainty, and real or perceived inaccuracies
in those metrics and estimates may harm our reputation and negatively affect our business”.
Satellite Communications Systems
The non-geostationary orbit includes satellites operating in LEO, with an altitude typically
between 200 and 870 miles (325 to 1,400 kilometers) and satellites operating in MEO, between the LEO and GEO orbits. Unlike GEO satellites
that operate in a fixed orbital location above the equator, LEO and MEO satellites travel over the surface of the earth at high relative
velocities, requiring user terminals and hubs capable of tracking their movement. LEO satellite systems have the potential to offer a
number of advantages over GEO satellites to meet growing requirements for commercial and consumer broadband services by providing increased
data speeds and capacity, and global coverage.
We believe, based on internal estimates using the McKinsey data, that a total of approximately
50,000 satellites are planned to be in operation by the end of the current decade, most of which we expect to be LEO, and which will need
advanced satellite payloads and user terminals to enable their use. Additionally, because LEO satellites are expected to have a shorter
lifespan than GEO satellites, approximately 5 years based on estimates for Starlink’s SpaceX constellation, satellite providers
will require access to a recurring supply of satellite communications systems and components in order to replenish constellations as the
satellites approach obsolescence. We anticipate, based on the above figures and our own estimates of the projected demand for satellite
communications systems and unit pricing, that by the end of the current decade the TAM for satellite payloads could reach approximately
$3 to $4 billion and the TAM for user terminals will reach approximately $5 to $6 billion.
We believe we are well positioned to meet the demand for technologies that enable communication
via this anticipated wave of LEO satellites, which will require satellite communications systems (payloads, user terminals and hubs) with
strong on-board processing capabilities, electronically steerable antennas, wideband modems, the ability to transfer large volumes of
data and chips with desirable SWaP-C characteristics. Cost-effective ESMA are desirable for both mobile applications, removing the need
for unreliable mechanical parts and associated maintenance, and fixed applications, for ease of installation. We believe these key characteristics
of our proprietary technologies will offer customers compelling advantages, from ground to orbit. We believe that our chips’ capabilities
to power customers’ needs across the entire satellite communications value chain is an important competitive advantage, ensuring
compatibility and efficiency.
We expect that future satellite communications systems will be able to leverage the
benefits of, and integrate with, existing communication networks, including cellular networks, satellite communications systems operating
at L-band frequency ranges, as well as 5G communications networks, to provide continuous and reliable communication at quality and prices
competitive with the current terrestrial networks. Additionally, Ka and Ku-band frequency LEO satellites will enable satellite communications
systems to compete with terrestrial systems, even in urban areas where terrestrial systems currently operate at more attractive prices.
We believe there is a trend in the global telecommunications industry moving towards a convergence between satellite and terrestrial-enabled
capability. Terrestrial players, including telecoms and other cellular service providers, are investing significantly in space capability
to this end. Our chips and products can be implemented to bridge the technical gap between satellite and terrestrial systems, enabling
seamless, ubiquitous connectivity across the globe.
While we are not currently developing any telecommunications-related products, we believe
that the expected rapid expansion of 5G networks presents a substantial opportunity for the satellite communications industry. We also
believe that our proprietary chip technology is well-suited to adaptation to the expected requirements of 5G telecommunications satellites.
Aero/IFC
Satellite communications systems for in-flight broadband connectivity on aircraft have
undergone significant changes over recent years, as demand has intensified for in-flight broadband communication services at a level and
quality more comparable to home use, supporting broadband and streaming applications. The modern airline passenger desires reliable, high
speed data connectivity in-flight (which aggregates up to one (1) gigabit per second for a wide body aircraft serving hundreds of passengers),
consistent, high-quality service from gate-to-gate, without the additional costs typically charged for such premium service.
Currently, Aero/IFC terminals are based on communication from the ground to the aircraft
or from GEO satellites to the aircraft. The data volume and transmission speeds via these communications systems are limited, in part
because the tracking antenna systems typically used for connection with GEO satellites and terrestrial broadband networks are mechanical
and susceptible to signal disruptions or gaps as the antenna mechanically switches from source to source. Download and upload speeds are
often limited, as is latency. The new generation of LEO satellite constellations operating at Ka and Ku-band frequency ranges provide
a partial solution to this connectivity issue, because they will be deployed in far greater numbers and provide more extensive signal
coverage than GEO constellations. However, in order for aircraft to connect with these LEO satellite constellations, they will need to
be equipped with a user terminal capable of tracking the fast-moving and numerous LEO satellites, or accessing both LEO networks and GEO
networks simultaneously. This electronically steered multibeam connectivity is essential to providing seamless handover between satellites
and simultaneous multi-orbit operation.
Based on September 2020 EuroConsult estimates, by the end of 2019, approximately 9,000
commercial aircraft and 22,500 private aircraft were equipped with an IFC system, many of which are not compatible with the new LEO satellite
technologies yet to be fully deployed. EuroConsult estimates that up to approximately 17,500 commercial and 30,000 private aircraft could
have an IFC system by 2029, marking growth in demand for enhanced in-flight Internet and communication capabilities. We anticipate that,
based on EuroConsult estimates and our estimates of demand and unit pricing, the TAM for Aero/IFC terminals will reach $10 to $12 billion
by 2029. Electronically steered multibeam connectivity is essential to provide seamless handover between satellites and simultaneous multi-orbit
operation.
Through Jet Talk, we are designing an advanced Aero/IFC terminal based on our chips
with the ESMA beamforming and multibeam capabilities necessary to address the challenges of mechanical signal tracking. Our Aero/IFC terminal
is designed to enable broadband connection between aircraft and LEO satellite constellations to provide enhanced data speeds and signal
coverage for Aero/IFC providers. Improved speeds and latencies from LEO constellations are expected to enable airlines to promote more
“bring-your- own-devices” for inflight entertainment, a longstanding ambition of the industry that could now become reality.
Additionally, our Aero/IFC terminal is designed to be easier and faster to install than existing IFC systems. Our system will also be
multi-orbit capable, able to send and receive signals to LEO, MEO and GEO networks simultaneously, a feature desired by customers for
service resilience and flexibility.
Further, we expect to benefit from STE’s industry experience and strong presence
in East Asia in the marketing and sale of our Aero/IFC terminals, which will be marketed and sold to the commercial aviation market exclusively
through our Jet Talk joint venture. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Our Revenue Model and Prospects.”
We have continued to invest in research and development and also believe the circumstances
have provided us with an opportunity to gain IFC market share. Significant delays occurred in the procurement of IFC antennas as a result
of the pandemic, providing us with the opportunity to mature our technology and design lower cost, more powerful and easier to install
Aero/IFC terminals at a time when our principal competitors’ market-ready products, based on more traditional mechanical antennas
operating over GEO, did not receive substantial orders. We anticipate that our Aero/IFC terminals will now come to market at the time
the industry is likely to begin procuring their next generation of IFC equipment, also coinciding better with new services being introduced
by new LEO constellations. See “Risk Factors — Risks Related to SatixFy’s Business,
Operations and Industry — The global COVID-19 pandemic has harmed and could continue to harm our business, financial condition,
and results of operations” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Impact of COVID-19.”
Communications On The Move (“COTM”)
We believe that LEO constellations further provide the potential to facilitate connectivity
for applications requiring continuous communication while on the move. There are many such satellite-enabled mobile applications such
as connected cars and commercial vehicle fleets, broadband to public transport, and connected emergency service vehicles. Satellite communications
systems with high coverage capability will have an important role in supporting the development of the broader mobility market and enabling
full ubiquitous connectivity. We believe that our proprietary chip technology is well-suited to adaptation to the expected requirements
of the COTM device market in the future.
As part of our current strategy, we have decided to pause development and marketing
related to our satellite-enabled Internet-of-Things Diamond product in order to continue to focus on our other satellite communications
chips and products described herein.
Our Technology
We have a broad portfolio of technology leading silicon chips and systems for the entire
satellite communications value chain. Our team of over 160 engineers is focused on developing cutting-edge systems, powered by our chip
technologies, to lead innovation in satellite communications. We are committed to enhancing our technology, which is demonstrated by our
over $209 million in R&D investment from the commencement of operations in June 2012 through December 31, 2022.
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Cutting-Edge Chips. We believe we are positioned to be a leading provider of satellite communications
systems for the next generation of satellites. Our modem chips have the ability to split data for retransmission and combine received
data from nearby satellites or ground hubs efficiently and quickly. Our chip technology enables us to develop communications systems that
are high performing, low weight, energy efficient and sized to be compatible for a wide array of applications and satellite technologies.
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Advanced Antennas and Modems. Our technology in the field of multibeam management, transmission
and beamforming and hopping, based on our advanced chips, introduces a new and advanced generation of flat electronic antennas that will
be critical to enabling user terminals to track multiple LEO satellites at a time. Our ESMA chips enable efficiency, modularity and scalability
to support multibeam and high data rates. We are designing efficient and innovative digital interfaces for our modems to enable them to
handle numerous transmission and reception beams, which will be necessary for LEO satellite networks. |
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Tailor Made. We have the ability to design and present customers with customized solutions
using our whole family of highly flexible chips and modules that integrate with their planned or existing systems, and which can be tailored
to meet their requirements. We believe that providing optimized cost-effective solutions, in an era when satellite technology is rapidly
evolving, is important for positioning us at the technological forefront of the market and securing relationships with leading communications
providers. |
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End-to-End Solutions. Our development team manages the entire product development life cycle,
beginning with the characterization stage, through to the design and third-party manufacture of the chips, integration of the chips within
communications systems, testing of the systems and culminating with delivery and the provision of operational support to the customer.
The solutions we provide enable customers to enjoy an efficient and continuous process for the development of their systems with a single
supplier and single point of contact throughout the entire development and implementation process. We develop the chips, design the systems
that integrate the chips, write the software needed to operate the chips and manage integration of the various components into a single,
cohesive satellite communications systems that fits our customers’ needs. |
Our Strengths
Our core chip technology and satellite communications systems leverage our track record
in satellite communications chip development, and our deep understanding of RF device processing, silicon chip design and related system
architecture to address the emerging needs of the satellite communications markets. We believe our leadership position in developing chips
and satellite communications systems is a result of the following core strengths:
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Superior Technology Leading to Superior Performance. We believe we are a technology and product
leader in the growing satellite communications industry, as evidenced by our innovative technologies such as the digital beamforming and
the beam-hopping chip technology. Our chips are designed to power our satellite communications systems, which in turn enhance satellite
communications capabilities, including on-board processing capabilities driven by channel switching and flexibility. |
Our systems are optimized to unlock the full potential of new LEO satellite constellations.
We believe that the proprietary and innovative features of our modem and antenna chips enable us to create satellite communications systems
that are superior in capacity, performance and functionality to our competitors’ systems.
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Tailor-Made Innovation of Next-Generation Satellite Communications Technology. Our
SDR modem and antenna chips are designed to be tailored and optimized to meet the technical requirements of our customers in their respective
end markets without the traditional expense of developing bespoke chips each time. This is a significant differentiator from, and combined
with the over $209 million we have invested in research and development creates significant barriers to entry for, our competitors. Our
communications systems are also capable of being tailored to our customers’ needs, while promoting efficiency through a common chip
set across the entire satellite communications value chain. In many cases, our close relationships with our customers in the design stage
and our deep engineering expertise, position us in a limited group of satellite communications system developers capable of providing
the necessary solutions to our customers. We believe these close working relationships, coupled with our proprietary technology and experience,
help our customers achieve higher throughput capacity and better integration of all key components of the satellite communications system,
while providing advantages in terms of lower weight and power consumption. We believe our solution enables overall lower systems costs
relative to our principal competitors. |
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Silicon Enabled SWaP-C. The use of silicon-based technologies in our satellite communications
chips and systems is key to achieving the industry’s goal of producing systems that are smaller in size and lower in weight, power
consumption and cost. |
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Higher Reliability, Lower Maintenance and Faster Installation. The use of silicon in our
antenna systems makes them more reliable than the mechanical antennas available in the market due to fewer moving parts, fewer failure
points and faster installation time of our antennas. We have designed our antenna systems to be easier to install and require less maintenance
than systems using mechanical elements with complex packaging. |
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End-to-End Capabilities Promoting Long-term Customer Relationships. We often cover
the entire life cycle of the systems we deliver to our customers, from defining specifications according to our customers’ requirements,
to designing or redesigning the chips, to oversight of the assembly of the final product and the subsequent delivery of custom-tailored
products to the customer. We believe that our participation in serving the entire life cycle of the customer’s satellite communications
system promotes long-term customer relationships, as once our tailor-made systems are integrated in a customer’s satellite constellation
or the ground communications infrastructure, the costs of switching to a different provider of satellite communications systems could
often be substantial. |
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Proven Management Team. Our founders and executive management team have extensive experience
in effectively guiding companies through various industry cycles and technology transitions. We have recently strengthened our leadership
with the joining of Mr. Ido Gur as a CEO as of January 15, 2023 and the addition of Itzik Ben Bassat as our EVP Product Development and
Operation as of February 12, 2023 as well as Nir Barkan as our Chief Product and Strategy Officer as of May 1, 2023. Mr. Gur brings
extensive experience of leading high tech technologies and products companies, including Saguna, GASNGO and VocalTec. Charles A. Bloomfield,
our Chief Executive Officer of SatixFy Space Systems UK Ltd., a subsidiary of SatixFy, previously led the Communication Products (Telecom
Satellite) division of Airbus Defence and Space Ltd. where he was responsible for the strategic planning and its implementation relating
to spacecraft advanced payloads, products and equipment. Mr. Yoav Leibovitch, our Chairman of the Board, has a vast experience in leading
the financial strategizing and investor relations of public companies. Our management team provides us with steady, reliable leadership,
uniquely capable of identifying strong investments, executing through change, and maintaining stability during market uncertainty.
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Our Strategy
We aim to be the leading global provider of digital satellite communications systems
that enable satellite-based broadband delivery to markets across the globe. The key elements of our strategy are:
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Strengthen our Technology Leadership. We believe that our success thus far is largely attributable
to our digital silicon chip design expertise. We aim to leverage our design expertise to continue developing high-performing chips and
systems that are smaller, lighter, have lower power consumption and a lower cost, while continuing to invest in research and development
to maintain our technology leadership in this market. |
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Capitalize on LEO and IFC Market Opportunities. The satellite communications market presents
significant opportunities for innovative solutions. The introduction of the new LEO satellite constellations creates the need for smaller
satellite communications systems that can handle higher speeds, larger capacity and operate with lower power consumption. Our modem and
antenna chips, as well as our satellite payload, user terminal and hub systems were developed to meet the new technological needs of the
LEO satellite constellations. New opportunities in the Aero/IFC market are emerging as the demand for “home-like” broadband
connectivity on commercial flights increases, creating the need for IFC systems that can deliver fast and reliable connectivity. By developing
our chips and systems to meet new market opportunities, we intend to expand the deployment of our next generation chips and systems.
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Leverage and Expand our Existing Customer Base. We intend to continue to develop long-term,
collaborative relationships with top tier customers who are regarded as leaders in their respective markets. We intend to continue to
focus on sales to these customers and build on our relationships with them to define and enhance our product roadmap and expand our scope
of business with them. Engaging with market leaders will also enable us to participate in emerging technology trends and new industry
standards. |
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Attract and Retain Top Talent. We are committed to recruiting and retaining talented professionals
with proven expertise in the design, development, marketing and sales of satellite communications chips and systems. We believe we have
assembled a high-quality global multinational team in all the areas of expertise required for a leading satellite communications company.
We believe that our ability to attract the best engineers is a critical component of our future growth and success. |
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Expand our Global Presence. We intend to continue strengthening our relationships with our
existing customers, while also planning for increased demand as our brand recognition grows. We intend to continue expanding our presence
worldwide as we grow in our market to serve the needs of clients in additional geographies and tap into talent pools from international
markets. |
Our Chips and Satellite Communications Systems
Modem Chips — SX-3000/3099/4000
SX-3000/3099
Our SX-3000 is the first generation of modem chip we developed. It is a VSAT modem chip,
System on a Chip and an ASIC designed for ground user terminals. The SX-3000 is a core element with empowered SDR capabilities and is
compatible with the latest industry standards, such as DVB-S2X/RCS2, with a transponder throughput rate of up to 500 Msps HTS. In addition
to providing VSAT modem SDR functions, additional embedded Central Processing Units and multiple Digital Signature Processing, the SX-3000
enables advanced features, such as fast beam-hopping, is custom designed for wide-band high throughput satellite terminals, and is highly
compatible and designed to serve as a core component in VSAT modem systems. The SX-3000 serves applications from standard satellite broadcast
to mobile satellite data terminals, and TV broadcast. The SX-3000 also includes “Over the Air” capability, which enables firmware
upgrades in the field for long term system viability and a long product life cycle with future proof upgradability enabling future-proof
systems.
Our SX-3099 VSAT modem chip is the new generation of SX-3000 that represents an improvement
over the SX-3000. SX-3099 is capable of supporting 1GHz bandwidth, up to eight instances in receive and transmit paths, beam-hopping,
and is smaller in size, consumes less power, and is lower in cost compared with the SX-3000. The beam-hopping capability is compatible
with the DVB S2X standard, which is the latest revision of the industry standard for the satellite communications systems, written and
led by our engineers and is based on our technology and patents. We believe our SX-3099 is the first and currently the only modem chip
supporting wideband channels and beam hopping. The primary target uses of our SX-3099 modem chips include ground terminals and hubs and
IFC systems.
As of December 31, 2022, we have sold approximately an aggregate of 174,600 of our satellite
communications modems (S-IDU) with our SX-3000 chips and of our SX-3000 chips on a standalone basis.
SX-4000
The SX-4000 is a highly integrated, low-power, satellite baseband modem chip suitable
for use in satellite payloads, with on-board processing, also supporting Inter-satellite Links. The chip is based on our SX-3000 and SX-3099
modem chips and is treated with a radiation hardening process to be suitable for space usage. The radiation hardening process used on
the SX-4000 chip includes software features that are designed to reduce the occurrence of radiation-induced errors in the operating system.
The software is also designed to identify and recover from errors caused by radiation, minimizing downtime and disconnection.
We designed our SX-4000 payload chip to meet the signal regeneration, beam-hopping and
on-board processing needs of the next generation of LEO/MEO satellite constellations and high throughput GEO satellites using modern satellite
architectures.
Antenna Chips — PRIME and BEAT
PRIME
The PRIME chip is a commercial digital beamforming ASIC implementing electronic steering
of the beams by means of true-time delay of the electromagnetic waves received or transmitted by the antenna. Use of the digital beamforming
technology allows the antenna to handle a wide bandwidth using a large number of antennae radiating elements and without beam squint.
Each PRIME chip combines the radiation pattern from 32 antenna elements simultaneously, operates entirely in the digital domain and could
be cascaded to any size antenna. The PRIME chip can point, track and manage multiple beams at multiple polarization angles simultaneously.
In order to address the in-orbit beamforming needs of our payload customers, we have
developed a beamformer chip called PRIME 2.0. We believe that PRIME 2.0 offers the best SWaP-C digital multi-beamforming solution for
satellite payloads on the market, capable of generating up to 128 simultaneous beams in any band up to Ka-band.
We believe our PRIME chips can reduce the number of LEO satellites needed in a constellation
and allow for larger coverage areas than possible with conventional phased arrays.
BEAT
The BEAT chip is an RFIC that includes four independent transmit and receive channels
in Ku-band, Ka-band and additional required satellite bands at any polarization. The chip includes four Power Amplifiers, four Low Noise
Amplifiers and interfaces with the PRIME chip, on one side, and directly to the antenna radiating elements that transmit or receive the
electromagnetic waves, on the other side.
Combining the PRIME and BEAT chips enables the construction of flat antennas or even
conformal antennas at any size, and each antenna can generate multiple beams to communicate with satellites in multiple orbits at the
same time. Target applications of the PRIME and BEAT chips include satellite payloads, ground user terminals, IFC and more.
Satellite Payloads
We are developing a line of satellite payload systems that can provide data throughput
of many gigabits per second, are power efficient and weigh significantly less than competing solutions. The payload systems will be used
in satellites providing broadband access, backhauling, mobility and other services.
Our satellite payloads are designed to consist of an OBP, our satellite ESMA powered
by our PRIME 2.0 digital beamforming chip and our advanced SDR SX-4000 payload chip. Our satellite payloads are designed for LEO, MEO
and GEO satellite applications and are fundamentally flexible, enabling the transmission of large amounts of data supporting the full
range of satellite communications business opportunities. Our satellite payloads have a digital regenerative onboard processing capability
that enables satellite interconnectivity, separate handling of communications coming from the ground and communications transmitted from
the satellite to the ground, while ensuring more effective use of the communication bandwidth, improving system performance. Our payload
chips also support transparent modes used in more classic satellite systems.
Operators using our payload technology can actively move satellite beams to direct services
to customers on the ground, improving satellite efficiency and increasing the number of users served, leading to a substantial opportunity
for enhanced service and operator profitability. Additionally, the on-board processing enables more efficient use of bandwidth and a significant
improvement in system spectral efficiency, reducing the number of ground gateways required, which could lead to a substantial reduction
in operator ground segment costs.
Satellite payloads must be engineered to meet the specifications of a specific satellite
and the mission for which it is destined.
User Terminals, Modems and Antennas
User Terminals
User terminals consist of a modem and an antenna. The following is a description of
our user terminal products, both current and under development.
Aero/IFC terminals. Our Aero/IFC terminal is
designed to provide online broadband connectivity via multiple satellites to simultaneously support hundreds of passengers in commercial
and private flights with high performance communication. We intend to offer a commercial Aero/IFC terminal, which is targeted at airlines
operating narrow-body (single-aisle) aircrafts or wide-body (double-aisle) aircrafts, and a compact-sized terminal made to service business
jets. Our commercial Aero/IFC terminals, as well as all other satellite antenna systems for commercial aircraft applications, will be
offered exclusively in the commercial aviation market through our Jet Talk joint venture with STE. In furtherance of his arrangement,
we have granted an exclusive, royalty-free, worldwide, perpetual, non-transferable, irrevocable license to certain of our intellectual
property to Jet Talk for this purpose. We have two contracts with Jet Talk, both related to the development of an Aero/IFC satellite communications
terminal for commercial aircraft. Jet Talk pays for our development services associated with these contracts with the proceeds of a $20.0
million investment by our joint venture partner, STE.
Our Aero/IFC terminal is designed to be fully electronic, with no moving parts, designed
for high reliability, low maintenance and fast, simple installation. Our Aero/IFC terminal is equipped with our beamforming technology
and is designed to enable seamless communication with multiple LEO, MEO and/or GEO satellites to provide “home-like” broadband
connectivity and streaming capabilities to passengers.
Our Aero/IFC terminal includes an embedded modem, based on our SX-3099 chip. The modem
is digitally interfaced with receive and transmit antenna arrays for high-performance data communication and is combined with a programmable
SDR.
Ground Terminals. We offer or are developing
a family of ground terminals to address a broad number of market verticals such as fixed (e.g., direct-to-home, etc.) and mobile (e.g.,
public transport, etc.) broadband applications.
We are also developing a direct-to-home broadband user terminal in connection with our
ESA-sponsored project with OneWeb, which is designed as a low-cost user terminal variant that we believe can be the lowest-cost ESMA on
the market, providing large data transfer rates and low latency via LEO constellation operators. We expect that this user terminal will
be capable of delivering speeds greater than 100 Mbps at a very competitive price point.
Hubs and Gateways. We offer our Shepherd
managed communications system, known as a hub, which serves as a smart satellite resource manager that uses a common forward channel to
transmit data and allows our customers to monitor and manage advanced terminals in their networks. We also offer gateway modem products
based on our SX-3099 modem chips, supporting high-capacity links and beam-hopping with reduced power consumption and cell size.
Modems
The following is a description of our modem products, both current and under development.
We have developed our modems based on our proprietary SX-3000 and SX-3099 VSAT chips,
a part of our ASIC technology and one of the base building blocks for all our terminal products. We produce modem modules designed to
bring the fastest performance available today in a compact form factor and with low power. All of our modems are designed for easy integration
with our customers’ hardware and software solutions and are available for a variety of applications. Our modems are designed to
natively support the entire DVC-RCS2 / DVB-S2X industry standards, as well as a complete SDR for any other waveform, to ensure maximum
flexibility and relevance to our customer base.
Terminal on Module (ToM). We believe our
ToM modem, which is now available for sale, is among the most sophisticated satellite core modules available today, and is designed to
bring the fastest performance available in an ultra-small-scale footprint with low power utilization. Our ToM is designed to help our
customers shorten their design cycle and quickly deliver products to market. The SX-3099 based ToM can be used to design a wide variety
of indoor and outdoor systems, integrating a satellite modem function. ToM is designed with multiple interfaces for the design of applications
that directly interface to an external RF front-end or ESMA.
We expect to begin offering our ToM modems based on our SX-3099 chips in the near term
and are in the process of engineering models of our SX-3099-based ToM modems for certain customers.
S-IDU. The S-IDU, our first product to market,
is a VSAT modem enabling satellite communications based on our SDR modem chips. The unit, which is marketed mainly to enterprise users
of satellite communications services, provides base VSAT capabilities with advanced features for end-user enterprises and satellite communications
service providers, and is designed to provide a complete communication solution. Satellite communications service providers can port their
existing software stack to our S-IDU to benefit from affordable and advanced features.
The S-IDU is based on a SDR approach and supports the latest DVB-S2X and DVB-RCS2 standards.
It is also designed to support beam-hopping, enabling migration to the next generation of satellite systems.
To date, we have sold over approximately an aggregate of 174,600 units of our S-IDU
modems based on our SX-3000 chip and of our SX-3000 chips on a standalone basis.
Antennas
Our ESMA is designed for fixed and mobile applications and is able to receive from,
and transmit data to, existing Ku-band LEO, MEO and GEO satellites. The ESMA is based on our developed family of PRIME and BEAT antenna
chips. The basic unit of the ESMA is comprised of one PRIME chip and multiple BEAT chips. The units are then integrated into an antenna
module of 32 radiating elements, which are then cascaded into anywhere from 64 to thousands of antenna elements and can serve various
applications, including as a building block for larger sized antennas or Aero/IFC systems.
We are currently developing an ESMA with a new RFIC to receive data from and transmit
data to Ka-band LEO, MEO and GEO satellites. Our ESMA can handle a number of beams and can switch between LEO, MEO and GEO satellites
in microseconds. ESMA supports acquisition and tracking capabilities from multiple beams at multiple polarizations and can be integrated
with our SDR modem chip to provide a full terminal solution or with the SX-4000 chip to provide a full satellite payload solution.
The ESMA can also be integrated with external modems produced by other vendors to operate
on their own ecosystems.
Manufacturing and Raw Materials
We are a fabless chip manufacturer, and as such we manufacture our chips under contract
with a fab manufacturer. After the manufacturing stage, the chips are then cut, packaged and tested by service providers that we have
arrangements with for each of our chip lines. Additionally, we have a relationship with a leading supplier of software development tools
to support the design, development, simulation and verification of new chip enhancements.
We currently rely on a small number of third parties for a substantial amount of our
chip manufacturing and system assembly operations, and for electronic components and chip development software. Currently, the majority
of our chips are supplied by a single foundry, GlobalFoundries, on a purchase order-by-purchase order basis and we purchase chip development
software and software libraries from a limited number of providers, such as Cadence Design Systems, Inc. and Siemens. We currently do
not have long term supply contracts with most of our other third-party vendors, and we negotiate pricing with our main vendors on a purchase
order-by-purchase order basis. The majority of our chips are designed to be compatible with the manufacturing processes and equipment
employed by GlobalFoundries and switching to a new foundry vendor for these chips may require significant cost and time. Additionally,
we may establish additional foundry and other vendor relationships as such arrangements become economically useful or technically necessary.
For our communications systems, which consist primarily of a printed circuit board (“PCB”),
chips and other electronic components, we have arrangements with third-party manufacturers to produce our PCBs, and we source electronic
components and other parts that comprise the non-chip components of our systems from a variety of suppliers. Additionally, we outsource
the assembly of our systems to third-party service providers. While most of the electronic components used for our communications systems
are commoditized, the subassemblies and other necessary services for the production of our communications systems are obtained from a
limited group of suppliers. If one or more of these vendors terminates its relationship with us, or if they fail to produce and deliver
our products or provide services according to our requested demands in specification, quantity, cost and time, our ability to ship our
chips or satellite communication systems to our customers on time and in the quantity required could be adversely affected, which in turn
could cause an unanticipated decline in our sales and damage our customer relationships. See “Risk
Factors — Risks Related to SatixFy’s Business, Operations and Industry — We rely on third parties for manufacturing
of our chips and other satellite communications system components. We do not have long-term supply contracts with our foundry or most
of our third-party manufacturing vendors, and they may not allocate sufficient capacity to us at reasonable prices to meet future demands
for our solutions” and “— Risks Related to SatixFy’s Business, Operations
and Industry — We rely on a third-party vendor to supply chip development software to us for the development of our new chips and
satellite communications systems, and we may be unable to obtain the tools necessary to develop or enhance new or existing chips or satellite
communications products.”
Our engineers work closely with our contractors to increase yield, lower manufacturing
costs and improve product quality. Our production objective is to produce systems that conform to customer and industry specifications
at a competitive production and customer cost. To achieve this objective, we primarily utilize a range of sub-contractors that are selected
based on the production volumes and complexity of the product.
The current global shortage in semiconductor and electronic components, resulting mainly
from macro trends such as strong demand for 5G devices and high performance computing, as well as the impact of the COVID-19 pandemic,
has resulted in increases in the prices we pay for the manufacturing of our chips and assemblies, disruptions in our supply chain and
disruptions in the operations of our suppliers and customers. These disruptions have resulted in disruptions and delays in our development
work and in delays in delivering our systems and products. In response to these challenges, we have implemented mitigation strategies,
such as procurement planning, purchasing widely-available components based on regularly updated assessments of demand, while seeking longer-term
supplier relationships and higher volume, longer-term orders for scarce components and materials. In the future, industry supply chain
challenges may also be exacerbated and the demand for our products may be adversely affected as a result of the indirect effects of the
Russia-Ukraine war, related sanctions or their impacts on global and regional economies. See “Risk
Factors — Risks Related to SatixFy’s Business, Operations and Industry — We are currently experiencing, and may continue
to experience, increased risks and costs associated with volatility in labor or component prices or as a result of supply chain or procurement
disruptions, which may adversely affect our operations.”
Sales and Marketing
Sales
Our experienced executives lead our sales activities and are responsible for our overall
market and business development. Our sales cycle is long and usually lasts between one-to-two years from identifying potential customer
needs, defining product specification and proof of concept to production of our final product in large numbers. We have three dedicated
global sales teams, one based out of Israel and two based out of the UK, each of which is specialized in one or more of our key targeted
product markets.
Our engineers interact with customers during all stages of design and production, maintain
regular contact with customer engineers and provide technical support. We maintain close relationships with our customers and provide
them with post-sale technical support until the stage in which the customer assumes full responsibility for such product’s support.
We generated $10.6 million, $21.7 million and $10.6 million in revenues in 2022, 2021
and 2020, respectively, of which approximately 85%, 49% and 100%, respectively, was attributable to U.K.-based operations and the remaining
revenues were attributable to Israel-based operations.
Marketing
Our marketing strategy is focused on promoting brand awareness through differentiated
positioning, messaging and pronounced leadership. We achieve this by communicating our product advantages and business benefits and promoting
our brand.
Our marketing team focuses on increasing the awareness of the SatixFy brand through
public relations, advertising, trade show participation and conference speaking engagements that inform the market on our current systems.
Our marketing efforts include identifying and sizing new market opportunities for our systems, creating awareness of our company and systems,
and generating contacts and leads within these targeted markets.
In addition, in connection with our Jet Talk joint venture, which has the exclusive
right to sell our Aero/ IFC terminals to the commercial aviation market, we expect to benefit from STE’s marketing resources and
experience in the aerospace industry.
Our Customers and Potential Revenue Pipeline
We design, develop, produce and market our modem and antenna chips and our systems to
leading international companies such as operators of LEO, MEO and GEO communication satellites, manufacturers in the fields of Aero/ IFC
systems and satellite communications systems’ manufacturers.
The structure of our contracts with customers varies based on the needs and preferences
of our individual customers. For example, while we may enter into agreements with some customers that cover the whole life cycle of a
project, from the definition of requirements to the development and delivery of a system, at the outset of the engagement, other customers
may prefer a phased approach, placing a contract with us for an initial product demonstration, followed by a second phase for the delivery
of a commercial- ready product. Accordingly, the length and nature of our contracts vary across our customer base.
We are focused on attracting new customers and expanding our relationships and revenue
with existing customers, which we believe will be driven by our ability to continue to improve our technologies and systems that make
our offerings compatible with the latest advances in satellite-enabled communication. We actively track our customer relationships, including
by monitoring progress under our committed contracts and our prospective customer relationships. While our contracts are typically terminable
by us or our customers upon prior notice, once our tailor-made systems are embedded in a customer’s satellite constellation or communication
infrastructure, the costs of switching to a different provider could often be substantial.
A significant portion of our net revenue has historically been generated by a limited
number of customers. Our three largest customers accounted for, in the aggregate, approximately 78% and 64% of our total revenue
for the years ended December 31, 2022 and December 31, 2021, respectively. As of December 31, 2022, we had binding contracts with 12 customers
under which we recorded revenues in 2022 or in 2021, or expect to record future revenues. See “Risk
Factors — Risks Related to SatixFy’s Business, Operations and Industry — We generate a significant percentage of our
revenue from certain key customers, and anticipate this concentration will continue for the foreseeable future, and the loss of one or
more of our key customers could negatively affect our business and operating results.”
Backlog and Potential Revenue Pipeline
As of December 31, 2022, we had signed revenue contracts representing backlog of approximately
$45 million. Our backlog consists of estimated revenue pursuant to customer orders and signed contracts. Our customer orders may be terminated
under certain circumstances, including if we fail to meet delivery deadlines or otherwise breach our contracts, and most of our customer
contracts are terminable upon prior notice to us, without penalty. There is no assurance that we will be able to expand our customer relationships,
and therefore our backlog, or that our backlog will translate into revenue or cash flows.
Additionally, we previously reported estimates of our potential future revenue pipeline,
however, due to the cessation or narrowing of negotiations of new contracts with existing and prospective customers, our potential revenue
pipeline is uncertain and we do not plan to report this metric in future periods unless and until these circumstances change, as such
pipeline information would be of limited utility to investors.
Research and Development
As of December 31, 2022 we had a team of over 160 engineers supporting our mission to
innovate the satellite communications industry, including hardware and software engineers (30), VLSI engineers (37), product and antenna
engineers (50), and algorithms, system engineers and satellite payload engineers (43). Continued investment in research and development
is critical to our business.
Our R&D efforts focus primarily on developing new chips, systems and technologies,
as well as improving our existing systems with additional innovative features and functionality. For example, based on our SX-3099 chip,
we developed the SX-4000 chip to be used in space by applying a radiation hardening process. The development of modem and antenna chips
requires us to improve the performance, size, power consumption, product roadmap, resilience and cost of our chips. We combine technologies,
such as beamforming, beam-hopping and silicon development processes with our proprietary design methods, intellectual property and our
expertise to develop new technologies and advanced systems.
Our research and development expenses were $29.2 million and $31.7 million in 2022 and
2021, respectively, before the deduction of R&D grants. Since we commenced operations in 2012, we have invested over $209 million
in R&D. We conduct our R&D across centers in Israel, the United Kingdom and Bulgaria. By spreading our research and development
team across multiple locations, we increase our access to highly skilled engineering talent, which we believe provides us with opportunities
for evolution and growth.
We have received significant research and development funding from ESA, with the support
of the UKSA, through its ARTES program since establishing and growing a presence in the U.K. in 2016. We have won multiple contracts with
ESA, including as a subcontractor to leading satellite communications companies, and through December 31, 2022 have obtained over $75
million in grants from the ESA and $6.1 million in other forms of funding from the Israeli Innovation Authority. These development contracts
span the full range of our product portfolio, including our PRIME, BEAT, SX-3099, SX-4000 payload, Ka-band Aero/IFC terminal and the development
of OneWeb’s consumer user terminal and payload prototype currently expected to be delivered to the customer in the second half of
2023. In connection with the ESA grants, which are intended to fund 50%-75% of the cost of development and manufacturing of the integrated
chip sets and the communications systems, our agreement stipulates that the resulting intellectual property will be available to ESA on
a free, worldwide license for its own requirements. In addition, ESA can require us to license the intellectual property to certain bodies
that are part of specified
ESA programs, for ESA’s own requirements on acceptable commercial terms, and can
also require us to license the intellectual property to any other third party for purposes other than ESA’s requirements, subject
to our approval that such other purposes do not contradict our commercial interests.
Competition
The satellite communications industry is competitive and characterized by rapid advances
in technology, new product introductions, high levels of investment in R&D and high costs associated with generating marketable systems.
Our competitiveness depends on our ability to develop and launch systems superior in performance and SWaP-C than our competitors and our
ability to anticipate and adjust to changes in our customers’ requirements. The competition in the satellite communications market
focuses primarily on performance, size, power consumption, product roadmap resilience and cost. We believe that we compete favorably as
measured against these criteria. Our customers’ selection process is highly competitive, and there are no guarantees that our systems
will be included in the next generation of our customers’ systems.
We compete with many major chip and satellite communications system manufacturers that
currently, or may in the future, develop satellite-specific communication technology, as well as smaller niche companies that produce
systems or chips that compete with our individual offerings on a product-by-product basis. Additionally, in the future we may compete
with telecommunication-based connectivity providers as 5G broadband coverage increases. We compete in different product lines to various
degrees on the basis of price, technical performance, product features, product system compatibility, customized design, availability,
quality, and sales and technical support. In particular, standard systems may involve greater risk of competitive pricing, inventory imbalances
and severe market fluctuations than differentiated systems.
Many of our current and potential competitors have existing customer relationships,
established patents and other intellectual property, and substantial technological capabilities. In some cases, our competitors are also
our customers or suppliers. Some of our competitors have recently introduced products with more advanced technologies than in the past,
which increases competition with our products. Additionally, many of our competitors may have significantly greater financial, technical,
manufacturing and marketing resources than we do, which may allow them to implement new technologies and develop new systems more quickly
than we can. For further information, see “Risk Factors — Risks Related to SatixFy’s
Business, Operations and Industry — We operate in a highly competitive industry and may be unsuccessful in effectively competing
in the future.”
Intellectual Property
We seek to establish and maintain our intellectual property and proprietary rights in
our technology and systems through a combination of patent, trademark, copyright and trade secret laws, as well as contractual rights
and confidentiality obligations. We seek to maintain the confidentiality of our trade secrets and confidential information through nondisclosure
policies, the use of appropriate confidentiality agreements and other security measures. We have registered a number of patents worldwide
and have a number of patent applications pending determination, including provisional patent applications for which we are considering
whether to file a non-provisional patent application.
As of April 24, 2023, we owned approximately 54 issued patents and 23 pending patent
applications, including provisional and Patent Cooperation Treaty applications, across the United States, the United Kingdom, Europe,
China and Israel. Our issued patents and pending patent applications cover, among other things, our satellite communications systems,
ESMA technology, beam-hopping, satellite payload technology and a broad array of applications from aero mechanics and cooling to mechanical
design, digital design and software verification.
There can be no assurance that our patent rights can be successfully enforced against
competitive systems in any particular jurisdiction. Although we believe the protection afforded by our intellectual property portfolio
(including our patents and trade secrets) and confidentiality agreements has value, the rapidly changing technology in the satellite communications
industry and uncertainties in the legal process make our future success dependent primarily on the innovative skills, technological expertise
and management abilities of our personnel, rather than on the protections afforded by our intellectual property portfolio and contractual
rights. Accordingly, while these legal protections are important, they must be supported by other factors, such as the expanding knowledge,
ability and experience of our personnel and the continued development of new systems and product enhancements.
Certain of our systems include software or other intellectual property licensed from
third parties. While it may be necessary in the future to seek new licenses or to renew existing licenses relating to various elements
of the technology we use to develop these systems or our future systems, we believe, based upon past experience and standard industry
practice, that such licenses generally could be obtained on commercially reasonable terms. Nonetheless, there can be no assurance that
such licenses would be available on commercially reasonable terms, if at all.
The industries in which we compete are characterized by rapidly changing technologies,
a large number of patents, and claims and related litigation regarding patent and other intellectual property rights. We cannot ensure
that our patents and other intellectual property and proprietary rights will not be challenged, invalidated or circumvented, that others
will not assert that we have infringed, misappropriated or otherwise violated their intellectual property rights, or that our rights will
give us a competitive advantage. In addition, the laws of some foreign countries may not adequately protect our systems or intellectual
property or proprietary rights.
For further information, see “Risk Factors —
Risks Related to Intellectual Property, Information Technology, Data Privacy and Cybersecurity.”
Grants from the Israel Innovation Authority
We have received grants in an aggregate amount of $6.3 million, from the government
of Israel through the IIA for the financing of our research and development expenditures in Israel. As a recipient of grants, we are subject
to certain obligations and restrictions under the Innovation Law, including the following:
Royalty payment obligations: We are obligated
to pay the IIA royalties from the revenues generated from the sale of products (and related services) developed, directly or indirectly,
as a result of the Approved Programs, or deriving therefrom, at rates which are determined under the Innovation Law (currently a yearly
rate of between 3% to 5% on sales of products or services developed under the Approved Programs), up to the aggregate amount of the total
grants received by the IIA, plus annual interest based on the 12-month LIBOR.
Reporting obligations: We are subject to periodic
and event-based reporting obligations, and, among other requirements, must report to the IIA regarding any change of control in Satixfy
or regarding any change in the holding of the means of control of Satixfy which results in any non-Israeli citizen or entity becoming
an “interested party”, as defined in the Innovation Law, in the company. In the latter case, the non-Israeli citizen or entity
will also be required to execute an undertaking, in a form prescribed by IIA, acknowledging the restrictions imposed by the Innovation
Law and agreeing to abide by its terms.
IIA Funded Know-How transfer restrictions: IIA
Funded Know-How may not be transferred outside of Israel except under limited circumstances, and only with the approval of the IIA and
in certain circumstances, subject to the payment to the IIA of a redemption fee calculated in accordance with the Innovation Law (generally
capped at six times the grants received (dollar linked) plus interest). A “transfer” for the purpose of the Innovation Law
means a sale of the IIA Funded Know-How or any other transaction which in essence constitutes a transfer of such know-how (for example,
grant of an exclusive license to a non-Israeli entity for R&D purposes which precludes the grant recipient from further using the
IIA Funded Know-How). The calculation of the amount due to the IIA in the event of the transfer of IIA Funded Know-How outside of Israel
will take into consideration the amounts received from the IIA, the royalties that have already paid to the IIA, the amount of time that
has elapsed between the date on which the IIA Funded Know-How was transferred and the date on which the IIA grants were received, the
sale price and the form of transaction. Upon payment of such redemption fee, the IIA Funded Know-How and the manufacturing rights of the
products supported by such IIA funding cease to be subject to the Innovation Law. An IIA grant recipient may transfer IIA Funded Know-How
to another Israeli entity subject to the IIA’s prior approval. Such transfer will not be subject to the payment of a redemption
fee but the grant recipient will be required to pay royalties to the IIA from the proceeds of such transaction as part of the royalty
payment obligation.
Local manufacturing obligations: Products
developed using the IIA grants must, as a general matter, be manufactured in Israel. The IIA grant recipient is prohibited from manufacturing
products developed with IIA grants outside of the State of Israel without receiving prior approval from the IIA (except for the transfer
of less than 10% of the manufacturing capacity in the aggregate which only requires submitting a notice following which the IIA has a
right, within 30 days following the receipt of such notice, to deny the transfer of manufacturing). If approval to manufacture products
developed with IIA grants outside of Israel is received, the grant recipient will be generally required to pay increased royalties to
the IIA, up to 300% of the grant amount plus interest at annual rate, depending on the manufacturing volume that is performed outside
of Israel. The grant recipient may also be subject to an accelerated royalty repayment rate as defined under the Innovation Law. The grant
recipient also has the option to declare in its original IIA grant application its intention to perform a portion of the manufacturing
capacity outside of Israel, thus avoiding the need to obtain additional approval and to pay the increased royalty amount. The company
has declared in all of its IIA grant applications its intention to perform between 70% – 95% of the manufacturing capacity outside
of Israel. This requires the payment of royalties at an accelerated rate.
IIA Funded Know-How license restrictions: The
grant of a license to use the IIA Funded Know-How (which does not amount to a “transfer”) to a non-Israeli licensee is subject
to the IIA’s prior approval and the payment of license fees calculated in accordance with the Innovation Law (such fee shall be
no less than the amount of the IIA grants received (plus annual interest), and no more than six times the grants received (dollar linked)
plus interest and will generally be due only upon the receipt of the license fee from the licensee).
For further information, see “Risk Factors —
Risks Related to Litigation, Laws and Regulation and Governmental Matters.”
Human Capital
As of December 31, 2022, we had 191 full-time employees, primarily based in Israel,
the United Kingdom and Bulgaria, of whom more than 160 are engineers focused on the development of Very Large Scale Integration (VLSI),
hardware, software, algorithms, satellite payloads and communications systems. Our team draws from a broad spectrum of backgrounds and
experiences and we seek to foster an entrepreneurial culture so that we may remain focused and innovative. We believe our culture, and
the personal and professional development opportunities we offer, helps us to attract and retain talented engineers, including those who
bring prior experience from national and multi-national space agencies and leading companies in the satellite communications sector.
Facilities
Our corporate headquarters is located in Rehovot, Israel, which also serves as VLSI
R&D and Operations Center and which comprises 2,409 square meters. We also have two design centers in the United Kingdom, which comprise
540 square meters and 1,668 square meters, respectively, one design center in Bulgaria, which comprises 966 square meters and one center
in the United States that comprises 140 square meters. The two U.K. locations serve as R&D and operations centers for our hardware,
software and payload engineers and test teams, and the Bulgaria center is where we employ our antenna development team.
We lease all of our facilities. Our headquarters facility lease was scheduled to expire
in May 2023 and we exercised the option to extend the lease to May 2028. We believe our facilities are sufficient to meet our current
needs and anticipate that suitable additional space will be readily available to accommodate any foreseeable expansion of our operations.
Legal Proceedings
We are presently involved in a proceeding brought by certain plaintiffs, who purport
to be stockholders of SatixFy, that have filed two suits, in an Israeli court in Tel Aviv, against SatixFy, Satixfy Limited, Yoel Gat,
Doron Rainish, Yair Shamir and Yoav Leibovitch, arguing that plaintiffs are entitled to an aggregate of two million SatixFy ordinary shares,
and seeking, among other things, an order enjoining the defendants from executing any transaction, including the Business Combination,
or taking any other action that could harm plaintiffs’ rights as shareholders to the extent it does not affect all shareholders
equally. The plaintiffs base their claims on their prior ownership stakes in Satixfy Limited, a company incorporated in Hong Kong, whose
business was assigned to SatixFy in exchange for the issuance of identical holdings in SatixFy, except for certain shares placed in trust
for the benefit of certain service providers (including the plaintiffs) subject to a future arrangement regarding their actual ownership.
Plaintiffs maintain that they were entitled to direct holdings in SatixFy. SatixFy intends to vigorously contest the plaintiffs’
claims. SatixFy has issued and placed in trust sufficient shares to provide for the plaintiffs’ alleged stakes in SatixFy if the
plaintiffs prevail on the merits. In May 2022, the court rejected plaintiff’s request for injunctive relief and ordered the appointment
of a former judge, Mr. Yossi Shapira, as the new trustee to exercise fiduciary authority over such shares. The plaintiffs’ claim
on the merits remains pending. SatixFy believes that these proceedings will not have a material impact on SatixFy.
On October 27, 2022, Sensegain defaulted on its commitment to purchase units it had
subscribed for in connection with the PIPE financing pursuant to its Subscription Agreement with SatixFy and Endurance. As a result of
the default, out of the $29,100,000 previously committed by subscribers pursuant to the Subscription Agreements, SatixFy received $20
million in proceeds from the PIPE financing. On December 12, 2022, we filed a complaint against Sensegain in the New York Supreme Court,
County of New York, seeking specific performance by Sensegain under the Subscription Agreement or, in the alternative, damages in the
amount Sensegain owes pursuant to the Subscription Agreement (plus applicable interest and fees). SatixFy intends to enforce Sensegain’s
obligations under the Subscription Agreement.
From time to time, we may be subject to other legal proceedings and claims in the ordinary
course of business. We are not currently a party to any litigation, except as described above. Regardless of the outcome, litigation can
have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Regulatory Environment
Our customers are subject to certain laws and regulations with regard to the performance
of their communications systems. Therefore, our systems must comply with their applicable requirements. We are subject to export control
laws and regulations, and trade and economic sanctions laws and regulations, with respect to the export of such systems and equipment.
For further information, see “Risk Factors — Risks Related to Litigation, Laws and Regulation
and Governmental Matters.”
Product Testing and Verification
Certain equipment and systems manufactured by our customers must comply with applicable
technical requirements intended to minimize radio interference to other communication services and ensure product safety. In the United
States, the Federal Communications Commission is responsible for ensuring that communication devices comply with technical requirements
for minimizing radio interference and human exposure to radio emissions. Other regulators, mainly in our European markets, perform similar
functions of publishing and enforcing their own requirements. These requirements flow down as technical requirements from our customers
to the technical specifications of our systems with which we must comply. The systems we deliver to our customers are tested either by
us or by a private testing organization to ensure compliance with all applicable technical requirements, and such testing is backed up
with a compliance certification as part of the delivery process.
Export Controls
Due to the nature and classification of our communications systems, we must comply with
applicable export control regulations in the countries from which we export our systems. These regulations often require obtaining export
licenses from local governments for the export of our systems, which could increase our costs. Failure to comply with these regulations
could result in substantial harm to the company, including fines, penalties and the forfeiture of future rights to sell or export these
systems.
Data Privacy and Cybersecurity
In the ordinary course of our business, we collect, use, transfer, store, maintain and
otherwise process certain sensitive and other personal information regarding our employees, customers and service providers that is subject
to complex and evolving laws, regulations, rules, and standards regarding data privacy and cybersecurity. Internationally, many jurisdictions
have established their own data privacy and cybersecurity legal frameworks with which we may need to comply. For example, the European
Union has adopted the General Data Protection Regulation (“GDPR”), which requires covered businesses to comply with rules
regarding the processing of personal data, including its use, protection and the ability of persons whose personal data is processed to
access, to correct or delete personal data about themselves. Failure to meet GDPR requirements could result in penalties of up to 4% of
annual worldwide turnover or EUR 20 million (UK£17.5 million) (whichever is the greater). Additionally, the U.K. General Data Protection
Regulation (“U.K. GDPR”) (i.e., a version of the GDPR as implemented into U.K. law) went into effect following Brexit. Further,
the GDPR and the U.K. GDPR include certain limitations and stringent obligations with respect to the transfer of personal data from the
EU and the U.K. to certain third countries (including the United States).
At the U.S. federal level, we are subject to the rules and regulations promulgated under
the authority of the Federal Trade Commission, which regulates unfair or deceptive acts or practices, including with respect to data privacy
and cybersecurity. Moreover, the United States Congress has recently considered, and is currently considering, various proposals for more
comprehensive data privacy and cybersecurity legislation, to which we may be subject if passed. Data privacy and cybersecurity are also
areas of increasing state legislative focus and we are, or may in the future become, subject to various state laws and regulations regarding
data privacy and cybersecurity. For example, the CCPA applies to for-profit businesses that conduct business in California and meet certain
revenue or data collection thresholds.
Other states where we do business, or may in the future do business, or from which we
otherwise collect, or may in the future otherwise collect, personal information of residents have enacted or are considering enacting
similar laws, with laws in four such states (Virginia, Colorado, Connecticut and Utah) having taken effect, or scheduled to take effect,
in 2023. In addition, laws in all 50 U.S. states generally require businesses to provide notice under certain circumstances to consumers
whose personal information has been disclosed as a result of a data breach.
Any failure or perceived or inadvertent failure by us to comply with existing or new
laws, regulations, rules, and standards regarding data privacy or cybersecurity could harm our reputation, distract our management and
technical personnel, increase our costs of doing business, adversely affect the demand for our products, and ultimately result in the
imposition of liability. For further information, see “Risk Factors — We are subject to complex
and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity, which can increase
the cost of doing business, compliance risks and potential liability.”
MANAGEMENT
Management and Board of Directors
The following persons serve as SatixFy’s executive officers and directors. For
biographical information concerning the executive officers and directors, see below.
|
|
|
|
|
Yoav Leibovitch |
|
66 |
|
Chairman of the Board of Directors |
Ido Gur |
|
55 |
|
Chief Executive Officer |
Nir Barkan |
|
50 |
|
Chief Product and Strategy Officer |
Oren Harari |
|
49 |
|
Interim Chief Financial Officer |
Doron Rainish |
|
67 |
|
Chief Technology Officer |
Charles A. Bloomfield |
|
50 |
|
Chief Executive Officer — SatixFy Space Systems |
Divaydeep Sikri |
|
44 |
|
Vice President and Chief Engineer |
Stephane Zohar |
|
56 |
|
Vice President — VLSI |
Itzik Ben Bassat |
|
55 |
|
EVP Product Development and Operation |
Mary P. Cotton |
|
66 |
|
Director |
Yair Shamir |
|
78 |
|
Director |
David L. Willetts |
|
67 |
|
Director |
Richard C. Davis |
|
57 |
|
Director |
Moshe Eisenberg |
|
57 |
|
Director |
Yoram Stettiner |
|
65 |
|
Director |
Executive Officers
Yoav Leibovitch is a member
of our board of directors, a position he has held since co-founding SatixFy in 2012, and was appointed as our Co-Chairman of the board
of directors in March 2022 and served as our interim Chief Executive Officer from April 2022 to June 2022, following the passing of our
co-founder and Chief Executive Officer, Mr. Yoel Gat. Mr. Leibovitch also served as our Chief Financial Officer from 2012 until the closing
of the Business Combination in October 2022. Prior to SatixFy, Mr. Leibovitch was the Chief Executive Officer of Raysat, Inc. from 2009
to 2012, a leading developer of Communication-On-The-Move antennas. Additionally, Mr. Leibovitch was the Vice President of Business Development
at Gilat Satellite Networks (“Gilat”), a company founded by our late co-founder and CEO, Mr. Yoel Gat, from 2005 to 2008 and
the Chief Financial Officer of Gilat from 1991 to 2003. Mr. Leibovitch holds an M.B.A. from the Hebrew University of Jerusalem. Mr. Leibovitch
is a Certified Public Accountant in Israel.
Ido Gur is our Chief Executive
Officer since January 15, 2023. From 2020 to 2022, Mr. Gur served as the CEO and a director of Saguna Networks, an edge cloud computing
company in the 5G and private networks markets. Prior to this, Mr. Gur served as the CEO and a director of GASNGO, a leader in Automatic
Vehicle Identification solutions for fuel delivery, payments and fleet management. From 2008 to 2011, Mr. Gur served as the CEO and President
of VocalTec, an innovative telecommunications equipment provider that launched the first voice-over-internet-protocol software. From 2011
to 2020, Mr. Gur gained experience through his involvement, as investor or director, in multiple early-stage startups in the tech space.
Mr. Gur holds an M.Sc. in Physics and a B.Sc. in Physics from Tel Aviv University.
Nir Barkan is joining the
Company as our Chief Product and Strategy Officer starting on May 1, 2023. Mr. Barkan has previously served as our Chief Commercial Officer
from 2014 until 2018. Prior to joining SatixFy, from 2018 to 2023, Mr. Barkan was a Co-Founder Group CTO and the General Manager as well
as a Director of Curvalux, a company operating in the field of sustainable fixed wireless broadband technology. Prior to Curvalux, Mr.
Barkan served as a Satcom Product Marketing Manager at Orbit Communication Systems, as a Director of Marketing, Pre-Sale and Support at
Novelsat, as a Product Marketing Manager in SanDisk, and also served as a Strategic Marketing Manager, a Customer Programs Manager and
an application engineer at Texas Instruments. Mr. Barkan also served as an R&D Engineer and a Captain in Reserve in the IDF. Mr. Barkan
holds an MBA in Strategy and Entrepreneurship University and a B.SC in Electronics and Electricity from Tel-Aviv University.
Oren Harari is our Interim
Chief Financial Officer. Prior to that, Mr. Harari was our Vice President of Finance, a position he has held since joining SatixFy in
2018. Prior to joining SatixFy, Mr. Harari was the Chief Financial Officer of MICT inc. (NASDAQ:MICT) from 2016 to 2018, a holding company
operating in the field of telematics and commercial MRM. Prior to MICT, Mr. Harari served as a VP Finance at AGT international, a global
homeland security company, from 2012 until 2015. Prior to that, he served as a VP Finance at Raysat Antenna Systems, a leading developer
of Communication-On-The-Move antennas. Additionally, Mr. Harari was a Finance Director at Telrad Connegy (A subsidiary of Telrad Networks,
a company listed on the TASE). Mr. Harari holds an M.B.A. from the College of Management Academic Studies and is a Certified Public Accountant
in Israel.
Doron Rainish is our Chief
Technology Officer, a position he has held since co-founding SatixFy in 2012, and served as a director for the same period until October
2022. Mr. Rainish has over 40 years of experience in algorithm research and management of large teams of researchers in the field of advanced
wireless communications. Mr. Rainish is an expert in information theory and digital signal processing and has over 30 patents issued and
many publications on the field of digital communications. Prior to SatixFy, from 2006 to 2011, Mr. Rainish served as the Communication
Director for RaySat Broadcasting Corporation, and served as a research group leader for Intel Cellular Communication from 1999 to 2006.
Mr. Rainish holds a M.Sc. in Electrical Engineering from Tel Aviv University and a B.Sc. in Electrical Engineering from the Technion,
Israel Institute of Technology.
Charles A. Bloomfield is
our Chief Executive Officer of SatixFy Space Systems UK Ltd., a subsidiary of SatixFy, a position he has held since August 2020. Prior
to SatixFy, Mr. Bloomfield was the Head of Communications Products (Telecom Satellites) of Airbus Defence and Space Limited from 2015
to 2020, where he was responsible for strategic planning concerning spacecraft advanced payloads, products and equipment, including system
architecture, design, assembly, test and validation. From 2012 to 2015, Mr. Bloomfield served as the Head of Communications (Payload Electronics
UK) of Airbus Defence and Space Limited. Prior to 2012, Mr. Bloomfield held various product and operation management roles at Astrium,
an aerospace manufacturer and subsidiary of the European Aeronautic Defence and Space Company. Mr. Bloomfield holds a HND in Mechanical
and Manufacturing Systems and a Bachelors of Engineering in Manufacturing, Systems Engineering from Plymouth University, England.
Divaydeep Sikri is a Vice
President and the Chief Engineer of SatixFy, positions he has held since joining SatixFy in August 2016. In this role, Mr. Sikri leads
SatixFy’s R&D for Antenna technology, including Digital Beamforming Chip Architecture, RFIC Chip development, and Antenna system
designs and software. Prior to SatixFy, Mr. Sikry held various Staff Systems Engineer roles with Qualcomm between 2004 and 2016, where
he led various aspects of Qualcomm’s 2G/2.5G/3G/4G modem technology development. Mr. Sikry holds a M.S. in Electrical and Electronics
Engineering from the New Jersey Institute of Technology and a Bachelors in Engineering from the Netaji Subhas Institute of Technology.
Stephane Zohar is our Vice
President of VLSI, a position he has held since February 2019. Mr. Zohar has over 25 years of research and development experience in executive
and VLSI expert roles. Prior to joining SatixFy, from 2011 to 2019, Mr. Zohar served as a Director of VLSI at Multiphy, a complex signal
processing and mixed signal VLSI solution company. Prior to this, from 2005 to 2011, Mr. Zohar served as a Director of VLSI at Ethernity
Networks, a leading provider of networking and security software solutions on Field Programmable Gate Arrays (FPGAs) company, and from
1997 to 2005 he was the VLSI Manager at Metalink, a silicon solutions for wireless and wireline broadband communications company. Mr.
Zohar holds a B.Sc. in Computer Engineering from the Technion, Israel Institute of Technology with specialization in digital communication,
signal processing and VLSI.
Itzik Ben Bassat is our Executive
Vice President of Product Development and Operation since February 12, 2023. Prior to joining Satixfy, Mr. Ben Bassat served as a COO
of Nexite from 2019 until 2023. Mr. Ben Bassat also served as VP Business Development and Strategic Partnership in Flex. Prior to this,
between 2008 until 2016, Mr. Ben Bassar served as CEO of Siklu Communication, he also served as COO in Metalnik between the years 2006
until 2008. From 2002 until 2004, Mr. Ben Bassat served as the VP of R&D and CTO of Scopus Video Networks. In the years 1996 until
2002, he worked in Gilat Satellite Networks Ltd. and served as a Marketing Senior Director and Satellite IP product line as well as a
R&D Director. Mr. Ben Bassat served in the IDF – Intelligence Technical Research Department, as the head of the R&D Group,
Project Leader and R&D engineer. Mr. Ben Bassat holds a B.Sc. degree in Electrical Engineering from the Technion - Israel Institute
of Technology.
Directors
Mary P. Cotton has served
as a member of our board of directors since 2014. Ms. Cotton previously served as a at ST Engineering iDirect as CEO from 2007 to 2017,
as a director from 2007 to 2018, and as a Senior Advisor until 2022. Ms. Cotton previously served on the board of Seachange International
from 2004 to 2019 and as the chair of Seachange’s audit and compensation and governance committees. Ms. Cotton holds a B.Sc. in
accounting from Boston College.
Yair Shamir has served as
a member of our board of directors from 2007 to 2013 and since October 2018. Mr. Shamir co-founded Catalyst Investments L.P. in 1993 and
served as a Managing Partner from 1993 to 2013 and has served in this role since 2015. Mr. Shamir was elected as a member of the Israeli
Parliament (Knesset) and served as Minister of Agriculture of the State of Israel from 2013 to 2015. Mr. Shamir served as the Chairman
of the Board of the N.T.A. Metropolitan Mass Transit System from 2017 to August 2018 and as the Chairman of the Israeli Road Safety
Authorities from September 2018 until November 2020. Mr. Shamir served as the Chairman of Israel’s National Roads Company from 2011
to 2012 and Chairman of Israel Aerospace Industries Ltd. from 2005 until 2011. Mr. Shamir also served as the Chairman and Chief Executive
Officer of VCON Telecommunications Ltd. from 1997 to 2010 and Chairman of El Al (Israeli Airlines), where he led El Al’s privatization
from 2004 to 2005. Mr. Shamir holds a B.Sc. in Electronics Engineering from the Technion, Israel Institute of Technology.
Lord David L. Willetts has
served as a member of our board of directors since 2020. The Rt. Hon. Lord Willetts served as a British Member of Parliament from 1992
– 2015 and is now a member of the House of Lords. Lord Willetts served as Minister for Universities and Science in the British Government
from 2010 – 2014 and oversaw Space policy issues. Served as Adviser to Dresdner Kleinwort Bank 1997 – 2008. Lord Willetts
has served on the boards of several public companies, including Surrey Satellites Technology Ltd., a subsidiary of Airbus PLC (since 2015),
Biotech Growth Trust PLC (since 2015), Verditek Ltd, a solar cell company (since 2018), Tekcapital PLC (since 2020), and Darktrace PLC
(since its initial public offering in 2021). Lord Willetts holds a first class honors degree in politics, philosophy and economics from
Christ Church, Oxford, a constituent college of the University of Oxford, and is a visiting Professor at King’s College, London.
Richard C. Davis has been
a member of our board of directors since October 2022, and was the Chief Executive Officer and a director of Endurance from April 2021
until the consummation of the Business Combination in October 2022. Mr. Davis is a highly experienced executive
with over 25 years of experience in corporate finance, private equity and the space industry. Since July of 2022, he has served as Chief
Executive Officer of Descartes Labs, Inc., a leading provider of geospatial intelligence products. Since March 2021, he has served as
a Managing Director of ADP. He is also a founder and Managing Member of ArgoSat Advisors, a premier global advisory firm focused on the
space industry that was founded in 2009. As part of his duties, Mr. Davis sits on the boards of Descartes Labs, Sky and Space Corporation
and EarthDaily Analytics Corp. Mr. Davis was formerly an instructor pilot in the United States Air Force. He received his B.S. in Astrophysics
(cum laude) from the University of Minnesota, and his MBA from the University of Virginia.
Moshe Eisenberg has been
a member of our board of directors since October 2022. Mr. Eisenberg currently serves as the Chief Financial Officer of Camtek Ltd., a
position he has held since 2011. Prior to Camtek, Mr. Eisenberg served as the Chief Financial Officer of Exlibris, a global provider of
library automation solution for the academic market, from 2010 to 2011, and as the Chief Financial Officer of Scopus Video Networks Ltd.,
a leading provider of digital compression, decoding & video processing equipment, from 2005 to 2009. Mr. Eisenberg holds an MBA from
Tel Aviv University and a B.Sc. in Agricultural Economics from the Hebrew University of Jerusalem.
Yoram Stettiner has been
a member of our board of directors since October 2022. Dr. Stettiner currently serves as the Chief Scientist Officer at Arbe Robotics,
Ltd., a position he has held since 2016. Dr. Stettiner is a Signal Processing Ph.D. with 35 years of R&D experience. Dr. Stettiner
specializes in RTLS Radio Location and Tracking Systems, Array Processing, Sensor Fusion, Speech Signal Processing and VoIP. Dr. Stettiner
has held various leadership positions at eight startups from foundation or early stage, with five of them having gone public or acquired.
Dr. Stettiner holds a B.Sc. in Electrical Engineering, a M.Sc. and Ph.D. in Speech Signal Processing all from the Tel Aviv University.
CEO Succession
On January 15, 2023, Ido Gur became our Chief Executive Officer. He succeeded David
Ripstein, who had served as our Chief Executive Officer since June 26, 2022 after succeeding our late co-founder and Chief Executive Officer,
Mr. Yoel Gat.
CFO Succession
Mr. Yoav Leibovitch was required to step down as Chief Financial Officer in connection
with the consummation of the Business Combination pursuant to Israeli law, which stipulates that a chairman of the board of directors
of a public company should not also serve as its chief financial officer.
Notwithstanding his resignation as Chief Financial Officer, Mr. Leibovitch will remain
actively involved in SatixFy’s strategy, governance and oversight as Chairman of the board of directors and will continue to contribute
to SatixFy’s day-to-day operations as a consultant under his existing services agreement.
SatixFy has commenced the process of recruiting a new Chief Financial Officer. In the
interim, Mr. Oren Harari has been appointed as SatixFy’s Interim Chief Financial Officer.
Arrangements for Election of Directors and Members of Management
There are no arrangements or understandings with major shareholders or others pursuant
to which any of our executive officers or directors are selected.
Corporate Governance Practices
A majority of our board of directors are composed of directors who are “independent”
as defined by the rules of the NYSE, although we may decide to rely on the foreign private issuer exemption from this requirement in the
future. The board of directors is expected to establish categorical standards to assist it in making its determination of director independence.
The board of directors will assess on a regular basis the independence of directors
and will make a determination as to which members are independent. References to “SatixFy” above include any subsidiary in
a consolidated group with SatixFy. The term “executive officer” above is expected to have the same meaning specified for such
term in the NYSE listing standards.
As a foreign private issuer whose shares are listed on the NYSE, we are permitted to
follow certain home country corporate governance practices instead of certain requirements of the rules of the NYSE. We are permitted
to comply with Israeli corporate governance practices instead of the NYSE corporate governance rules (although we intend to comply with
many of these rules), provided that we disclose which NYSE requirements we are not following and
the equivalent Israeli requirements. Pursuant to this “home country practice exemption,” we:
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do not have a nominating and governance committee (and the power to nominate directors will not be limited exclusively to independent
directors); |
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did not implement and publish corporate governance guidelines; |
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do not have an lead independent or non-management director that presides over regularly scheduled meetings of the Board without the
participation of management; |
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have a compensation committee that complies with Israeli law and may not comply with all of the NYSE requirements applicable to U.S.
domestic public companies, including the requirements that the compensation committee must be composed entirely of directors determined
to be independent under NYSE compensation committee rules and conduct an independence assessment with respect to any compensation consultant,
legal counsel or other adviser that provides advice to the compensation committee; |
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adopt and approve material changes to equity incentive plans in accordance with the Israeli Companies Law, which does not impose
a requirement of shareholder approval for such actions, instead of the NYSE corporate governance rule, which requires shareholder approval
prior to an issuance of securities in connection with equity-based compensation of officers, directors, employees or consultants; and
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follow the quorum requirements for shareholder meetings under the Israeli Companies Law instead of the NYSE corporate governance
requirements, which would require 331∕3% of the total outstanding voting power of our shares present at meetings, as further described
in “Description of SatixFy Ordinary Shares — Voting Rights — Quorum Requirements;”
and |
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follow Israeli corporate governance practice in respect of private placements instead of the NYSE corporate governance requirements
to obtain shareholder approval for certain dilutive events, such as issuances that will result in a change of control, certain transactions
other than a public offering involving issuances of a 20% or greater equity interest in us and certain acquisitions of the stock or assets
of another company. |
Under the Israeli Companies Law we will be permitted to create and issue shares having
rights different from those attached to the SatixFy Ordinary Shares. For a discussion of such different rights, see “Description
of SatixFy Ordinary Shares — Anti-takeover Provisions.” SatixFy may rely on additional foreign private issuer exemptions
with respect to some or all of the other corporate governance rules.
External Directors
Under the Israeli Companies Law, companies incorporated under the laws of the State
of Israel that are “public companies,” including companies with shares listed on the NYSE are required to appoint at least
two external directors.
Pursuant to the regulations promulgated under the Israeli Companies Law, companies whose
shares are traded on specified U.S. stock exchanges, including the NYSE, which do not have a controlling shareholder (as such term is
defined in the Israeli Companies Law) and which comply with the independent director requirements and the audit committee and compensation
committee composition requirements of U.S. law and the U.S. stock exchange applicable to domestic issuers, may (but are not required to)
elect to opt out of the requirement to maintain external directors and opt out of the composition requirements under the Israeli Companies
Law with respect to the audit and compensation committees. We currently do not qualify for such exemption.
The appointment of initial external directors must be made by a general meeting of our
shareholders no later than three months following the closing of this offering, and therefore we intend to hold a meeting of shareholders
within three months of the closing of this offering for the appointment of two external directors.
The provisions of the Israeli 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:
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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 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
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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.
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The term “controlling shareholder” as used in the Israeli Companies Law
for purposes of all matters related to external directors and for certain other purposes (such as the requirements related to appointment
to the audit committee or compensation committee, as described below), means 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 50% or more of the voting rights in a company or has the right to appoint a majority of the directors of the company or its general
manager. With respect to certain matters (various related party transactions), 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. For the purpose of determining the holding percentage stated above, two or more shareholders who have a personal
interest in a transaction that is brought for the company’s approval are deemed as joint holders.
The initial term of an external director is three years. Thereafter, an external director
may be re-elected, subject to certain circumstances and conditions, by shareholders to serve in that capacity for up to two additional
three-year terms, provided that either:
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his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company’s
voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non-controlling,
disinterested shareholders voting for such re-election exceeds 2% of the aggregate voting rights in the company, subject to additional
restrictions set forth in the Israeli Companies Law with respect to affiliations of external director nominees; |
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the external director proposed his or her own nomination, and such nomination was approved in accordance with the requirements described
in the paragraph above; or |
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his or her service for each such additional term is recommended by the board of directors and is approved at a meeting of shareholders
by the same majority required for the initial election of an external director (as described above). |
Our Class I director, Yair Shamir, will hold office until our 2023 Annual General Meeting
of Shareholders. Our Class II directors, Mary Cotton and David Willetts, will hold office until our 2024 Annual General Meeting of Shareholders.
Our Class III directors, Yoav Leibovitch and Richard Davis, will hold office until our 2025 Annual General Meeting of Shareholders. The
directors (other than the outside directors) are elected by a vote of the holders of a majority of the voting power present and voting
at the meeting. Each director will hold office and, unless otherwise provided, serve on the committees to which he or she have been appointed
by the Board, until the annual general meeting of our shareholders for the year in which his or her term expires and until his or her
successor is duly elected and qualified, unless the tenure of such director expires earlier pursuant to the Companies Law or unless he
or she resigns or is removed from office.
The term of office for external directors for Israeli companies traded on certain foreign
stock exchanges, including the NYSE, may be extended indefinitely in increments of additional three-year terms, in each case 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 re-election for such additional period(s) is beneficial
to the company, and provided that the external director is re-elected subject to the same shareholder vote requirements (as described
above regarding the re- election of external directors). Prior to the approval of the re-election 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. An external director may also be removed by order of an Israeli court if, following a
request made by a director or shareholder of the company, the court finds that such external director has ceased to meet the statutory
qualifications for his or her appointment as stipulated in the Israeli Companies Law or has violated his or her 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, then the board of directors is required under the Israeli Companies Law to call a meeting of the
shareholders as soon as practicable to appoint a replacement external director. Each committee of the board of directors that exercises
the 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 and an external director must serve as chair thereof.
Under the Israeli 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
Israeli Companies Law and the regulations promulgated thereunder. Compensation of an external director is determined prior to his or her
appointment and may not be changed during his or her term subject to certain exceptions.
The Israeli Companies Law provides that a person is not qualified to be appointed 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 controlling shareholder
or any 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 chair 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 in the Israeli Companies Law as a spouse,
sibling, parent, grandparent or descendant, a spouse’s sibling, parent or descendant and the spouse of each of the foregoing persons.
Under the Israeli Companies Law, the term “affiliation” and the similar types of disqualifying relationships include (subject
to certain exceptions):
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an employment relationship; |
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a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships);
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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 appointed 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 in the Israeli Companies Law as a general
manager (i.e., chief executive officer), 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, no person may 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 an external director or if the person is an employee of the Israel
Securities Authority, or ISA, or an Israeli stock exchange. A person may also 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 Israeli 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 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
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.
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. 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.
According to the Israeli Companies Law and regulations promulgated thereunder, 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); provided that 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 independence requirements of the NYSE rules for membership on the audit committee and (iii) has accounting
and financial expertise as defined under the Israeli 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 the following: (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 or 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.
Mr. Moshe Eisenberg and Mr. Yoram Stettiner are expected to serve as SatixFy’s
external directors upon the ratification of their appointment by our shareholders at our annual general meeting of shareholders, which
we expect to hold in May 2023.
Chairman of the Board
The A&R Articles of Association provide that the chairman of the board is appointed
by the members of the board of directors and serves as chairman of the board throughout his term as a director, unless resolved otherwise
by the board of directors. Under the Israeli Companies Law, the chief executive officer (or any relative of the chief executive officer)
may not serve as the chairman of the board of directors, and the chairman (or any relative of the chairman) may not be vested with authorities
of the chief executive officer without shareholder approval consisting of a majority vote of the shares present and voting at a shareholders
meeting, provided that either:
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at least a majority of the shares of non-controlling shareholders or shareholders that do not have a personal interest in the approval
voted at the meeting are voted in favor (disregarding abstentions); or |
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the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such appointment
voting against such appointment does not exceed 2% of the aggregate voting rights in the company. |
In addition, a person subordinated, directly or indirectly, to the chief executive officer
may not serve as the chairman of the board of directors; the chairman of the board may not be vested with authorities that are granted
to those subordinated to the chief executive officer; and the chairman of the board may not serve in any other position in the company
or a controlled company, but he may serve as a director or chairman of a subsidiary.
Committees of the Board of Directors
The board of directors has the following standing committees: an audit committee and
a compensation committee.
Audit Committee
Israeli Companies Law Requirements
Under the Israeli Companies Law, the board of directors of a public company must appoint
an audit committee (the “Audit Committee”). The audit committee must be comprised
of at least three directors, including all of the external directors, one of whom must serve as chair of the committee. The audit committee
may not include the (i) chair of the board; (ii) a controlling shareholder of the company; (iii) a relative of a controlling shareholder;
(iv) 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 (v) a director who derives most of his or her income from a controlling shareholder. In addition, under
the Israeli Companies Law, the audit committee of a publicly traded company must consist of a majority of unaffiliated directors. In general,
an “unaffiliated director” under the Israeli Companies Law is defined as either an external director or as a director who
meets the following criteria:
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he or she meets the qualifications for being appointed as an external director, except for the requirement (i) that the director
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)for accounting and financial expertise or professional qualifications; and |
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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 his or her service as a director shall not be deemed to interrupt the continuity of the service. |
A majority of our audit committee (each, as identified in the second paragraph under
“— Listing Requirements” below) are external directors under the Israeli Companies
Law, thereby fulfilling the foregoing Israeli law requirement for the composition of the audit committee.
Listing Requirements
Under the corporate governance rules of the NYSE, listed companies are 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.
The members of the Audit Committee are our two external directors, Messrs. Moshe Eisenberg
and Yoram Stettiner, and Ms. Mary P. Cotton. We have designated Mr. Moshe Eisenberg and Ms. Mary P. Cotton as “audit committee financial
experts” as defined by the SEC and each member of the Audit Committee is “financially literate” under the NYSE rules.
The board of directors has determined that each member of the Audit Committee is “independent” as defined under the NYSE rules
and Exchange Act rules and regulations.
Audit Committee Role
Our board of directors has adopted an audit committee charter setting forth the responsibilities
of the audit committee, which are consistent with the Israeli Companies Law, the SEC rules, and the corporate governance rules of the
NYSE. These responsibilities include:
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• |
retaining and terminating our independent auditors, subject to ratification by the board of directors and by the shareholders;
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• |
pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; |
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• |
overseeing the accounting and financial reporting processes of our company; |
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• |
managing audits of our financial statements; |
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• |
preparing all reports as may be required of an audit committee under the rules and regulations promulgated under the Exchange Act;
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• |
reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication, filing,
or submission to the SEC; |
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• |
recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement
fees and terms, in accordance with the Israeli Companies Law as well as approving the yearly or periodic work plan proposed by the internal
auditor; |
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• |
reviewing with counsel, as deemed necessary, legal and regulatory matters that may have a material impact on the financial statements;
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• |
identifying irregularities in our business administration, including by consulting with the internal auditor (if any) or with the
independent auditor, and suggesting corrective measures to the board of directors; |
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• |
reviewing policies and procedures with respect to transactions (other than transactions related to the compensation or terms of services)
between the company and officers and directors, or affiliates of officers or directors, or transactions that are not in the ordinary course
of the Company’s business and deciding whether to approve such acts and transactions if so required under the Israeli Companies
Law; and |
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• |
establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to
be provided to such employees. |
Additionally, under the Israeli Companies Law, the role of the audit committee includes
the identification of irregularities in our business management, among other things, by consulting with the internal auditor or our independent
auditors and suggesting an appropriate course of action to the board of directors. The audit committee is required to assess the company’s
internal audit system and the performance of its internal auditor. The Israeli Companies Law also requires that the audit committee assess
the scope of the work and compensation of the company’s external auditor. In addition, the audit committee is required to determine
whether certain related party actions and transactions are “material” or “extraordinary” for the purpose of the
requisite approval procedures under the Israeli Companies Law and whether certain transactions with a controlling shareholder will be
subject to a competitive procedure.
Compensation Committee
Israeli Companies Law Requirements
Under the Israeli Companies Law, the board of directors of a public company must appoint
a compensation committee (the “Compensation Committee”). The compensation committee
generally must be comprised of at least three directors, including all of the external directors, who must constitute a majority of the
members of the compensation committee. The chair of the compensation committee must be an external director. 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 Israeli Companies Law restrictions as the audit committee as to who may not
be a member of the compensation committee. Each member of our compensation committee (each, as identified in the second paragraph under
“— Listing Requirements” below) fulfills the foregoing Israeli law requirements
related to the composition of the compensation committee.
Listing Requirements
Under the corporate governance rules of the NYSE, listed companies are required to maintain
a compensation committee consisting of at least two independent directors.
The members of the Compensation Committee are our two external directors, Messrs. Moshe
Eisenberg and Yoram Stettiner, and Ms. Mary P. Cotton. The board of directors has determined that each member of the Compensation Committee
is “independent” as defined under the NYSE listing standards, taking into consideration the additional independence criteria
applicable to the members of a compensation committee. The Compensation Committee has the authority to retain compensation consultants,
outside counsel and other advisers.
Compensation Committee Role
In accordance with the Israeli Companies Law, the responsibilities of the compensation
committee are, among others, as follows:
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• |
recommending to the board of directors with respect to the approval of the compensation policy for “office holders” (a
term used under the Israeli Companies Law, which essentially means directors and executive officers) and, once every three years, regarding
any extensions to a compensation policy that has been in effect for a period of more than three years; |
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• |
reviewing the implementation of the compensation policy and periodically recommending to the board of directors with respect to any
amendments or updates of the compensation plan; |
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• |
resolving whether or not to approve arrangements with respect to the terms of office and employment of office holders; and
|
|
• |
exempting, under certain circumstances, from the requirement of approval by the general meeting of shareholders, transactions with
a candidate to serve as the chief executive officer of SatixFy. |
Our board of directors has adopted a compensation committee charter setting forth the
responsibilities of the committee, which include among others:
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• |
recommending to our board for its approval a compensation policy in accordance with the requirements of the Israeli Companies Law
as well as other compensation policies, incentive-based compensation plans and equity-based compensation plans, and overseeing the development
and implementation of such policies and recommending to our board of directors any amendments or modifications the committee deems appropriate,
including as required under the Israeli Companies Law; |
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• |
reviewing and approving the granting of options and other incentive awards to our Chief Executive Officer and other executive officers,
including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other
executive officers, including evaluating their performance in light of such goals and objectives; |
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• |
approving and exempting certain transactions regarding office holders’ compensation pursuant to the Israeli Companies Law;
and |
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• |
administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and
interpreting such plans and the awards and agreements issued pursuant thereto, and making awards to eligible persons under the plans and
determining the terms of such awards. |
Compensation Policy under the Israeli Companies Law
In general, under the Israeli Companies Law, a public company must have a compensation
policy approved by the board of directors after receiving and considering the recommendations of the compensation committee. In addition,
a compensation policy must be approved at least once every three years, first, by the issuer’s board of directors, upon recommendation
of its compensation committee, and second, by a simple majority of the ordinary shares present, in person or by proxy, and voting at a
general shareholders meeting, provided that either:
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• |
such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and do not have
a personal interest in such compensation policy and who are present and voting (excluding abstentions); or |
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• |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation
policy and who vote against the policy, does not exceed 2% of the company’s aggregate voting rights. |
In the event that the shareholders fail to approve the compensation policy in a duly
convened meeting, the board of directors may nevertheless override that decision, provided that the compensation committee and then the
board of directors decide, on the basis of detailed reasons and after further review of the compensation policy, that approval of the
compensation policy is for the benefit of the company despite the failure of the shareholders to approve the policy.
If a company that adopts a compensation policy in advance of its initial public offering
(or in this case, prior to the closing of the Business Combination) describes the policy in its prospectus for such offering, then that
compensation policy shall be deemed validly adopted in accordance with the Israeli Companies Law and will remain in effect for term of
five years from the date such company becomes a public company.
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 as set forth in the Israeli
Companies Law, including advancement of the company’s objectives, business plan and long-term strategy, and 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 the following additional factors:
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• |
the education, skills, experience, expertise and accomplishments of the relevant office holder; |
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• |
the office holder’s position, responsibilities and prior compensation agreements with him or her; |
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• |
the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the
company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost,
the average and median salary of the employees of the company, as well as the impact of such disparities on the work relationships in
the company; |
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• |
if the terms of employment include variable components — the possibility of reducing variable components at the discretion
of the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components; and
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• |
if the terms of employment include severance compensation — the term of employment or office of the office holder, the terms
of his or her compensation during such period, the company’s performance during such period, his or her individual contribution
to the achievement of the company goals and the maximization of its profits and the circumstances under which he or she is leaving the
company. |
The compensation policy must also include, among other things:
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• |
with regard to variable components of compensation: |
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• |
with the exception of office holders who report directly to the chief executive officer, provisions determining the variable components
on the basis of long-term performance and on measurable criteria; however, the company may determine that an immaterial part of the variable
components of the compensation package of an office holder shall be awarded based on non-measurable criteria, if such amount is not higher
than three monthly salaries per annum, while taking into account such office holder’s contribution to the company; and |
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• |
the ratio between variable and fixed components, as well as the limit on the values of variable components at the time of their grant.
|
|
• |
a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation
policy, any amounts paid as part of his or her terms of employment, if such amounts were paid based on information later to be discovered
to be wrong, and such information was restated in the company’s financial statements; |
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• |
the minimum holding or vesting period of variable equity-based components to be set in the terms of office or employment, as applicable,
while taking into consideration long-term incentives; and |
|
• |
a limit on retirement grants. |
Our compensation policy is designed to promote retention and motivation of directors
and executive officers, incentivize superior individual excellence, align the interests of our directors and executive officers with our
long-term performance and provide a risk management tool. To that end, a portion of an executive officer compensation package is targeted
to reflect our short and long-term goals, as well as the executive officer’s individual performance. On the other hand, its compensation
policy includes measures designed to reduce the executive officer’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 officer and minimum vesting periods for equity-based compensation.
The compensation policy also addresses our executive officers’ individual characteristics
(such as their respective positions, education, scope of responsibilities and contribution to the attainment of its goals) as the basis
for compensation variation among its executive officers and considers the internal ratios between compensation of its executive officers
and directors and other employees. Pursuant to our compensation policy, the compensation that may be granted to an executive officer may
include: base salary, 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 or outstanding company performance), equity-based compensation, benefits and retirement and termination
of service arrangements and the compensation that may be granted to the chairman of our board of directors may include, among others,
an annual cash retainer, annual bonuses and other cash bonuses as an executive officer other than our chief executive officer and equity
based compensation. All cash bonuses are limited to a maximum amount linked to the executive officer’s base salary. In addition,
the total variable compensation components (cash bonuses and equity-based compensation) may not exceed 90% of each executive officer’s
total compensation package with respect to any given calendar year.
An annual cash bonus may be awarded to executive officers and the chairman of our board
of directors upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may be granted to our
executive officers other than its chief executive officer is based on performance objectives and a discretionary evaluation of the executive
officer’s overall performance by the chief executive officer. The annual cash bonus that may be granted to executive officers other
than our chief executive officer and to the chairman of our board of directors may be based entirely on a discretionary evaluation. Furthermore,
our chief executive officer is entitled to recommend performance objectives, and such performance objectives will be approved by the Compensation
Committee (and, if required by law, by our board of directors).
The performance measurable objectives of our chief executive officer will be determined
by our Compensation Committee and board of directors. A non-material 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 the compensation policy for our executive officers
is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus. Primary objectives
include enhancing the alignment between the executive officers’ interests and our long-term interests and those of its shareholders
and strengthening the retention and the motivation of executive officers in the long term. Our compensation policy provides for executive
officer compensation in the form of share options or other equity-based awards, such as restricted shares and RSUs, in accordance with
its share incentive plan then in place. All equity-based incentives granted to executive officers shall be subject to vesting periods
in order to promote long-term retention of the awarded executive officers. Equity-based compensation shall be granted from time to time
and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications,
role and the personal responsibilities of the executive officer.
In addition, the compensation policy contains compensation recovery provisions which
allow us under certain conditions to recover bonuses paid in excess, enables its chief executive officer to approve immaterial changes
in the terms of employment of an 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 its executive officers and directors to the maximum extent permitted by Israeli
law, subject to certain limitations as set forth therein.
The compensation policy also provides for compensation to the members of our board of
directors either (i) in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation and Expenses
of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded on Stock Exchanges Outside
of Israel) of 2000, as such regulations may be amended from time to time, or (ii) in accordance with the amounts determined in the compensation
policy.
Compensation of Directors and Executive Officers
Directors
Under the Israeli Companies Law, the compensation of a public company’s directors
requires the approval of (i) its compensation committee, (ii) its board of directors and, unless exempted under regulations promulgated
under the Israeli Companies Law, (iii) the approval of its shareholders at a general meeting. In addition, if the compensation of a public
company’s directors is inconsistent with the company’s compensation policy, then those inconsistent provisions must be separately
considered by the compensation committee and board of directors, and approved by the shareholders by a special vote in one of the following
two ways:
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• |
at least a majority of the shares of non-controlling shareholders or shareholders that do not have a personal interest in the approval
voted at the meeting are voted in favor (disregarding abstentions); or |
|
• |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such appointment
voting against the inconsistent provisions of the compensation package does not exceed 2% of the aggregate voting rights in the company.
|
Executive Officers other than the Chief Executive Officer
The Israeli Companies Law requires the compensation of a public company’s office
holders (other than the chief executive officer) be approved in the following order: (i) the compensation committee, (ii) the company’s
board of directors, and (iii) if such compensation arrangement is inconsistent with the company’s stated compensation policy, the
company’s shareholders (by a special vote as discussed above with respect to the approval of the compensation that is inconsistent
with the compensation policy).
However, there are exceptions to the foregoing approval requirements with respect to
non-director office holders. If the shareholders of the company do not approve the compensation of a non-director office holder, the compensation
committee and board of directors may in special circumstances override the shareholders’ disapproval for such non-director office
holder provided that the compensation committee and the board of directors each document the basis for their decision to override the
disapproval of the shareholders and approve the compensation.
An amendment to an existing compensation arrangement with a non-director office holder
requires only the approval of the compensation committee, if the compensation committee determines that the amendment is immaterial. However,
if the non-director office holder is subordinate to the chief executive officer, an amendment to an existing compensation arrangement
shall not require the approval of the compensation committee if (i) the amendment is approved by the chief executive officer, (ii) the
company’s compensation policy allows for such immaterial amendments to be approved by the chief executive officer and (iii)the engagement
terms are consistent with the company’s compensation policy.
Chief Executive Officer
Under the Israeli Companies Law, the compensation of a public company’s chief
executive officer is required to be approved by: (i) the company’s compensation committee, (ii) the company’s board of directors
and (iii) the company’s shareholders (by a special vote as discussed above with respect to the approval of director compensation
that is inconsistent with the compensation policy). However, if the shareholders of the company do not approve the compensation arrangement
with the chief executive officer, the compensation committee and board of directors may in special circumstances override the shareholders’
decision provided that they each document the basis for their decision and the compensation is in accordance with the company’s
compensation policy.
In the case of a new chief executive officer, the compensation committee may waive the
shareholder approval requirement with regard to the compensation of a candidate for the chief executive officer position if the compensation
committee determines that: (i) the compensation arrangement is consistent with the company’s compensation policy, (ii) the chief
executive officer candidate did not have a prior business relationship with the company or a controlling shareholder of the company and
(iii) subjecting the approval of the engagement to a shareholder vote would impede the company’s ability to employ the chief executive
officer candidate. However, if the chief executive officer candidate will serve as a member of the board of directors, such candidate’s
compensation terms as chief executive officer must be approved in accordance with the rules applicable to approval of compensation of
directors.
Aggregate Compensation of Directors and Executive Officers
The aggregate compensation (not including bonuses or share-based compensation) paid
by us and our subsidiaries to our executive officers and directors as a group for the year ended December 31, 2022 was approximately $8.2
million (including amounts set aside or accrued to provide pension, severance, retirement or similar benefits), and does not include business
travel, relocation, professional and business association dues and expenses reimbursed to office holders, and other benefits commonly
reimbursed or paid by companies in Israel. This amount includes bonuses earned with respect to 2022. It does not include the grant-date
value of share-based compensation awarded in 2022.
As of December 31, 2022, options to purchase 4,190,966 of our ordinary shares granted
to our executive officers and directors as a group were outstanding under our equity incentive plans at a weighted average exercise price
of $2.33 per ordinary share.
The table and summary below outline the compensation granted to our five highest compensated
directors and executive officers during the year ended December 31, 2022. The compensation detailed in the table below refers to actual
compensation granted or paid to the director or officer during the year 2022 and was paid in New Israel Shekels and converted into U.S.
dollars for purposes of the table below at the exchange rate of NIS 3.5/U.S.$1.00.
|
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|
Value of Equity- |
|
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|
|
|
|
|
|
Base Salary |
|
|
Value of |
|
|
|
|
|
Based |
|
|
|
|
|
|
|
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|
or Other |
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|
Social |
|
|
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Compensation |
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All Other |
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Name and Position of Director or Officer |
|
Payment (1) |
|
|
Benefits (2) |
|
|
Bonuses |
|
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Granted (3) |
|
|
Compensation (4) |
|
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Total |
|
Yoav Leibovitch |
|
|
1,065,000 |
|
|
|
0 |
|
|
|
4,059,967 |
|
|
|
38,694 |
|
|
|
0 |
|
|
|
5,163,66 |
|
David Ripstein |
|
|
188,571 |
|
|
|
52,800 |
|
|
|
200,000 |
|
|
|
144,243 |
|
|
|
12,000 |
|
|
|
597,614 |
|
Simona Gat (5) |
|
|
660,000 |
|
|
|
0 |
|
|
|
40,178 |
|
|
|
38,694 |
|
|
|
0 |
|
|
|
738,872 |
|
Oren Harari |
|
|
177,143 |
|
|
|
49,600 |
|
|
|
225,000 |
|
|
|
41,990 |
|
|
|
0 |
|
|
|
493,733 |
|
Doron Rainish |
|
|
161,143 |
|
|
|
45,120 |
|
|
|
68,571 |
|
|
|
3,183 |
|
|
|
21,017 |
|
|
|
299,034 |
|
_____________________________
|
(1) |
“Base Salary or Other Payment” means the aggregate yearly gross monthly salaries or other payments with respect to the
Company’s executive officers and members of the board of directors for the year 2022. |
|
(2) |
“Social Benefits” include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites
may include, to the extent applicable to the relevant officers, payments, contributions and/or allocations for savings funds (e.g., Managers’
Life Insurance Policy), education funds (referred to in Hebrew as "keren hishtalmut"), pension, severance, vacation, car or car allowance,
rent for relocated officers, medical insurances and benefits, risk insurance (e.g., life, disability, accident), telephone, convalescence
pay, payments for social security, tax gross-up payments and other benefits and perquisites. |
|
(3) |
Represents the equity-based compensation expenses recorded in the Company's consolidated financial statements for the year ended
December 31, 2022, calculated in accordance with accounting guidance for equity-based compensation. For a discussion on the assumptions
used in reaching this valuation, see Note 17 to our consolidated financial statements included elsewhere in this prospectus. |
|
(4) |
“All Other Compensation” includes, among other things, car-related expenses (including tax gross-up), communication expenses,
basic health insurance, and holiday presents. |
|
(5) |
Ms. Gat resigned from her positions as President of SatixFy, the CEO and a director of Satixfy UK Limited, and a director of Satixfy
Bulgaria effective April 30, 2023. |
Code of Ethics
We have adopted a code of ethics applicable to the board of directors and all employees,
which covers a broad range of matters including the handling of conflicts of interest, compliance issues and other corporate policies
such as insider trading and equal opportunity and non-discrimination standards.
Equity Incentive Plans
2020 Share Award Plan
On May 12, 2020, we adopted our 2020 Share Award Plan and the EMI options Addendum to
the 2020 Share Award Plan, and on September 30, 2020, we adopted the U.S. Addendum to the 2020 Share Award Plan (as amended from time
to time, together the “Plans”). The purpose of the 2020 Share Award Plan is to advance
our and our shareholders’ interests by attracting and retaining the best available personnel for positions of substantial responsibility
and provide additional incentive to our officers, directors, employees and other key persons, upon whose judgment, initiative and efforts
we depend for the successful conduct of our business, to acquire a proprietary interest in the Company and/or its Affiliates. Under the
2020 Share Award Plan, select eligible participants have been granted share options and RSUs. The 2020 Share Award Plan is administered
by our board of directors or, at the discretion of our board, a committee of directors.
Authorized Shares. The 2020 Share Award Plan
provides for the grant of options and/or shares, including restricted shares, and/or RSUs and/or stock appreciation rights and/or performance
units, performance shares and other stock or cash awards to employees, officers, directors, advisors and consultants of SatixFy and its
subsidiaries. As of April 24, 2023, we had 6,770,270 SatixFy Ordinary Shares underlying outstanding vested and unvested options and 3,019,619
SatixFy Ordinary Shares underlying unvested RSUs (with no RSUs vested as of such date). The maximum number of shares which may be issued
under the 2020 Share Award Plan is determined by the board of directors from time to time, subject to the maximum authorized number of
shares we may issue under the A&R Articles of Association. However, we have designated and registered for issuance up to 3,000,000
additional shares under the 2020 Share Award Plan. The maximum number of ordinary shares that may be awarded specifically in the form
of incentive stock options only under the Plans and the U.S. Addendum is one million ordinary shares.
Administration. SatixFy’s board
of directors, or a committee of SatixFy’s board of directors, appointed by the board, administers the Plans. Under the Plans, the
administrator has the authority, subject to applicable law and subject to terms and conditions included in the Plans, to construe and
interpret the terms of the Plans and any award granted pursuant to the Plans, to designate recipients of option grants, to determine the
fair market value of a SatixFy Ordinary Share, to determine and amend the terms of awards, including the exercise price of options, to
accelerate the vesting periods of the awards granted under the Plans, the time and vesting schedule applicable to an option grant or the
method of payment for an award and make all other determinations necessary for the administration of the Plans. The administrator also
has the authority to amend and rescind rules and regulations relating to the Plans or terminate the Plans at any time before their expiration.
Eligibility. The Plans provide for granting
awards under various tax regimes, including in compliance with Section 102 (“Section 102”) of the Israeli Income Tax Ordinance
(New Version), 5721-1961, or the “Ordinance,” and Section 3(i) of the Ordinance, and for awards granted to our United States
employees or service providers, including those who are deemed to be residents of the United States for tax purposes, Section 422 of the
Code and Section 409A of the Code.
Section 102 allows employees, directors and officers who are not controlling shareholders
and are considered Israeli residents to receive favorable tax treatment for compensation in the form of shares or options under certain
terms and conditions. Our non-employee consultants and/or controlling shareholders who are considered Israeli residents may only be granted
options under section 3(i) of the Ordinance, which does not provide for similar tax benefits. Section 102 includes two alternatives for
tax treatment involving the issuance of options or shares to a trustee for the benefit of the grantees and also includes an additional
alternative for the issuance of options or shares directly to the grantee. Section 102(b)(2) of the Ordinance, the most favorable tax
treatment for the grantee, permits the issuance to a trustee under the “capital gain track.”
Options granted under the U.S. Addendum to the 2020 Share Award Plan to our employees
who are U.S. residents may qualify as “incentive stock options” within the meaning of Section 422 of the Code, or may be non-qualified
stock options. The exercise price of a stock option may not be less than 100% of the fair market value of the underlying share on the
date of grant (or 110% in the case of incentive stock options granted to certain significant shareholders).
Grants. All awards granted pursuant to the Plans
are evidenced by an award agreement that sets forth the terms and conditions of the award, including the tax designation, expiration date,
number of shares subject to such award, vesting schedule, exercise price, and conditions. Each award will expire ten years from the date
of the grant thereof, unless such shorter term of expiration is otherwise designated by the administrator or required by applicable law.
Exercise. An award under the Plans may be exercised
by providing SatixFy with a written or electronic notice of exercise and full payment of the exercise price for such shares underlying
the award, if applicable, in such form and method as may be determined by the administrator and permitted by applicable law and subject
to the Plans. An award may not be exercised for a fraction of a share. With regard to tax withholding, exercise price and purchase price
obligations arising in connection with awards under the Plans, the administrator may, in its discretion, among others, accept cash or
otherwise provide for net withholding of shares.
Termination of Employment. In the event of termination
of a grantee’s employment or service with SatixFy or any of its affiliates, all vested and exercisable awards held by such grantee
as of the date of termination may be exercised within three months after such date of termination, unless otherwise determined by the
administrator. After such three month period, all such unexercised awards will terminate and the shares covered by such awards shall again
be available for issuance under the Plans.
In the event of termination of a grantee’s employment or service with SatixFy
or any of its affiliates due to such grantee’s death or total and permanent disability, all vested and exercisable awards held by
such grantee as of the date of termination may be exercised by the grantee or the grantee’s legal guardian, estate, or by
a person who acquired the right to exercise the award by bequest or inheritance, as applicable, within twelve months after such date of
termination, unless otherwise provided by the administrator or specified in the terms and conditions included in the Plans. Any awards
which are unvested as of the date of such termination or which are vested but not then exercised within the twelve months period following
such date, will terminate and the shares covered by such awards shall again be available for issuance under the Plans.
Notwithstanding any of the foregoing, if a grantee’s employment or services with
SatixFy or any of its affiliates is terminated for “cause” (as defined in the 2020 Share Award Plan), unless otherwise determined
by the administrator or specified in the terms and conditions included in the Plans, all outstanding awards held by such grantee (whether
vested or unvested) will terminate on the date of such termination and all shares issued upon previous exercise or vesting of awards of
such grantee shall be subject to repurchase at their nominal value, for no value or for the exercise price previously received by SatixFy,
as the administrator deems fit, and the shares covered by such awards shall again be available for issuance under the Plans.
Transactions. In the event of a shares split,
reverse shares split, shares dividend, recapitalization, combination or reclassification of our shares, or any other increase or decrease
in the number of issued shares effected without receipt of consideration by SatixFy (but not including the conversion of any convertible
securities of SatixFy), the administrator in its sole discretion may, and where required by applicable law shall, without the need for
a consent of any holder, make an appropriate adjustment in order to adjust (i) the number of shares reserved and available for the outstanding
awards and (ii) the exercise price per share covered by any award; provided that any fractional shares resulting from such adjustment
shall be rounded to the nearest whole share.
In the event of a single transaction and/or a series of transactions in connection with
any of the following events: (i) the sale, transfer or other disposition of all or substantially all of the assets of SatixFy for cash,
securities or any other asset, (ii) a sale (including an exchange) of all or substantially all of the shares of SatixFy, (iii) a merger,
acquisition, consolidation, amalgamation or like transaction of SatixFy with or into another corporation whereas SatixFy is not the surviving
company, (iv) a scheme of arrangement for the purpose of effecting such sale, merger, acquisition, consolidation or amalgamation, or (v)
such other transaction that is determined by the Board to be a transaction having a similar effect a merger or consolidation of SatixFy,
then without the consent or action of the grantee unless otherwise determined by the administrator, any outstanding award will be assumed
or substituted by such successor corporation.
In the event that the awards are not assumed or substituted (all or in part), the administrator
may (a) provide the grantee with the option to exercise the award as to all or part of the shares, and may provide for an acceleration
of an award, as to all or part of the shares covered by the award which would not otherwise be exercisable or vested and/or cancel all
of the unvested awards and/or (b) cancel the award and pay in cash and/or shares of SatixFy to the grantees for any vested awards, as
determined by the administrator as fair in the circumstances. Notwithstanding the foregoing, the administrator may upon such events amend,
modify or terminate the terms of any award as it shall deem, in good faith, appropriate.
In the event that SatixFy distributes bonus shares, the exercise price of options outstanding
as of the record date of such distribution will not be adjusted; however, the number of ordinary shares covered by each such option and
the number of ordinary shares which have been authorized for issuance under the Plans but as to which no options or other award have yet
been granted or which have been returned to the Plans upon cancellation or expiration of an option or other award, shall be proportionately
adjusted to the increase in the number of issued ordinary shares. In the case of a rights issue made by SatixFy, the number of ordinary
shares covered options granted as of the record date of such distribution will be proportionately and equitably adjusted so as to maintain
through such an event the proportionate equity portion represented by the rights issue, such that the number of ordinary shares underlying
the relevant option will be proportionately adjusted to the benefit component underlying the rights issuance as represented by the difference
between the closing price of SatixFy’s ordinary shares on the stock exchange on the last trading day prior to the “ex-rights”
day and the base price of SatixFy’s shares on the stock exchange following the “ex- rights” day. In the event of a distribution
of cash dividend or in kind dividend to SatixFy’s shareholders, the exercise price of options outstanding as of the record date
of such distribution of a dividend, will be adjusted, such that the exercise price of such outstanding options will be decreased by the
gross dividend amount per Share (or its monetary value in the event of a dividend in kind). This adjustment shall be subject to and in
accordance with the terms of any applicable ruling issued by the Israeli Tax Authority, to the extent applicable to the options. In no
event will the exercise price of the options outstanding as of the record date be adjusted to a price lower than the minimum exercise
price set forth in applicable law. All these adjustments will be subject to and in accordance with the terms of any applicable ruling
issued by the Israel Tax Authority to the extent required.
Employment and Incentive Arrangements with our Directors and CEO
Employment Agreement — Mr. Ido Gur
On January 12, 2023, SatixFy Israel Ltd. entered into an agreement with Mr. Ido Gur,
effective January 15, 2023, pursuant to which Mr. Gur agreed to provide CEO services to SatixFy Israel Ltd. and its affiliates. The Compensation
to be paid to Mr. Gur pursuant to this agreement consists of, (i) a monthly gross salary of NIS 130,000 (which is equivalent to approximately
$37,000 as of the date hereof), (ii) an annual bonus opportunity of up to the NIS equivalent of $370,000, subject to satisfaction of certain
performance criteria, (iii) 1,500,000 RSUs that settle into 1,500,000 SatixFy Ordinary Shares and vest quarterly over four years with
an initial cliff vesting of 25% of such RSUs to vest on the first anniversary of the date of the employment agreement, with the remainder
vesting in 12 equal quarterly installments, provided that (1) if a change of control (meaning a simultaneous ownership change of more
than 50% of the outstanding SatixFy shares) occurs, all of the unvested RSUs shall automatically vest, and (2) if Mr. Gur’s employment
is terminated not for cause or he resigns in certain circumstances (a) between the first and second anniversary of the date of the employment
agreement, then 500,000 of the unvested RSUs shall automatically vest or (b) after the second anniversary of the date of the employment
agreement, then all unvested RSUs shall automatically vest, and (iv) other customary executive perquisites and benefits.
Separation Agreement — Mr. David Ripstein
On January 12, 2023, we entered into a separation agreement with Mr. David Ripstein,
our former CEO, pursuant to which SatixFy and Mr. Ripstein mutually agreed to the termination of Mr. Ripstein’s employment as CEO
effective January 13, 2023. In connection with the termination of Mr. Ripstein’s employment as CEO, SatixFy agreed to provide compensation
to Mr. Ripstein consisting of, (i) continued payment of regular salary and access to certain benefits under his existing employment agreement
through his employment termination date on April 12, 2023, (ii) a one-time bonus of $125,000 for fiscal year 2022 pursuant to Mr. Ripstein’s
existing employment agreement, (iii) a one-time bonus of $95,000 payable on April 12, 2023, (iv) a one-time payment of $30,000 in exchange
for Mr. Ripstein’s agreement to assist with transition of our new CEO, and (v) other customary terms and conditions.
Employment Agreement — Mr. David Ripstein
SatixFy Israel Ltd. entered into an agreement with Mr. David Ripstein, effective June
26, 2022, pursuant to which Mr. Ripstein agreed to provide CEO services to SatixFy Israel Ltd. and its affiliates. The compensation that
was paid to Mr. Ripstein pursuant to this agreement consisted of (i) a monthly gross salary of NIS 110,000 (which is equivalent to approximately
$34,000 as of the date of April 1, 2023), (ii) a signing bonus in the NIS equivalent amount of $100,000, payable six months after the
effective date of the agreement, (iii) an annual bonus opportunity of up to the NIS equivalent of $250,000, prorated to a maximum of $125,000
for fiscal year 2022, of which $100,000 was guaranteed and which was paid, (iv) options to purchase 800,000 ordinary shares of SatixFy
at an exercise price of $2.50 per share issued pursuant to the terms of the 2020 Share Award Plan (all of which will be forfeited in connection
with the termination of Mr. Ripstein’s employment as described above), and (v) other customary executive perquisites and benefits.
Services Agreement — Ms. Simona Gat
SatixFy Israel Ltd. and Ilan Gat were parties to a Services Agreement, effective January
1, 2013, and amended as of June 27, 2017, September 6, 2020 and January 4, 2021, for services provided by Simona Gat. Pursuant to this
agreement, Ms. Simona Gat provided presidential and management services to SatixFy Israel Ltd. and its affiliates. The compensation paid
to Ilan Gat for Ms. Gat’s services consisted of (i) a monthly fee of $55,000, (ii) a yearly bonus of 0.67% out of the incremental
year to year growth in equity in the consolidated financial statements of SatixFy Communications Ltd. and (iii) an annual bonus of 0.67%
out of the incremental year to year growth in revenues of SatixFy Communications Ltd. The service agreement further provided for garden
leave equal to (i) three months’ base salary upon termination due to mutual written agreement or (ii) six months’ base salary
upon termination without cause (if such termination is approved by 76% of the board of directors). The service agreement further provided
for (i) a one year non-compete with respect to any business “anywhere in the world” that competes, directly or indirectly,
with SatixFy Israel Ltd. or is based on similar technology to that of SatixFy Israel Ltd., (ii) standard confidentiality provisions and
(iii) duty to perfect, enforce or defend trade secrets.
On April 30, 2023, SatixFy Communications Ltd. and Ilan Gat Ltd. entered into a Separation
Agreement pursuant to which the Services Agreement was further amended to provide that effective April 30, 2023, Ms. Gat resigned from
all positions at the Company and its subsidiaries, including serving as the President of the Company.
Employment Agreement — Mr. Itzik Ben Bassat
SatixFy Israel Ltd. SatixFy Israel Ltd. entered into an agreement on February 7, 2023
with Mr. Itzik Ben Bassat, effective February 12, 2023, pursuant to which Mr. Ben Bassat agreed to serve as EVP Product Development and
Operation. The compensation to be paid to Mr. Ben Bassat pursuant to this agreement consists of, (i) a monthly gross salary of NIS 75,000
(which is equivalent to approximately $21,000 as of March 1, 2023), (ii) an annual bonus opportunity of up to NIS 450,000 (which is equivalent
to approximately $125,000 as of March 1, 2023), (iii) 400,000 RSUs convertible into 400,000 ordinary shares, which shall vest yearly in
equal installments over four years, provided that 25% of the RSUs shall vest on the first anniversary of the agreement and if a change
of control (meaning a simultaneous ownership change of more than 50% of the outstanding SatixFy shares) occurs within 24 months of the
effective date of the agreement and thereafter Mr. Ben Bassat’s employment with the Company is terminated by the Company without
cause, 100% of the unvested RSUs shall automatically vest, and (iv) other customary executive perquisites and benefits.
Employment Agreement — Mr. Oren Harari
SatixFy Israel Ltd. entered into an agreement on April 1, 2018 with Mr. Oren Harari,
which was subsequently amended on October 28, 2022, pursuant to which Mr. Oren Harari agreed to serve as Interim Chief Financial Officer.
The compensation to be paid to Mr. Oren Harari pursuant to this agreement consists of, (i) a monthly gross salary of NIS 60,000 (which
is equivalent to approximately $16,000 as of March 1, 2023), (ii) an annual bonus opportunity in 2023 of up to four times the then applicable
month salary, and (iii) other customary executive perquisites and benefits.
Employment Agreement — Mr. Nir Barkan
SatixFy Israel Ltd. entered into an agreement on February 19, 2023 with Mr. Nir Barkan,
effective May 1, 2023, pursuant to which Mr. Nir Barkan agreed to serve as Chief Product and Strategy Officer. The compensation to be
paid to Mr. Nir Barkan pursuant to this agreement consists of, (i) a monthly gross salary of NIS 80,000 (which is equivalent to approximately
$22,000 as of March 1, 2023), (ii) a signing bonus of NIS 120,000 (which is equivalent to approximately $33,000 as of March 1, 2023),
(iii) an annual bonus opportunity of up to $160,000 for 2023 and, for subsequent years, $200,000, (iv) 500,000 RSUs, which shall vest
quarterly in equal installments over 15 quarters, provided that 25% of the RSUs vests on January 1, 2024 and if a change of control (meaning
a simultaneous ownership change of more than 50% of the outstanding SatixFy shares) occurs within 24 months of the effective date of the
agreement and thereafter Mr. Barkan’s employment with the Company is terminated by the Company without cause, 100% of the unvested
RSUs shall automatically vest, and (v) other customary executive perquisites and benefits.
Services Agreement — Mr. Yoav Leibovitch
SatixFy Israel Ltd. and RaySat Ltd. (“RaySat”),
an entity organized under the laws of the State of Israel and controlled by Mr. Yoav Leibovitch our Chairman of the board of directors
and one of our significant shareholders, are parties to a Services Agreement effective as of January 1, 2013 (as amended as of June 27,
2017, September 6, 2020 and January 4, 2021). Pursuant to this agreement, Mr. Yoav Leibovitch provides financial management, business
development, presidential and management services to SatixFy Israel Ltd. and its affiliates. The compensation paid to RaySat for Mr. Leibovitch’s
services consists of, (i) a monthly fee of $85,000, (ii) a yearly bonus of 0.67% out of the incremental year to year growth in equity
in the consolidated financial statements of SatixFy Communications Ltd, effective 2021 and (iii) an annual bonus of 0.67% out of the incremental
year to year growth in revenues of SatixFy Communications Ltd. Subject to the consummation of a SPAC transaction or the initial
public offering of SatixFy, the foregoing percentages shall increase to 1% each. The service agreement further provides for
garden leave equal to (i) 3 months’ base salary upon termination due to mutual written agreement or (ii) 6 months’ base salary
plus VAT upon termination without cause (if such termination is approved by 51% of the board of directors). The service agreement provides
for (i) a one year non-compete with respect to any business “anywhere in the world” that competes, directly or indirectly,
with SatixFy Israel Ltd. or is based on similar technology to that of SatixFy Israel Ltd., (ii) standard confidentiality provisions and
(iii) duty to perfect, enforce or defend trade secrets.
On September 15, 2022, SatixFy’s board approved an amendment, which was approved
by SatixFy’s shareholders on September 28, 2022, to Mr. Leibovitch’s compensation under this agreement to (i) grant Mr. Leibovitch
a $2 million success bonus payable upon the Closing of the Business Combination, (ii) increase Mr. Leibovitch’s monthly fee
for services provided to $100,000 per month, effective as of October 1, 2022, increase Mr. Leibovitch’s yearly bonus such
that the yearly bonus shall be 2% of the incremental year-over-year growth of the shareholders’ equity in the consolidated financial
statements of the Company and increase Mr. Leibovitch’s annual bonus such that the annual bonus shall be 2% of the incremental year-over-year
growth of revenues in the consolidated financial statements of the Company.
Employment Agreement — Doron Rainish.
Effective as of the incorporation of our subsidiary, SatixFy Israel Ltd., in 2012,
SatixFy Israel Ltd. entered into an employment agreement with Doron Rainish to serve as Chief Technology Officer, which was amended on
December 1, 2016. The employment agreement provided for compensation equal to an annual gross amount of $160,000, plus $60,000 as “13
Salary” paid in four quarterly installments of $15,000 in the NIS equivalent. The employment agreement further provided for severance
equal to two months’ base salary and an additional 8.33% employer contribution to any pension insurance. The employment agreement
further provided for (i) pension insurance up to 14.33% employer contribution, depending on the type of insurance, (ii) advanced study
fund with 7.5% employer contribution up to the limit recognized by the Income Tax Authority and (iii) employer car and mileage payments.
Services Agreement and Option Grant — Lord David Willetts.
On September 7, 2020, we entered into a Board Member Services Agreement with Lord David
Willets, who serves as a director of the Company. With respect to his services as a director of the Company, Lord Willetts shall be entitled
to receive annual remuneration and remuneration for participating in meetings at a fixed amount according to the applicable U.K. remuneration
regulations. Pursuant to this agreement, Lord Willets is entitled to receive 50,000 non-tradable options exercisable into 50,000 SatixFy
Ordinary Shares in accordance with the terms of the 2020 Share Award Plan.
Director Compensation
We pay each of our external directors and to each other (non-external director) member
of the compensation committee of the board (i) a fee of NIS 10,000 per month, (ii) a per meeting fee for participation in board and committee
meetings of NIS 4,000 plus VAT, to the extent applicable, and (iii) reimbursement of expenses incurred in connection with service on the
board and its committees, all in accordance with the Israeli Companies Law, 1999 and applicable regulations. The other members of
the board are entitled to reimbursement of expenses to the same extent to which the external directors are entitled to such reimbursement.
No other compensation is currently paid to these other members of the board.
Internal Auditor
Under the Israeli Companies Law, the board of directors of a public company must appoint
an internal auditor based on the recommendation of the audit committee. The role of the internal auditor is, among other things, to examine
whether a company’s actions comply with applicable law and orderly business procedure. Under the Israeli Companies Law, the internal
auditor cannot be an interested party or an office holder or a relative of an interested party or an office holder, nor may the internal
auditor be the company’s independent auditor or its representative. An “interested party” is defined in the Israeli
Companies Law as: (i) a holder of 5% or more of the issued share capital or voting power in a company, (ii) any person or entity who has
the right to designate one or more directors or to designate the chief executive officer of the company, or (iii) any person who serves
as a director or as a chief executive officer of the company. On September 28, 2022, the Company’s Board approved the appointment
of Mr. Yisrael Gewirtz from Fahn Kanne Grant Thornton as the Company’s internal auditor.
Approval of Related Party Transactions under Israeli Law
Fiduciary Duties of Directors and Executive Officers
The Israeli Companies Law codifies the fiduciary duties that office holders owe to a
company. An office holder is defined in the Israeli Companies 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 such person’s title,
a director, and any other manager directly subordinate to the general manager. Each person listed in the table under “Management
— Management and Board of Directors” is an office holder under the Israeli 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
act under the same circumstances. The duty of care includes, among other things, a duty to use reasonable means, in light of the circumstances,
to obtain:
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information on the business advisability of a given action brought for the office holder’s approval or performed by virtue
of the office holder’s position; and |
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all other important information pertaining to such action. |
The duty of loyalty requires an office holder to act in good faith and in the best interests
of the company, and includes, among other things, the duty to:
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refrain from any act involving a conflict of interest between the performance of the office holder’s duties in the company
and the office holder’s other duties or personal affairs; |
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refrain from any activity that is competitive with the business of the company; |
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refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for the office holder
or others; and |
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disclose to the company any information or documents relating to the company’s affairs which the office holder received as
a result of the office holder’s position. |
Under the Israeli Companies Law, a company may approve an act, specified above, which
would otherwise constitute a breach of the office holder’s fiduciary duty, provided that the office holder acted in good faith,
neither the act nor its approval harms the company, and the personal interest of the office holder is disclosed a sufficient time before
the approval of such act. Any such approval is subject to the terms of the Israeli Companies Law setting forth, among other things,
the appropriate bodies of the company required to provide such approval and the methods of obtaining such approval.
Disclosure of Personal Interests of an Office Holder and Approval
of Certain Transactions
The Israeli Companies Law requires that an office holder promptly disclose to the board
of directors any personal interest and all related material information known to such office holder concerning any existing or proposed
transaction with the company. A personal interest includes an interest of any person in an act or transaction of a company, including
a personal interest of one’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 such person has the right to appoint at least one director or the general manager,
but excluding a personal interest stemming solely from one’s ownership of shares in the company. A personal interest 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 the officer holder’s vote on behalf of a person for whom he or she holds a proxy even if such shareholder has no personal interest
in the matter.
If it is determined that an office holder has a personal interest in a non-extraordinary
transaction (meaning any transaction that is in the ordinary course of business, on market terms or that is not likely to have a material
impact on the company’s profitability, assets or liabilities), 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. Any such transaction that is adverse to
the company’s interests may not be approved by the board of directors.
Approval first by the company’s audit committee and subsequently by the board
of directors is required for an extraordinary transaction (meaning any transaction that is not in the ordinary course of business, not
on market terms or that is likely to have a material impact on the company’s profitability, assets or liabilities) in which an office
holder has a personal interest.
A director and any other office holder who has a personal interest in a transaction
which is considered at a meeting of the board of directors or the audit committee may generally (unless it is with respect to a transaction
which is not an extraordinary transaction) not be present at such a meeting or vote on that matter unless a majority of the directors
or members of the audit committee, as applicable, have a personal interest in the matter. If a majority of the members of the audit committee
or the board of directors have a personal interest in the matter, then all of the directors may participate in deliberations of the audit
committee or board of directors, as applicable, with respect to such transaction and vote on the approval thereof and, in such case, shareholder
approval is also required.
Certain disclosure and approval requirements apply under Israeli law to certain transactions
with controlling shareholders, certain transactions in which a controlling shareholder has a personal interest, and certain arrangements
regarding the terms of service or employment of a controlling shareholder. For these purposes, a controlling shareholder is any shareholder
that has the ability to direct the company’s actions, including any shareholder holding 25% or more of the voting rights if no other
shareholder owns more than 50% of the voting rights in the company. Two or more shareholders with a personal interest in the approval
of the same transaction are deemed to be one shareholder.
For a description of the approvals required under Israeli law for compensation arrangements
of officers and directors, see “Management — Compensation of Directors and Executive Officers.”
Shareholder Duties
Pursuant to the Israeli 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 with respect to the company,
including, among other things, in voting at a general meeting and at shareholder class meetings with respect to the following matters:
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an amendment to the company’s articles of association; |
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an increase of the company’s authorized share capital; |
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interested party transactions that require shareholder approval. |
In addition, a shareholder has a general duty to refrain from discriminating against
other shareholders.
Certain shareholders also have a duty of fairness toward the company. These shareholders
include any controlling shareholder, any shareholder who knows that it has the power to determine the outcome of a shareholder vote, and
any shareholder who has the power to appoint or to prevent the appointment of an office holder of the company or exercise any other rights
available to it under the company’s articles of association with respect to the company. The Companies Law does not define the substance
of this 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.
DESCRIPTION OF SATIXFY ORDINARY
SHARES
A summary of the material provisions governing SatixFy’s share
capital is described below. This summary is not complete and should be read together with the A&R Articles of Association.
The following descriptions of share capital and provisions of the
A&R Articles of Association are summaries and are qualified by reference to the A&R Articles of Association. Copies of these documents
were filed with the SEC as exhibits to the registration statement that includes this prospectus. Certain Israeli law matters concerning
the provisions of the A&R Articles of Association and the rights of shareholders are further discussed under the section titled “Management.”
Unless otherwise indicated or the context otherwise requires, all
references in this section entitled “Description of SatixFy Ordinary Shares” to the terms “SatixFy,” the “Company,”
“we,” “us” and “our” refer to SatixFy Communications Ltd., together with its subsidiaries.
Authorized Capitalization
Our authorized share capital consists of 250,000,000 ordinary shares, no par value per
share, of which, as of April 24, 2023, 80,756,058 ordinary shares are issued and outstanding.
All of our outstanding ordinary shares are validly issued, fully paid and non-assessable.
Our ordinary shares are not redeemable and do not have any preemptive rights. All ordinary shares will have identical voting and other
rights in all respects, unless otherwise will be determined pursuant to the A&R Articles of Association.
Our board of directors may determine the issue prices and terms for such ordinary shares
or other securities and may further determine any other provision relating to such issue of shares or securities. We may also issue and
redeem redeemable securities on such terms and in such manner as our board of directors shall determine. The board of directors may make
calls or assessments upon shareholders with respect to any sum unpaid in respect of ordinary shares held by such shareholders which is
not, the terms of allotment thereof or otherwise, payable at a fixed time.
The following descriptions of share capital and provisions of A&R Articles of Association
are summaries and are qualified by reference to such articles. Copies of these documents are filed with the SEC as exhibits to the registration
statement that includes this prospectus.
Listing, Registration Number and Purpose
Our SatixFy Ordinary Shares are listed and traded on the NYSE under the trading symbol,
“SATX.”
Our registration number with the Israeli Registrar of Companies is 51-61350-35. Our
purpose as set forth in the A&R Articles of Association is to engage in any activity permitted by law.
Transfer of Shares
Our fully paid ordinary shares are issued in registered form and may be freely transferred
under the A&R Articles of Association, unless the transfer is restricted or prohibited by the provisions therein, 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 the A&R 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
Under the A&R Articles of Association, the number of directors on our board of directors
must be no less than three (3) and no more than twelve (12), including any external directors required to be appointed under the Israeli
Companies Law (if required). The minimum and maximum number of directors may be changed, at any time and from time to time, by a special
vote of the holders of at least sixty-six and two-thirds percent (662∕3%) of our outstanding shares.
Other than external directors (if so elected), for whom special election requirements
apply under the Israeli Companies Law, the vote required to appoint a director is a simple majority vote. In addition, under the A&R
Articles of Association, our board of directors may elect new directors to fill vacancies (whether such vacancy is due to a director no
longer serving or due to the number of directors serving being less than the maximum required in the A&R Articles of Association),
provided that the total number of directors shall not, at any time, exceed twelve (12) directors and provided that our board of directors
may not elect external directors. The A&R Articles of Association provide that the term of a director appointed by our board of directors
to fill any vacancy will be for the remaining term of office of the director(s) whose office(s) have been vacated.
Furthermore, under the A&R Articles of Association, our directors, other than external
directors, are divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of
one-third of the total number of directors constituting the entire board of directors (other than the external directors).
External directors, if so elected, are elected for an initial term of three years, may
be elected for additional three-year terms, and may be removed from office pursuant to the terms of the Israeli Companies Law. For further
information on the election and removal of external directors, see “Management.”
Dividend and Liquidation Rights
We have never declared or paid any cash dividends on our ordinary shares. We may declare
a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings, or as otherwise provided
by the A&R Articles of Association. 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. The A&R
Articles of Association will not require shareholder approval of a dividend distribution and provide that dividend distributions may be
determined by the 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 the company’s most recently 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 a company does not meet such criteria, then it may distribute dividends only with court approval. In
each case, we would only be permitted to distribute a dividend if its board of directors, and if applicable, the court determines that
there is no reasonable concern that payment of the dividend will prevent it from satisfying its 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 pursuant to the A&R Articles of Association.
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 certain countries that are, or have been, in a state of war with Israel at such time.
Shareholder Meetings
Under Israeli law, we are required to hold an annual general meeting of our shareholders
once every calendar year that must be held no later than 15 months after the date of the previous annual general meeting. All general
meetings other than the annual meeting of shareholders are referred to in the A&R Articles of Association as special meetings. Our
board of directors may call special meetings whenever it sees fit, at such time and place, within or outside of Israel, as it may determine.
In addition, the Israeli Companies Law provides that our board of directors is required to convene a special 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% or more of our outstanding voting power or (b)
5% or more of our outstanding voting power.
Under Israeli law, one or more shareholders holding at least 1% of the voting rights
at the general meeting may request that the board of directors include a matter in the agenda of a general meeting to be convened in the
future, such as nominating a director candidate, provided that it is appropriate to discuss such a matter at the general meeting. The
A&R Articles of Association contain procedural guidelines and disclosure items with respect to the submission of shareholder proposals
for shareholders meetings.
Subject to the provisions of the Israeli 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 Israeli Companies Law
requires that resolutions regarding, among other things, the following matters must be passed at a general meeting of our shareholders:
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amendments to the A&R Articles of Association; |
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appointment or termination of service of our auditors; |
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election of directors, including external directors (unless otherwise determined in the A&R Articles of Association); |
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approval of certain related party transactions; |
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increases or reductions of our authorized share capital; |
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the exercise of our board of directors’ 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. |
Under the A&R Articles of Association, we are not required to give notice to our
registered shareholders pursuant to the Israeli Companies Law, unless otherwise required by law. The Israeli Companies Law requires that
a notice of any annual general meeting or special general meeting be provided to shareholders at least 21 days prior to the meeting and
if the agenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders or interested
or related parties, or an approval of a merger, or as otherwise required under applicable law, notice must be provided at least 35 days
prior to the meeting. Under the Israeli Companies Law, shareholders of a public company are not permitted to take action by written consent
in lieu of a meeting. The A&R Articles of Association provide that a notice of general meeting may be served, as a general notice
to all shareholders, published by the Company on SatixFy’s website or any appropriate government agency, in accordance with applicable
rules and regulations of any stock market upon which the Company’s shares are listed and, if so published, shall be deemed to have
been duly given on the date of such publication to any shareholder.
Limitations on Liability and Indemnification of Directors and Officers
Under the Israeli 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 in advance an office holder 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. The A&R Articles of Association include such a provision. The Company may not exculpate
a director from liability arising out of a prohibited dividend or distribution to shareholders.
Under the Israeli Companies Law, a company may indemnify an office holder in respect
of the following liabilities and expenses incurred for acts performed as an office holder, either in advance of an event or following
an event, provided a provision authorizing such indemnification is contained in its articles of association:
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a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s
award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance,
then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s
activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors
as reasonable under the circumstances, and such undertaking shall detail the above mentioned events and amount or criteria; |
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reasonable litigation expenses, including attorneys’ fees, incurred by the office holder 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, such
as a criminal penalty, 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;
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reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings
instituted against him or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the
office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent; and |
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expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative
proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder
by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law. |
Under the Israeli Companies Law and the Israeli Securities Law, a company may insure
an office holder against the following liabilities incurred for acts performed as an office holder if and to the extent provided in the
company’s articles of association:
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a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis
to believe that the act would not prejudice the company; |
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a breach of the duty of care to the company or to a third party, including a breach arising out of the negligent conduct of the office
holder; |
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a financial liability imposed on the office holder in favor of a third party; |
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a financial liability imposed on the office holder in favor of a third party harmed by a breach in an administrative proceeding;
and |
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expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative
proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law. |
Under the Israeli Companies Law, a company may not indemnify, exculpate, or insure an
office holder against any of the following:
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a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe
that the act would not prejudice the company; |
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a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the
office holder; |
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an act or omission committed with intent to derive illegal personal benefit; or |
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a fine or forfeit levied against the office holder. |
Under the Israeli Companies Law, exculpation, indemnification, and insurance of office
holders must be approved by the audit committee and the board of directors (and, with respect to directors and the chief executive officer,
by the shareholders). However, under regulations promulgated under the Israeli Companies Law, the insurance of office holders shall not
require shareholder approval and may be approved by only the compensation committee, if the engagement terms are determined in accordance
with the company’s compensation policy that was approved by the shareholders by the same special majority required to approve a
compensation policy, provided that the insurance policy is on market terms and the insurance policy is not likely to materially impact
the company’s profitability, assets or obligations.
The A&R Articles of Association permit to us to exculpate, indemnify and ensure
its office holders for any liability imposed on them as a consequence of an act (including any omission) which was performed by virtue
of being an office holder. The office holders are currently covered by a directors and officers’ liability insurance policy.
We had entered into agreements with each of its directors exculpating them, to the fullest
extent permitted by law, from liability to us for damages caused to it as a result of a breach of duty of care and undertaking to indemnify
them to the fullest extent permitted by law. This indemnification is limited to events determined as foreseeable by the board of directors
based on our activities, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances.
The maximum indemnification amount set forth in such agreements is limited to an amount
equal to the highest of (i) 10% of our valuation (ii) 25 % of our total shareholders’ equity as reflected in our most recent consolidated
financial statements prior to the date on which the indemnity payment is made and (iii) 10% of our total market capitalization calculated
based on the average closing prices of our ordinary shares over the 30 trading days prior to the actual payment, multiplied by the total
number of our issued and outstanding shares as of the date of the payment (other than indemnification for an offering of securities to
the public, including by a shareholder in a secondary offering, in which case the maximum indemnification amount is limited to the gross
proceeds raised by us and/or any selling shareholder in such public offering). The maximum amount set forth in such agreements is in addition
to any amount paid (if paid) under insurance and/or by a third party pursuant to an indemnification arrangement.
In the opinion of the SEC, indemnification of directors and office holders for liabilities
arising under the Securities Act is against public policy and therefore unenforceable.
There is no pending litigation or proceeding against any of our office holders as to
which indemnification is being sought, nor we aware of any pending or threatened litigation that may result in claims for indemnification
by any office holder.
Exclusive Jurisdiction of Certain Actions
Unless we consent in writing to the selection of an alternative forum, the competent
courts of Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of SatixFy, (ii)
any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of SatixFy to SatixFy or SatixFy’s
shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Israeli Companies Law or the Israeli Securities
Law. See “Risk Factors — Risks Related to SatixFy’s Incorporation and Location in Israel
— Our amended and restated articles of association provide that unless SatixFy consents otherwise, the competent courts of Tel Aviv,
Israel shall be the sole and exclusive forum for substantially all disputes between SatixFy and its shareholders under the Israeli Companies
Law and the Israeli Securities Law, which could limit our shareholders’ ability to bring claims and proceedings against, as well
as obtain favorable judicial forum for disputes with SatixFy, its directors, officers and other employees.”
Voting Rights
Quorum Requirements
Pursuant to the A&R 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. Under the A&R
Articles of Association, the quorum required for general meetings of shareholders must consist of at least two shareholders present in
person or by proxy (including by voting deed) holding 331∕3% or more of our voting rights. A meeting adjourned for lack of a quorum
will generally be adjourned to the same day of the following week at the same time and place, or to such other day, time or place as indicated
by our board of directors if so specified in the notice of the meeting. At the reconvened meeting, any number of shareholders present
in person or by proxy shall constitute a lawful quorum.
Vote Requirements
The A&R Articles of Association provide that all resolutions of our shareholders
require a simple majority vote, unless otherwise required by the Israeli Companies Law or by the A&R Articles of Association.
Pursuant to the A&R Articles of Association, an amendment to the A&R Articles
of Association regarding any change of the composition or election procedures of our directors will require a special majority vote of
shareholders (662∕3%).
Under the Israeli Companies Law, certain actions require the approval of a special majority
vote of shareholders, including: (i) an extraordinary transaction with a controlling shareholder or in which the controlling shareholder
has a personal interest, (ii) the terms of employment or other engagement of a controlling shareholder of the company or a controlling
shareholder’s relative (even if such terms are not extraordinary) and (iii) certain compensation-related matters, including with
respect to compensation of directors and executive officers, described above under “Management.”
The special majority vote required for the actions in clauses (i) and (ii) require either that (A) at least a majority of the shares of
shareholders that do not have a personal interest in the proposal voted at the meeting are voted in favor (disregarding abstentions) or
(B) the total number of shares of shareholders who do not have a personal interest in such proposal does not exceed 2% of the aggregate
voting rights in the company.
Modification of Class Rights
Under the Israeli Companies Law and the A&R 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, in addition to the simple majority vote of all classes of shares voting together as a single class at a shareholder
meeting, as set forth in the A&R Articles of Association.
Access to Corporate Records
Under the Israeli Companies Law, shareholders generally have the right to review minutes
of our general meetings, our shareholders register and material shareholders register, the A&R Articles of Association, our 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 Israeli 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.
Changes in Capital
The A&R Articles of Association enable us to increase or reduce our share capital.
Any such changes are subject to the provisions of the Israeli Companies Law and must be approved by a resolution duly adopted by our shareholders
at a general meeting. In addition, transactions that have the effect of reducing capital, such as the declaration and payment of dividends
in the absence of sufficient retained earnings or profits, require the approval of both our board of directors and an Israeli court.
Registration Rights
Certain of our shareholders are entitled to certain registration rights under the terms
of our A&R Shareholders’ Rights Agreement, the A&R Registration Rights Agreement and the Forward Purchase Agreement. For
a discussion of such rights, see “Certain Relationships and Related Party Transactions.”
Anti-Takeover and Acquisition Provisions under Israeli Law
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 voting rights or the
target company’s issued and outstanding share capital (or of a class thereof) is required by the Israeli 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 (or
the applicable class). A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of voting
rights or 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.
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 accept the tender offer hold at least 5% of the
issued and outstanding share capital of the company (or of the applicable class) and the shareholders who accept the offer constitute
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 less than 2% of the issued and outstanding share capital of the company (or of the applicable class),
all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. A shareholder who had
its shares so transferred may petition an Israeli court within six months from the date of acceptance of the full tender offer, regardless
of whether such shareholder agreed to the offer, to determine whether the tender offer was for less than fair value and whether the fair
value should be paid as determined by the court. However, an offeror may provide in the offer that a shareholder who accepted the offer
will not be entitled to petition the court for appraisal rights as described in the preceding sentence, as long as the offeror and the
company disclosed the information required by law in connection with the full tender offer. If the full tender offer was not accepted
in accordance with any of the above alternatives, the acquirer may not acquire shares of the company that will increase its holdings to
more than 90% of the company’s voting rights or the company’s issued and outstanding share capital (or of the applicable class)
from shareholders who accepted the tender offer. Shares purchased in contradiction to the full tender offer rules under the Israeli Companies
Law will have no rights and will become dormant shares for as long as such shares are held by the purchaser who purchased those shares
in contradiction with such rules.
Special Tender Offer. The Israeli Companies
Law provides that 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 25% or more of the voting rights in the company. Similarly, the Israeli Companies Law provides that
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. These requirements do not apply if, in general, (1) the acquisition occurs in the context
of a private placement by the company that received shareholders’ approval as a private placement whose purpose is to give the purchaser
25% or more of the voting rights in the company, if there is no person who holds 25% or more of the voting rights in the company or as
a private placement whose purpose is to give the purchaser 45% of the voting rights in the company, if there is no person who holds 45%
of the voting rights in the company, (2) the acquisition was from a shareholder holding 25% or more of the voting rights in the company,
which resulted in the purchaser becoming a holder of 25% or more of the voting rights in the company, or (3) the acquisition was from
a shareholder holding more than 45% of the voting rights in the company, which resulted in the purchaser becoming a holder of more than
45% of the voting rights of 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 number of shares tendered in the offer exceeds the number of shares whose holders objected to the
offer (excluding the purchaser and its controlling shareholders, holders of 25% or more of the voting rights in the company or any person
having a personal interest in the acceptance of the tender offer or any other person acting on their behalf, including the relatives and
entities under such person’s control).
In the event that a special tender offer is made, a company’s board of directors
is required to express its opinion on the advisability of the offer, or shall abstain from expressing any opinion if it is unable to do
so, provided that it gives the reasons for its abstention. The board of directors shall also disclose any personal interest that any of
the directors has with respect to the special tender offer or in connection therewith. An office holder in a target company who, in his
or her capacity as an office holder, performs an action the purpose of which is to cause the failure of an existing or foreseeable special
tender offer or is to impair the chances of its acceptance, is liable to the potential purchaser and shareholders for damages, unless
such office holder acted in good faith and had reasonable grounds to believe he or she was acting for the benefit of the company. However,
office holders of the target company may negotiate with the potential purchaser in order to improve the terms of the special tender offer,
and may further negotiate with third parties in order to obtain a competing offer.
If a special tender offer is accepted, then the shareholders who did not respond to
or that had rejected the offer may accept the offer within four (4) days of the last day set for the acceptance of the offer and such
shareholders will be considered to have accepted the offer from the first day it was made.
If a special tender offer is accepted, then the acquirer 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.
Shares purchased in contradiction to the special tender offer rules under the Israeli Companies Law will have no rights and will become
dormant shares for as long as such shares are held by the purchaser who purchased those shares in contradiction with such rules under
the Israeli Companies Law.
Merger. The Israeli Companies Law permits merger
transactions if approved by each party’s board of directors and, unless certain requirements described under the Israeli Companies
Law are met, by a majority vote of each party’s shares, and, in the case that the shares of the target company are divided into
separate classes, a majority vote of each class of its shares, voted on the proposed merger at a shareholders meeting. The board of directors
of a merging company is required pursuant to the Israeli Companies Law to discuss and determine whether, in its opinion, there exists
a reasonable concern that as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards
its creditors, such determination taking into account the financial status of the merging companies. If the board of directors determines
that such a concern exists, it may not approve a proposed merger. Following the approval of the board of directors of each of the merging
companies, the boards of directors of the merging companies must jointly prepare and execute a merger proposal, and the merging companies
must submit the merger proposal to the Israeli Registrar of Companies.
For purposes of the shareholder vote of a merging company whose shares are held by the
other merging company, or by a person or entity holding 25% or more of the voting rights at the general meeting of shareholders of the
other merging company, or by a person or entity holding the right to appoint 25% or more of the directors of the other merging company,
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 entity 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.
In addition, if the non-surviving entity of the merger has more than one class of shares, the merger must be approved by each class of
shareholders. If the transaction would have been approved 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 request of holders of at least 25% of the voting
rights of a company, if the court holds that the merger is fair and reasonable, taking into account the valuation of the merging companies
and the consideration offered to the shareholders. 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.
Under the Israeli Companies Law, each merging company must deliver to its secured creditors
the merger proposal and inform its unsecured creditors of the merger proposal and its contents. 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 was 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 Israeli 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. No preferred shares will be authorized under the A&R 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 the A&R 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 Israeli Companies Law and our A&R Articles, as described above in “— Voting Rights.”
In addition, as disclosed under “— Election of Directors,” we will have a classified
board structure upon the closing of our Business Combination, which will effectively limit the ability of any investor or potential investor
or group of investors or potential investors to gain control of our board of directors.
Transfer Agent and Registrar
The transfer agent and registrar for our ordinary shares is Continental Stock Transfer
& Trust Company, its address is 1 State Street, 30th Floor, New York, New York 10004, and its telephone number is +1 (212) 509-4000.
DESCRIPTION OF SATIXFY WARRANTS
Unless otherwise indicated or the context otherwise requires, all
references in this section entitled “Description of SatixFy Warrants” to the terms “SatixFy,” the “Company,”
“we,” “us” and “our” refer to SatixFy Communications Ltd., together with its subsidiaries.
Public Warrants
Each whole warrant entitles the registered holder to purchase one SatixFy Ordinary Share
at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the Closing, except as
described below. Pursuant to the SatixFy A&R Warrant Agreement, a warrant holder may exercise its warrants only for a whole number
of SatixFy Ordinary Shares. This means only a whole warrant may be exercised at a given time by a warrant holder. The warrants will expire
five years after the Closing, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
We are not obligated to deliver any SatixFy Ordinary Share pursuant to the exercise
of a warrant and have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering
the issuance of the SatixFy Ordinary Share issuable upon exercise of the warrants is then effective and a current prospectus relating
thereto is current, subject to our satisfying our obligations described below with respect to registration, or a valid exemption from
registration is available, including in connection with a cashless exercise permitted as a result of a notice of redemption described
below under “— Redemption of warrants when the price per SatixFy Ordinary Share equals or
exceeds $10.00.” No warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any
shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of the exercising holder, or an exemption is available. In the event that the conditions in the
two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise
such warrant and such warrant may have no value and expire worthless. In the event that a registration statement is not effective for
the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for
the SatixFy Ordinary Share underlying such unit.
We have filed the registration statement of which this prospectus forms a part, which
was originally declared effective by the SEC on January 23, 2023, covering the issuance, under the Securities Act, of the SatixFy Ordinary
Shares issuable upon exercise of the warrants. Holders of the warrants have the right, during any other period when the company
fails to have maintained an effective registration statement covering the issuance of the SatixFy Ordinary Shares issuable upon exercise
of the warrants, to exercise such warrants on a “cashless basis.” Notwithstanding the above, if the SatixFy Ordinary Shares
are, at the time of any exercise of a warrant, not listed on a national securities exchange such that they do not satisfy the definition
of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants
who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in
the event we so elect, we will not be required to file or maintain in effect a registration statement, but will use our commercially reasonable
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In the case of a
cashless exercise, each holder would pay the exercise price by surrendering the warrants for that number of SatixFy Ordinary Shares equal
to the lesser of (A) the quotient obtained by dividing (x) the product of the number of SatixFy Ordinary Shares underlying the warrants,
multiplied by the excess of the “fair market value” (defined below) less the exercise price of the warrants by (y) the fair
market value and (B) 0.361 SatixFy Ordinary Shares per warrant. The “fair market value” as used in the preceding sentence
shall mean the volume weighted average price of the SatixFy Ordinary Shares for the 10 trading days ending on the trading day prior to
the date on which the notice of exercise is received by the warrant agent.
Redemption of warrants when the price per SatixFy Ordinary
Share equals or exceeds $18.00. Once the warrants become exercisable, we may redeem the outstanding warrants (except as described
herein with respect to the SatixFy Private Warrants):
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in whole and not in part; |
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at a price of $0.01 per warrant; |
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upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
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if, and only if, the last reported sale price of the SatixFy Ordinary Shares for any 20 trading days within a 30-trading day period
ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders (which we refer to
as the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable
upon exercise or the exercise price of a warrant as described under the heading “— Anti-dilution
Adjustments”). |
We will not redeem the warrants as described above unless a registration statement under
the Securities Act covering the issuance of the SatixFy Ordinary Shares issuable upon exercise of the warrants is then effective and a
current prospectus relating to those SatixFy Ordinary Shares is available throughout the 30-day redemption period. If and when the warrants
become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for
sale under all applicable state securities laws.
We have established the last of the redemption criteria discussed above to prevent a
redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions
are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant
prior to the scheduled redemption date. However, the price of the SatixFy Ordinary Shares may fall below the $18.00 redemption trigger
price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under
the heading “— Anti-dilution Adjustments”) as well as the $11.50 (for whole
shares) warrant exercise price after the redemption notice is issued.
Redemption of warrants when the price per SatixFy Ordinary Share equals or exceeds $10.00.
Once the warrants become exercisable, we may redeem the outstanding warrants:
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in whole and not in part; |
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at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise
their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based
on the redemption date and the “fair market value” of the SatixFy Ordinary Share (as defined below) except as otherwise described
below; |
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• |
if, and only if, the Reference Value (as defined above under “— Redemption of warrants
when the price per SatixFy Ordinary Share equals or exceeds $18.00”) equals or exceeds $10.00 per share (as adjusted for
adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “—
Anti-dilution Adjustments”); and |
|
• |
if the Reference Value is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise
or the exercise price of a warrant as described under the heading “— Anti- dilution Adjustments”),
the SatixFy Private Warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as
described above. |
During the period beginning on the date the notice of redemption is given, holders may
elect to exercise their warrants on a cashless basis. The numbers in the table below represent the number of SatixFy Ordinary Shares that
a warrant holder will receive upon such cashless exercise in connection with a redemption by us pursuant to this redemption feature, based
on the “fair market value” of the SatixFy Ordinary Shares on the corresponding redemption date (assuming holders elect to
exercise their warrants and such warrants are not redeemed for $0.10 per warrant), determined for these purposes based on volume weighted
average price of the SatixFy Ordinary Shares during the 10 trading days immediately following the date on which the notice of redemption
is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the
warrants, each as set forth in the table below. We will provide our warrant holders with the final fair market value no later than one
business day after the 10-trading day period described above ends.
The share prices set forth in the column headings of the table below will be adjusted
as of any date on which the number of shares issuable upon exercise of a warrant or the exercise price of a warrant is adjusted as set
forth under the heading “— Anti-dilution Adjustments” below. If the number of
shares issuable upon exercise of a warrant is adjusted, the adjusted share prices in the column headings will equal the share prices immediately
prior to such adjustment, multiplied by a fraction, the numerator of which is the number of shares deliverable upon exercise of a warrant
immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a warrant as so
adjusted. The number of shares in the table below shall be adjusted in the same manner and at the same time as the number of shares issuable
upon exercise of a warrant. If the exercise price of a warrant is adjusted, (a) in the case of an adjustment pursuant to the fifth paragraph
under the heading “— Anti-dilution Adjustments” below, the adjusted share prices
in the column headings will equal the unadjusted share price multiplied by a fraction, the numerator of which is the higher of the Market
Value and the Newly Issued Price as set forth under the heading “— Anti-dilution Adjustments”
and the denominator of which is $10.00 and (b) in the case of an adjustment pursuant to the second paragraph under the heading “—
Anti-dilution Adjustments” below, the adjusted share prices in the column headings will
equal the unadjusted share price less the decrease in the exercise price of a warrant pursuant to such exercise price adjustment.
|
|
Fair Market Value of Shares of SatixFy Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60 months
|
|
|
0.261 |
|
|
|
0.281 |
|
|
|
0.297 |
|
|
|
0.311 |
|
|
|
0.324 |
|
|
|
0.337 |
|
|
|
0.348 |
|
|
|
0.358 |
|
|
|
0.361 |
|
57 months
|
|
|
0.257 |
|
|
|
0.277 |
|
|
|
0.294 |
|
|
|
0.310 |
|
|
|
0.324 |
|
|
|
0.337 |
|
|
|
0.348 |
|
|
|
0.358 |
|
|
|
0.361 |
|
54 months
|
|
|
0.252 |
|
|
|
0.272 |
|
|
|
0.291 |
|
|
|
0.307 |
|
|
|
0.322 |
|
|
|
0.335 |
|
|
|
0.347 |
|
|
|
0.357 |
|
|
|
0.361 |
|
51 months
|
|
|
0.246 |
|
|
|
0.268 |
|
|
|
0.287 |
|
|
|
0.304 |
|
|
|
0.320 |
|
|
|
0.333 |
|
|
|
0.346 |
|
|
|
0.357 |
|
|
|
0.361 |
|
48 months
|
|
|
0.241 |
|
|
|
0.263 |
|
|
|
0.283 |
|
|
|
0.301 |
|
|
|
0.317 |
|
|
|
0.332 |
|
|
|
0.344 |
|
|
|
0.356 |
|
|
|
0.361 |
|
45 months
|
|
|
0.235 |
|
|
|
0.258 |
|
|
|
0.279 |
|
|
|
0.298 |
|
|
|
0.315 |
|
|
|
0.330 |
|
|
|
0.343 |
|
|
|
0.356 |
|
|
|
0.361 |
|
42 months
|
|
|
0.228 |
|
|
|
0.252 |
|
|
|
0.274 |
|
|
|
0.294 |
|
|
|
0.312 |
|
|
|
0.328 |
|
|
|
0.342 |
|
|
|
0.355 |
|
|
|
0.361 |
|
39 months
|
|
|
0.221 |
|
|
|
0.246 |
|
|
|
0.269 |
|
|
|
0.290 |
|
|
|
0.309 |
|
|
|
0.325 |
|
|
|
0.340 |
|
|
|
0.354 |
|
|
|
0.361 |
|
36 months
|
|
|
0.213 |
|
|
|
0.239 |
|
|
|
0.263 |
|
|
|
0.285 |
|
|
|
0.305 |
|
|
|
0.323 |
|
|
|
0.339 |
|
|
|
0.353 |
|
|
|
0.361 |
|
33 months
|
|
|
0.205 |
|
|
|
0.232 |
|
|
|
0.257 |
|
|
|
0.280 |
|
|
|
0.301 |
|
|
|
0.320 |
|
|
|
0.337 |
|
|
|
0.352 |
|
|
|
0.361 |
|
30 months
|
|
|
0.196 |
|
|
|
0.224 |
|
|
|
0.250 |
|
|
|
0.274 |
|
|
|
0.297 |
|
|
|
0.316 |
|
|
|
0.335 |
|
|
|
0.351 |
|
|
|
0.361 |
|
27 months
|
|
|
0.185 |
|
|
|
0.214 |
|
|
|
0.242 |
|
|
|
0.268 |
|
|
|
0.291 |
|
|
|
0.313 |
|
|
|
0.332 |
|
|
|
0.350 |
|
|
|
0.361 |
|
24 months
|
|
|
0.173 |
|
|
|
0.204 |
|
|
|
0.233 |
|
|
|
0.260 |
|
|
|
0.285 |
|
|
|
0.308 |
|
|
|
0.329 |
|
|
|
0.348 |
|
|
|
0.361 |
|
21 months
|
|
|
0.161 |
|
|
|
0.193 |
|
|
|
0.223 |
|
|
|
0.252 |
|
|
|
0.279 |
|
|
|
0.304 |
|
|
|
0.326 |
|
|
|
0.347 |
|
|
|
0.361 |
|
18 months
|
|
|
0.146 |
|
|
|
0.179 |
|
|
|
0.211 |
|
|
|
0.242 |
|
|
|
0.271 |
|
|
|
0.298 |
|
|
|
0.322 |
|
|
|
0.345 |
|
|
|
0.361 |
|
15 months
|
|
|
0.130 |
|
|
|
0.164 |
|
|
|
0.197 |
|
|
|
0.230 |
|
|
|
0.262 |
|
|
|
0.291 |
|
|
|
0.317 |
|
|
|
0.342 |
|
|
|
0.361 |
|
12 months
|
|
|
0.111 |
|
|
|
0.146 |
|
|
|
0.181 |
|
|
|
0.216 |
|
|
|
0.250 |
|
|
|
0.282 |
|
|
|
0.312 |
|
|
|
0.339 |
|
|
|
0.361 |
|
9 months
|
|
|
0.090 |
|
|
|
0.125 |
|
|
|
0.162 |
|
|
|
0.199 |
|
|
|
0.237 |
|
|
|
0.272 |
|
|
|
0.305 |
|
|
|
0.336 |
|
|
|
0.361 |
|
6 months
|
|
|
0.065 |
|
|
|
0.099 |
|
|
|
0.137 |
|
|
|
0.178 |
|
|
|
0.219 |
|
|
|
0.259 |
|
|
|
0.296 |
|
|
|
0.331 |
|
|
|
0.361 |
|
3 months
|
|
|
0.034 |
|
|
|
0.065 |
|
|
|
0.137 |
|
|
|
0.150 |
|
|
|
0.197 |
|
|
|
0.243 |
|
|
|
0.286 |
|
|
|
0.326 |
|
|
|
0.361 |
|
0 months
|
|
|
– |
|
|
|
– |
|
|
|
0.042 |
|
|
|
0.115 |
|
|
|
0.179 |
|
|
|
0.233 |
|
|
|
0.281 |
|
|
|
0.323 |
|
|
|
0.361 |
|
The exact fair market value and redemption date may not be set forth in the table above,
in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the
table, the number of SatixFy Ordinary Shares to be issued for each warrant exercised will be determined by a straight-line interpolation
between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable,
based on a 365 or 366-day year, as applicable. For example, if the volume weighted average price of the SatixFy Ordinary Shares during
the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is $11.00
per share, and at such time there are 57 months until the expiration of the warrants, holders may choose to, in connection with this redemption
feature, exercise their warrants for 0.277 SatixFy Ordinary Shares for each whole warrant. For an example where the exact fair market
value and redemption date are not as set forth in the table above, if the volume weighted average price of the SatixFy Ordinary Shares
during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is
$13.50 per share, and at such time there are 38 months until the expiration of the warrants, holders may choose to, in connection with
this redemption feature, exercise their warrants for 0.298 SatixFy Ordinary Shares for each whole warrant. In no event will the warrants
be exercisable in connection with this redemption feature for more than 0.361 SatixFy Ordinary Shares per warrant (subject to adjustment).
Finally, as reflected in the table above, if the warrants are out of the money and about to expire, they cannot be exercised on a cashless
basis in connection with a redemption by us pursuant to this redemption feature, since they will not be exercisable for any SatixFy Ordinary
Shares.
This redemption feature differs from the typical warrant redemption features used in
many other blank check offerings, which typically only provide for a redemption of warrants for cash (other than the SatixFy Private Warrants)
when the trading price for the SatixFy Ordinary Shares exceeds $18.00 per share for a specified period of time. This redemption feature
is structured to allow for all of the outstanding warrants to be redeemed when the SatixFy Ordinary Shares are trading at or above $10.00
per share, which may be at a time when the trading price of the SatixFy Ordinary Shares is below the exercise price of the warrants. We
have established this redemption feature to provide us with the flexibility to redeem the warrants without the warrants having to reach
the $18.00 per share threshold set forth above under “— Redemption of warrants when the price
per SatixFy Ordinary Share equals or exceeds $18.00.” Holders choosing to exercise their warrants in connection with a redemption
pursuant to this feature will, in effect, receive a number of shares for their warrants based on an option pricing model with a fixed
volatility input as of the date of this prospectus. This redemption right provides us with an additional mechanism by which to redeem
all of the outstanding warrants, and therefore have certainty as to our capital structure as the warrants would no longer be outstanding
and would have been exercised or redeemed. We will be required to pay the applicable redemption price to warrant holders if we choose
to exercise this redemption right and it will allow us to quickly proceed with a redemption of the warrants if we determine it is in our
best interest to do so. As such, we would redeem the warrants in this manner when we believe it is in our best interest to update our
capital structure to remove the warrants and pay the redemption price to the warrant holders.
As stated above, we can redeem the warrants when the SatixFy Ordinary Shares are trading
at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to our capital
structure and cash position while providing warrant holders with the opportunity to exercise their warrants on a cashless basis for the
applicable number of shares. If we choose to redeem the warrants when the SatixFy Ordinary Shares are trading at a price below the exercise
price of the warrants, this could result in the warrant holders receiving fewer SatixFy Ordinary Shares than they would have received
if they had chosen to wait to exercise their warrants for SatixFy Ordinary Shares if and when such SatixFy Ordinary Shares were trading
at a price higher than the exercise price of $11.50. As of September 23, 2022, the last reported closing price for each Endurance Public
Share was $9.96. Assuming that the SatixFy Ordinary Shares trade at the same price after the Closing, SatixFy will not be able to redeem
the SatixFy Public Warrants prior to their exercise.
No fractional SatixFy Ordinary Shares will be issued upon exercise. If, upon exercise,
a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of
SatixFy Ordinary Shares to be issued to the holder. If, at the time of redemption, the warrants are exercisable for a security other than
the SatixFy Ordinary Shares pursuant to the SatixFy A&R Warrant Agreement, the warrants may be exercised for such security.
Redemption procedures. A holder of a warrant
may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such
warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant
agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of the SatixFy
Ordinary Shares issued and outstanding immediately after giving effect to such exercise.
Anti-dilution Adjustments. If the number of
issued and outstanding SatixFy Ordinary Shares is increased by a capitalization or share dividend payable in SatixFy Ordinary Shares,
or by a split-up of SatixFy Ordinary Shares or other similar event, then, on the effective date of such capitalization or share dividend,
split-up or similar event, the number of SatixFy Ordinary Shares issuable on exercise of each warrant will be increased in proportion
to such increase in the issued and outstanding SatixFy Ordinary Shares. A rights offering to holders of SatixFy Ordinary Shares entitling
holders to purchase SatixFy Ordinary Shares at a price less than the “historical fair market value” (as defined below) will
be deemed a share dividend of a number of SatixFy Ordinary Shares equal to the product of (1) the number of SatixFy Ordinary Shares actually
sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or
exercisable for SatixFy Ordinary Shares) and (2) one minus the quotient of (x) the price per SatixFy Ordinary Share paid in such rights
offering and (y) the historical fair market value. For these purposes, (1) if the rights offering is for securities convertible into or
exercisable for SatixFy Ordinary Shares, in determining the price payable for SatixFy Ordinary Shares, there will be taken into account
any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (2) “historical
fair market value” means the volume weighted average price of SatixFy Ordinary Shares during the 10 trading day period ending on
the trading day prior to the first date on which the SatixFy Ordinary Shares trade on the applicable exchange or in the applicable market,
regular way, without the right to receive such rights.
In addition, if we, at any time while the warrants are outstanding and unexpired, pay
to all or substantially all of the holders of SatixFy Ordinary Shares a dividend or make a distribution in cash, securities or other assets
to the holders of SatixFy Ordinary Shares on account of such SatixFy Ordinary Shares, other than (a) as described above, (b) any cash
dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid on
the SatixFy Ordinary Shares during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed
$0.50 (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and
other similar transactions) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less
than $0.50 per share, or (c) to satisfy the redemption rights of the holders of SatixFy Ordinary Shares in connection with the Business
Combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount
of cash and/or the fair market value of any securities or other assets paid on each SatixFy Ordinary Shares in respect of such event.
If the number of issued and outstanding SatixFy Ordinary Shares is decreased by a consolidation,
combination, reverse share sub-division or reclassification of SatixFy Ordinary Shares or other similar event, then, on the effective
date of such consolidation, combination, reverse share sub-division, reclassification or similar event, the number of SatixFy Ordinary
Shares issuable on exercise of each warrant will be decreased in proportion to such decrease in issued and outstanding SatixFy Ordinary
Shares.
Whenever the number of SatixFy Ordinary Shares purchasable upon the exercise of the
warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately
prior to such adjustment by a fraction (x) the numerator of which will be the number of SatixFy Ordinary Shares purchasable upon the exercise
of the warrants immediately prior to such adjustment and (y) the denominator of which will be the number of SatixFy Ordinary Shares so
purchasable immediately thereafter.
In case of any reclassification or reorganization of the issued and outstanding SatixFy
Ordinary Shares, or in the case of a merger or consolidation of us with or into another corporation (other than a merger or consolidation
in which we are the continuing corporation and that does not result in any reclassification or reorganization of our issued and outstanding
SatixFy Ordinary Shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of
us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter
have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the
SatixFy Ordinary Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind
and amount of shares, stock or other equity securities or property (including cash) receivable upon such reclassification, reorganization,
merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received
if such holder had exercised their warrants immediately prior to such event. However, if such holders were entitled to exercise a right
of election as to the kind or amount of securities, cash or other assets receivable upon such merger or consolidation, then the kind and
amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of
the kind and amount received per share by such holders in such merger or consolidation that affirmatively make such election, and if a
tender, exchange or redemption offer has been made to and accepted by such holders under circumstances in which, upon completion of such
tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under
the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning
of Rule 13d-3 under the Exchange Act) more than 50% of the issued and outstanding SatixFy Ordinary Shares, the holder of a warrant will
be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled
as a shareholder if such warrant holder had exercised the warrant prior to the expiration of such tender or exchange offer, accepted such
offer and all of the SatixFy Ordinary Shares held by such holder had been purchased pursuant to such tender or exchange offer, subject
to adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided
for in the SatixFy A&R Warrant Agreement. Additionally, if less than 70% of the consideration receivable by the holders of SatixFy
Ordinary Shares in such a transaction is payable in the form of ordinary shares in the successor entity that is listed for trading on
a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately
following such event, and if the registered holder of the warrant properly exercises the warrant within 30 days following public disclosure
of such transaction, the warrant exercise price will be reduced as specified in the SatixFy A&R Warrant Agreement based on the per
share consideration minus Black-Scholes Warrant Value (as defined in the SatixFy A&R Warrant Agreement) of the warrant.
The warrants are issued in registered form under a warrant agreement between Continental,
as warrant agent, and us. You should review a copy of the SatixFy A&R Warrant Agreement, which is filed as an exhibit to this prospectus
is a part, for a complete description of the terms and conditions applicable to the warrants. The SatixFy A&R Warrant Agreement provides
that (a) the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correct
any mistake, including to conform the provisions of the SatixFy A&R Warrant Agreement to the description of the terms of the warrants
and the SatixFy A&R Warrant Agreement set forth in this prospectus, or defective provision or (ii) adding or changing any provisions
with respect to matters or questions arising under the SatixFy A&R Warrant Agreement as the parties to the SatixFy A&R Warrant
Agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the
warrants and (b) all other modifications or amendments require the vote or written consent of at least 50% of the then outstanding public
warrants and, solely with respect to any amendment to the terms of the SatixFy Private Warrants or PIPE Warrants, respectively, or any
provision of the SatixFy A&R Warrant Agreement with respect to the SatixFy Private Warrants, or PIPE Warrants, respectively, at least
50% of the then outstanding SatixFy Private Warrants and PIPE Warrants, respectively.
The warrant holders do not have the rights or privileges of holders of ordinary shares
and any voting rights until they exercise their warrants and receive SatixFy Ordinary Shares. After the issuance of SatixFy Ordinary Shares
upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by
shareholders.
No fractional warrants will be issued upon separation of the units and only whole warrants
will trade.
We have agreed that, subject to applicable law, any action, proceeding or claim against
us arising out of or relating in any way to the SatixFy A&R Warrant Agreement will be brought and enforced in the courts of the State
of New York or the United States District Court for the Southern District of New York, and we irrevocably submit to such jurisdiction,
which jurisdiction will be the exclusive forum for any such action, proceeding or claim. This provision applies to claims under the Securities
Act but does not apply to claims under the Exchange Act or any claim for which the federal district courts of the United States of America
are the sole and exclusive forum.
PIPE Warrants
Each of the 1,000,000 PIPE Warrants, pursuant to the terms of the Subscription Agreements,
have been issued on the same terms and subject to the same limitations applicable to the Public Warrants as described in the SatixFy A&R
Warrant Agreement, except that the PIPE Warrants, until they are resold by the PIPE Investors pursuant to an effective registration statement
or Rule 144 under the Securities Act, will bear a book-entry restrictive legend.
Private Warrants
Each of the outstanding SatixFy Private Warrants will not be redeemable by us (except
as described above under “— Public Shareholders’ Warrants — Redemption of warrants
when the price per SatixFy Ordinary Share equals or exceeds $10.00”) so long as they are held by the Sponsor or its permitted
transferees. The Sponsor, or its permitted transferees, has the option to exercise the SatixFy Private Warrants on a cashless basis and
have certain registration rights described herein. Otherwise, the SatixFy Private Warrants have terms and provisions that are identical
to the SatixFy Public Warrants. If the SatixFy Private Warrants are held by holders other than the Sponsor or its permitted transferees,
the SatixFy Private Warrants will be redeemable by us and exercisable by the holders on the same basis as the SatixFy Public Warrants.
In addition, for as long as the SatixFy Private Warrants are held by Cantor Fitzgerald & Co. or its designees or affiliates, they
will be subject to the registration rights limitations imposed by FINRA Rule 5110 and may not be exercised after five years from the commencement
of sales in the Endurance IPO.
Except as described under “— Public Shareholders’
Warrants — Redemption of warrants when the price per SatixFy Ordinary Share equals or exceeds $10.00,” if holders of
the SatixFy Private Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or
its warrants for that number of SatixFy Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of SatixFy
Ordinary Shares underlying the warrants, multiplied by the excess of the “historical fair market value” (defined below) less
the exercise price of the warrants by (y) the historical fair market value. For these purposes, the “historical fair market value”
shall mean the average last reported sale price of the SatixFy Ordinary Shares for the 10 trading days ending on the third trading day
prior to the date on which the notice of warrant exercise is sent to the warrant agent.
Except as described above, the Private Warrants have terms and provisions that are identical
to those of the Public Warrants, including as to exercise price, exercisability and exercise period.
BENEFICIAL
OWNERSHIP OF SECURITIES
The following table sets forth information regarding the beneficial ownership of our
ordinary shares by:
|
• |
each person who is the beneficial owner of more than 5% of the outstanding shares of any series of our voting ordinary shares;
|
|
• |
each of our current executive officers and directors as of April 24, 2023; and |
|
• |
all executive officers and directors of the Company as of April 24, 2023, as a group. |
The beneficial ownership of ordinary shares of the Company is based on 80,756,058 ordinary
shares issued and outstanding as of April 24, 2023.
Beneficial ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to, or the power to receive the economic benefit of ownership of, the securities. In computing
the number of shares beneficially owned by a person and the percentage ownership of that person, shares that the person has the right
to acquire within 60 days are included, including through the exercise of any option or other right or the conversion of any other security.
However, these shares are not included in the computation of the percentage ownership of any other person.
Unless otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all of our ordinary shares beneficially owned by them.
|
|
Number of Shares Beneficially Owned |
|
|
Percentage of Outstanding Shares |
|
5%
Holders (other than executive officers and directors): |
|
|
|
|
|
|
Endurance Antarctica Partners, LLC(1)
|
|
|
9,438,942 |
|
|
|
11.7 |
% |
Vellar Opportunities Fund Master, Ltd.(11)
|
|
|
6,150,000 |
|
|
|
7.6 |
% |
Executive
Officers and Directors(2) |
|
|
|
|
|
|
|
|
Ido Gur
|
|
|
— |
|
|
|
— |
|
Oren Harari
|
|
|
79,200 |
|
|
|
* |
|
Nir Barkan
|
|
|
|
|
|
|
|
|
Itzik Ben Bassat |
|
|
211,192 |
|
|
|
* |
|
Mary P. Cotton
|
|
|
— |
|
|
|
— |
|
Richard C. Davis(1)
|
|
|
— |
|
|
|
— |
|
Moshe Eisenberg . |
|
|
— |
|
|
|
— |
|
Doron Rainish(3)
|
|
|
1,153,679 |
|
|
|
1.4 |
% |
Yair Shamir (4)
|
|
|
— |
|
|
|
— |
|
Yoram Stettiner
|
|
|
— |
|
|
|
— |
|
David L. Willetts(5)
|
|
|
26,400 |
|
|
|
* |
|
Charles A. Bloomfield(6)
|
|
|
34,496 |
|
|
|
* |
|
Simona Gat(7)(12)
|
|
|
16,186,298 |
|
|
|
20.0 |
% |
Yoav Leibovitch(8)
|
|
|
21,903,349 |
|
|
|
27.1 |
% |
Divaydeep Sikry(9)
|
|
|
40,128 |
|
|
|
* |
|
Stephane Zohar(10)
|
|
|
|
|
|
|
|
|
All Executive Officers
and Directors as a Group |
|
|
|
|
|
|
|
|
* Less than 1%.
(1) Consists of 5,673,846 SatixFy Ordinary Shares, including 500,000 Price
Adjustment Shares, and 3,765,096 SatixFy Ordinary Shares underlying the SatixFy Warrants. Richard C. Davis shares voting and investment
control over shares held by the Sponsor by virtue of his shared control of the Sponsor. By virtue of this relationship, Richard C. Davis
may be deemed to share beneficial ownership of the securities held of record of the Sponsor. Richard C. Davis has disclaimed beneficial
ownership of the shares, except to the extent of his pecuniary interest therein, if any. The business address for Endurance Antarctica
Partners, LLC is 200 Park Avenue, 32nd Floor New York, NY 10166.
(2) The business address for each of the directors and officers of SatixFy
is 2 Hamada St., Rehovot 670315, Israel.
(3) Consists of 1,153,679 SatixFy Ordinary Shares held directly and 119,680
SatixFy Ordinary Shares underlying options to acquire SatixFy Ordinary Shares exercisable within 60 days of April 24, 2023.
(4) Mr. Yair Shamir is a director of CEL Catalyst Communications Limited and
has the power to direct it to vote and dispose of the shares and has shared voting and investment power over the shares. Mr. Yair
Shamir disclaims any beneficial ownership of any shares owned by CEL Catalyst Communications Limited other than to the extent of any pecuniary
interest he may have therein, directly or indirectly.
(5) Consists of 26,400 SatixFy Ordinary Shares underlying options to acquire SatixFy
Ordinary Shares exercisable within 60 days of April 24, 2023.
(6) Consists of 34,496 SatixFy Ordinary Shares underlying options to acquire SatixFy
Ordinary Shares exercisable within 60 days of April 24, 2023.
(7) Consists of 16,186,298 SatixFy Ordinary Shares held directly. Ms. Simona
Gat is one of SatixFy’s founders. Ms. Simona Gat’s holdings include Price Adjustment Shares.
(8) Consists of 21,903,349 SatixFy Ordinary Shares held directly. Mr. Yoav
Leibovitch is one of SatixFy’s founders. Mr. Yoav Leibovitch’s holdings include Price Adjustment Shares.
(9) Consists of 40,128 SatixFy Ordinary Shares underlying options to acquire
SatixFy Ordinary Shares exercisable within 60 days of April 24, 2023.
(10) Consists of 45,144 SatixFy Ordinary Shares underlying options to acquire
SatixFy Ordinary Shares exercisable within 60 days of April 24, 2023.
(11) Information is based on the Schedule 13G/A filed by Vellar Opportunities
Fund Master, Ltd., Cohen & Company Financial Management, LLC, Dekania Investors, LLC, Cohen & Company LLC, Cohen & Company
Inc., and Daniel G. Cohen (collectively, the “Cohen Entities”) on February 14, 2023 and information known to SatixFy. The
Cohen Entities are affiliated with Vellar Opportunity Fund SPV LLC — Series 7, our original counterparty under the Forward Purchase
Agreement. The Cohen Entities have disclosed that they share dispositive power over the SatixFy Ordinary Shares held by them. The business
address for the Cohen Entities and Vellar Opportunity Fund SPV LLC — Series 7 is 3 Columbus Circle, 24th Floor, New York, NY 10019.
Vellar has since informed us that, as of April 1, 2023, they had sold 3,163,025 SatixFy Ordinary Shares that are Subject Shares under
the Forward Purchase Agreement.
(12) Ms. Simona Gat resigned from her positions as President of SatixFy, the CEO
and a director of Satixfy UK Limited, and a director of Satixfy Bulgaria, effective April 30, 2023.
As of April 24, 2023, we had 75 record holders, of which 14
record holders were located in Israel and held approximately 47.3 million ordinary shares.
SATIXFY ORDINARY SHARES
ELIGIBLE FOR FUTURE SALE
We have 250,000,000 ordinary shares authorized
and, as of April 24, 2023, we had 80,756,058 ordinary shares issued and outstanding. All of the SatixFy Ordinary Shares issued in exchange
for Endurance Class A ordinary shares and Founder Shares as a part of the Business Combination are freely transferable by persons other
than the Sponsor (with respect to certain of its shares), which as of April 24, 2023 holds 5,173,846 SatixFy Ordinary Shares (including
the Unvested Sponsor Interests), in addition to 500,000 Price Adjustment Shares. The SatixFy Ordinary Shares and PIPE Warrants issued
to the PIPE Investors and the SatixFy Ordinary Shares held by existing SatixFy holders as of the time before the Business Combination
are restricted securities which may be sold only pursuant to Rule 144 of the Securities Act or pursuant to a valid registration statement
registering the resale of such shares under the Securities Act. The SatixFy Warrants will become exercisable upon the effectiveness of
the registration statement of which this prospectus forms a part. The remaining SatixFy Ordinary Shares, including the Founder Shares
held by certain holders other than the Sponsor and all SatixFy Ordinary Shares held by existing SatixFy shareholders prior to the Business
Combination (other than Francisco Partners, the PIPE Investors, and the Sellers under the Forward Purchase Agreement), were subject to
the lock-up restrictions, which have since expired, but certain of the shares remain subject to certain securities law restrictions, though
may still be sold pursuant to Rule 144 or an effective registration statement. Sales of substantial amounts of the SatixFy Ordinary Shares
in the public market could adversely affect prevailing market prices of the SatixFy Ordinary Shares.
Registration Rights
A&R Shareholders’ Agreement Registration
Rights
Under the A&R Shareholders’ Agreement, SatixFy agreed to register for resale
upon demand certain SatixFy Ordinary Shares that are held by the parties thereto from time to time. In certain circumstances, various
parties to the A&R Shareholders’ Agreement will be entitled to customary piggyback registration rights, in each case subject
to certain limitations set forth in the A&R Shareholders’ Agreement. In addition, the A&R Shareholders’ Agreement
provides that SatixFy will pay certain expenses relating to such registrations and indemnify the shareholders against certain liabilities.
The rights granted under the A&R Shareholders’ Agreement superseded any prior registration, qualification, or similar rights
of the parties with respect to SatixFy securities, and all such prior agreements were terminated.
A&R Registration Rights Agreement
Concurrently with the execution of the Business Combination Agreement, Endurance, the
Sponsor and Cantor Fitzgerald & Co. entered into the A&R Registration Rights Agreement pursuant to which, following completion
of the Transactions, the parties to the A&R Registration Rights Agreement will receive the same registration rights as those persons
party to the A&R Shareholders’ Agreement. The parties to the A&R Registration Rights Agreement are also entitled customary
demand and/or piggyback registration rights, in each case subject to certain limitations consistent with the A&R Shareholders’
Agreement. The rights granted under the A&R Registration Rights Agreement supersedes any prior registration, qualification, or similar
rights of the parties with respect to SatixFy or Endurance securities (other than the A&R Shareholders’ Agreement), and all
such prior agreements were terminated.
On December 11, 2022, we entered in an agreement with Cantor and certain of its affiliates
(the “Released Parties”) whereby we agreed, in consideration of a $1.5 million payment from the Released Parties, to waive
any and all lock-up restrictions with respect to the 1,000,000 SatixFy Private Warrants held by the Released Parties, upon which release
Cantor elected to exercise on a cashless basis 935,297 of its SatixFy Private Warrants for 553,692 SatixFy Ordinary Shares, which shares
are eligible for sale in the public market.
Rule 144
Pursuant to Rule 144 under the Securities Act (“Rule
144”), a person who has beneficially owned restricted SatixFy Ordinary Shares for at least six months would, subject to the
restrictions noted in the section below, be entitled to sell their securities provided that (i) such person is not deemed to have been
an affiliate of SatixFy at the time of, or at any time during the three months preceding, a sale and (ii) SatixFy has been subject to
the Exchange Act periodic reporting requirements for at least three months before the sale and has filed all required reports under Section
13 or 15(d) of the Exchange Act during the twelve months (or such shorter period as SatixFy was required to file reports) preceding the
sale.
Persons who have beneficially owned restricted SatixFy Ordinary Shares for at least
six months but who are affiliates of SatixFy at the time of, or at any time during the three months preceding, a sale, would be subject
to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that
does not exceed the greater of:
|
• |
1% of the total number of SatixFy Ordinary Shares then outstanding; or the average weekly reported trading volume of the SatixFy
Ordinary Shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. Sales by affiliates
of SatixFy under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public
information about SatixFy. |
|
• |
Sales by affiliates of SatixFy under Rule 144 are also limited by manner of sale provisions and notice requirements and by the availability
of current public information about SatixFy. |
Options
We have filed a registration statement on Form S-8 under the Securities Act to register
ordinary shares reserved for issuance under our equity compensation programs. The registration statement on Form S-8 became effective
automatically upon filing.
Ordinary shares issued upon exercise of a share option and registered under the Form
S-8 registration statement will, subject to vesting provisions and Rule 144 volume limitations applicable to our affiliates, be available
for sale in the open market immediately.
SELLING SHAREHOLDERS
On October 27, 2022, we consummated the Business Combination.
The Selling Shareholders may offer and sell, from time to time, any or all of the ordinary
shares and PIPE Warrants being offered for resale by this prospectus.
In addition, this prospectus relates to the issuance and sale of up to 10,000,000 ordinary
shares underlying the SatixFy Public Warrants that are issuable by us upon the exercise of the SatixFy Public Warrants, which were previously
registered.
The term “Selling Shareholders” includes the shareholders listed in the
table below and their permitted transferees.
The table below provides information regarding
the beneficial ownership of our ordinary shares and warrants of each Selling Shareholder prior to the offering, the number of ordinary
shares (including ordinary shares underlying warrants) and, separately, the number of PIPE Warrants that may be sold by each Selling Shareholder
in the offering and that each Selling Shareholder is expected to beneficially own after this offering. We have based percentage ownership
on 80,756,058 ordinary shares outstanding as of April 24, 2023.
Because each Selling Shareholder may dispose of all, none or some portion of their securities,
no estimate can be given as to the number of securities that will be beneficially owned by a Selling Shareholder upon termination of this
offering. For purposes of the table below, however, we have assumed that after termination of this offering none of the securities covered
by this prospectus will be beneficially owned by the Selling Shareholder and further assumed that the Selling Shareholders will not acquire
beneficial ownership of any additional securities during the offering and will retain beneficial ownership of the securities not covered
by this prospectus. In addition, the Selling Shareholders may have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time and from time to time, our securities in transactions exempt from the registration requirements of the
Securities Act after the date on which the information in the table is presented.
|
|
Ordinary Shares(1) |
|
|
PIPE Warrants |
|
Name |
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned After Offering |
|
|
Percent Owned After Offering |
|
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned After Offering |
|
|
Percent Owned After Offering |
|
ACM ARRTG LLC(2) |
|
|
4,397,607 |
|
|
|
3,999,384 |
|
|
|
398,223 |
|
|
|
0.5 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cantor(3)(7) |
|
|
2,118,395 |
|
|
|
1,564,703 |
|
|
|
553,692 |
|
|
|
0.7 |
% |
|
|
500,000 |
|
|
|
500,000 |
|
|
|
— |
|
|
|
— |
|
Endurance Antarctica Partners, LLC(4)(7)
|
|
|
10,035,096 |
|
|
|
5,156,827 |
|
|
|
4,878,269 |
|
|
|
5.6 |
% |
|
|
500,000 |
|
|
|
500,000 |
|
|
|
— |
|
|
|
— |
|
Francisco Partners(5)
|
|
|
846,434 |
|
|
|
846,434 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Vellar Opportunity Fund SPV LLC –
Series 7(6) |
|
|
6,150,000 |
|
|
|
6,150,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
(1) |
Includes ordinary shares underlying SatixFy Warrants. |
(2) |
Consists of 3,994,384 SatixFy Ordinary Shares purchased pursuant to the Forward Purchase Agreement and 398,223 SatixFy Ordinary Shares
underlying the SatixFy Warrants owned by the aforementioned beneficial owners that will be exercisable within 60 days of the date hereof.
The address of ACM ARRT G LLC is One Rockefeller Plaza, 32nd Floor New York, NY 10020. ACM ARRT informed us that, as of January 26, 2023,
they had sold 2,199,415 SatixFy Ordinary Shares that are Subject Shares under the Forward Purchase Agreement. |
(3) |
Consists of (i) 1,000,000 SatixFy Ordinary Shares
and, under the PIPE Warrants column, 500,000 PIPE Warrants purchased by CF Principal Investments LLC pursuant to the PIPE Financing, (ii)
500,000 SatixFy Ordinary Shares underlying such PIPE Warrants, (iii) 553,692 SatixFy Ordinary Shares received in connection with its cashless
exercise of 935,297 SatixFy Private Warrants, and (iv) 64,703 SatixFy Ordinary Shares underlying SatixFy Private Warrants beneficially
owned by Cantor Fitzgerald & Co. The business address of Cantor is 499 Park Avenue, New York, NY 10022. CF Group Management, Inc.
(“CFGM”) is the managing general partner of Cantor Fitzgerald, L.P. and directly or indirectly controls the managing general
partner of Cantor Fitzgerald Securities (“CFS”), the sole member of CF Principal Investments, LLC (“CFPI”). Mr.
Lutnick is Chairman and Chief Executive of CFGM and trustee of CFGM’s sole stockholder. Cantor Fitzgerald, L.P., indirectly, holds
a majority of the ownership interests in CFS, and therefore also indirectly, CFPI. As such, each of Cantor, CFGM and Mr. Lutnick may be
deemed to have beneficial ownership of the securities directly held by CFPI. Each such entity or person disclaims any beneficial ownership
of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly. The table above
assumes that the 553,692 SatixFy Ordinary Shares received by Cantor in connection with its cashless exercise of SatixFy Private Warrants
will continue to be beneficially owned by Cantor upon the completion of this offering. Cantor informed us that they had sold 1,000,000
SatixFy Ordinary Shares as well as additional SatixFy Ordinary Shares received by Cantor upon exchange of the SatixFy Private Warrants.
|
(4) |
Consists of (i) 4,770,000 SatixFy Ordinary Shares owned by the Sponsor, which includes, among other shares (x) 628,000 SatixFy Ordinary
Shares comprising Unvested Sponsor Interests, which are subject to vesting and forfeiture pursuant to the Sponsor Letter Agreement, (y)
2,000,000 SatixFy Ordinary Shares issued to the Sponsor in connection with its cashless exercise of 3,364,904 SatixFy Private Warrants,
and (z) 391,371 SatixFy Ordinary Shares which are held in escrow pursuant to the Subscription Agreements (and may be returned to the Sponsor
pursuant to the terms thereunder), (ii) 3,265,096 SatixFy Ordinary Shares underlying SatixFy Private Warrants held by the Sponsor, which
includes 2,652,000 Endurance Private Warrants comprising Unvested Sponsor Interests which are subject to vesting and forfeiture pursuant
to the Sponsor Letter Agreement, (iii) 1,000,000 SatixFy Ordinary Shares and, under the PIPE Warrants column, 500,000 PIPE Warrants purchased
by Endurance Antarctica Partners, LLC pursuant to the PIPE Financing, (iv) 500,000 SatixFy Ordinary Shares underlying the PIPE Warrants,
and (v) 500,000 Price Adjustment Shares that are subject to vesting and forfeiture. The address of Endurance Antarctica Partners, LLC
is 200 Park Avenue, 32nd Floor, New York, NY 10166. None
of the outstanding SatixFy Ordinary Shares owned by Sponsor (including the Price Adjustment Shares), other than (A) the 1,000,000 SatixFy
Ordinary Shares purchased by Endurance Antarctica Partners, LLC pursuant to the PIPE Financing, (B) 500,000 SatixFy Ordinary Shares underlying
the PIPE Warrants purchased by Endurance Antarctica Partners, LLC pursuant to the PIPE Financing, (C) 3,265,096 SatixFy Ordinary Shares
underlying SatixFy Private Warrants and (D) the 391,371 SatixFy Ordinary Shares that are Escrow Shares (and which may be transferred to
the PIPE Investors, in their capacity as such, pursuant to the Subscription Agreements if certain conditions are met), are being registered
under the registration statement of which this prospectus is a part. Accordingly, the table above assumes that 4,878,269 such outstanding
unregistered (or unrestricted shares) SatixFy Ordinary Shares will continue to be beneficially owned by Endurance Antarctica Partners,
LLC upon the completion of this offering. |
(5) |
Consists of an aggregate of 846,364 SatixFy Ordinary Shares received by FP Credit Partners, L.P., FP Credit Partners Phoenix, L.P.,
FP Credit Partners II, L.P. and FP Credit Partners Phoenix II, L.P. in connection with the 2022 Credit Agreement (including 29,065 SatixFy
Ordinary Shares held in escrow which may be released back to Francisco Partners or to the Sponsor and CF Principal Investments LLC upon
certain conditions). The address of Francisco Partners is One Letterman Drive, Building C — Suite 410, San Francisco, CA 94129.
We are not aware of any other beneficial holdings of our shares by Francisco Partners. |
(6) |
Consists of 4,544,900 SatixFy Ordinary Shares purchased pursuant to the Forward Purchase Agreement (including 150,000 shares that
are Share Consideration thereunder) and 1,605,100 Additional Shares issued to Vellar in a private placement thereunder after the closing
of the Business Combination. The address of Vellar Opportunity Fund SPV LLC — Series 7 is 3 Columbus Circle, 24th
Floor, New York, NY 10019. Vellar informed us that, as of April 1, 2023, they had sold 3,163,025 SatixFy Ordinary Shares that are Subject
Shares under the Forward Purchase Agreement. |
(7) |
Such holder may be entitled to receive up to 538,461 of the Escrow Shares pursuant to the conditions of the Subscription Agreements
as described elsewhere in the prospectus. Accordingly, 1,076,922 SatixFy Ordinary Shares that are Escrow Shares, only 420,436 of which
are reflected in this table as beneficially owned by any of the Selling Shareholders (see footnotes (4) and (5) above), are being registered
under the registration statement of which this prospectus is a part. |
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following is a description of certain related party transactions in effect as of
the date of this prospectus with any of our executive officers, directors or their affiliates and holders of more than 10% of any class
of our voting securities in the aggregate, which we refer to as related parties, other than employment, compensation and indemnification
arrangements which are described under “Management,” which are incorporated by reference
herein.
Business Combination Agreement
For a description
of the Business Combination Agreement, please see “Management’s Discussion and Analysis of
Financial Condition and Results of Operations –– Business Combination Agreement.”
Issuance of Price Adjustment Shares
Immediately following the Effective Time, SatixFy issued a total of 27,500,000 Price
Adjustment Shares with SatixFy’s founders receiving 27,000,000 Price Adjustment Shares and the Sponsor receiving 500,000 Price Adjustment
Shares. The Price Adjustment Shares, giving effect to the December Letter Agreement, vest upon three price adjustment achievement dates:
(i) one-third of the Price Adjustment Shares will vest if at any time forty-five (45) days after the date of effectiveness of the Registration
Statement and within the 10-year period following the closing, the volume weighted average price (“VWAP”) of SatixFy Ordinary
Shares is greater than or equal to $12.50 for any seven (7) trading days within a period of 30 consecutive trading days, (ii) one-third
of the Price Adjustment Shares will vest if at any time forty-five (45) days after the date of effectiveness of the Registration Statement
and within the 10-year period following the closing, the VWAP of SatixFy Ordinary Shares is greater than or equal to $14.00 for any seven
(7) trading days within a period of 30 consecutive trading days and (iii) one-third of the Price Adjustment Shares will vest if at any
time forty-five (45) days after the date of effectiveness of the Registration Statement and within the 10-year period following the closing,
the VWAP of SatixFy Ordinary Shares is greater than or equal to $15.50 for any seven (7) trading days within a period of 30 consecutive
trading days.
The share price targets shall be equitably adjusted for stock splits, reverse stock
splits, stock dividends, reorganizations, recapitalization, reclassifications, combinations, exchanges of shares and other similar changes
or transactions to the SatixFy Ordinary Shares occurring on or after the Closing. In the event of a SatixFy change in control transaction
within ten (10) years following the closing of the Business Combination, all of the unvested Price Adjustment Shares not earlier vested
will vest immediately prior to the closing of such change in control. If the Price Adjustment Shares do not vest according to the achievement
dates in the Business Combination Agreement, or if a change of control has not occurred after the Closing and prior to the date that is
ten (10) years following the Closing Date, then any unvested Price Adjustment Shares shall automatically be forfeited back to SatixFy
for no consideration.
A&R Shareholders’ Agreement
Concurrently with
the execution of the Business Combination Agreement, SatixFy, the Sponsor and certain shareholders of SatixFy entered into the A&R
Shareholders’ Agreement, pursuant to which various parties to the A&R Shareholders’ Agreement will be entitled to customary
piggyback registration rights, in each case subject to certain limitations set forth in the A&R Shareholders’ Agreement. In
addition, the A&R Shareholders’ Agreement provides that SatixFy will pay certain expenses relating to such registrations and
indemnify the securityholders against certain liabilities. The rights granted under the A&R Shareholders’ Agreement supersede
any prior registration, qualification, or similar rights of the parties with respect to SatixFy securities, and all such prior agreements
shall be terminated.
Additionally, under
the A&R Shareholders’ Agreement, each of the shareholders of SatixFy party thereto (other than the Sponsor) have agreed not
to transfer its SatixFy Ordinary Shares, except to certain permitted transferees, beginning on the closing date of the Business Combination
and continuing for a period of one hundred eighty (180) days thereafter, which period has expired as of the date hereof.
A&R Registration Rights Agreement
Concurrently with the execution of the Business Combination Agreement, Endurance, the
Sponsor and Cantor Fitzgerald & Co. entered into the A&R Registration Rights Agreement pursuant to which, following completion
of the Transactions, the parties to the A&R Registration Rights Agreement will receive the same registration rights as those persons
party to the A&R Shareholders’ Agreement. The parties to the A&R Registration Rights Agreement are also entitled customary
demand and/or piggyback registration rights, in each case subject to certain limitations consistent with A&R Shareholders’ Agreement.
The rights granted under the A&R Registration Rights Agreement superseded any prior registration, qualification, or similar rights
of the parties with respect to SatixFy or Endurance securities (other than the A&R Shareholders’ Agreement), and all such prior
agreements were terminated.
On December 11, 2022, we entered in an agreement with Cantor and certain of its affiliates
(the “Released Parties”) whereby we agreed, in consideration of a $1.5 million payment from the Released Parties, to
waive any and all lock-up restrictions with respect to the 1,000,000 SatixFy Private Warrants held by the Released Parties, upon which
release Cantor elected to exercise on a cashless basis 935,297 of its SatixFy Private Warrants for 553,692 SatixFy Ordinary Shares, which
shares are eligible for sale in the public market.
Sponsor Letter Agreement
Concurrently with the execution of the Business Combination Agreement, the Sponsor entered
into the Sponsor Letter Agreement, which was subsequently amended by the First Sponsor Letter Amendment and the Second Sponsor Letter
Amendment, in favor of SatixFy and Endurance, pursuant to which it agreed to (i) vote all of the Founder Shares and any other equity
securities of Endurance beneficially owned by it in favor of the Business Combination and each other proposal related to the Business
Combination proposed by the Endurance board of directors at the extraordinary general meeting of Endurance shareholders called to approve
the Business Combination, (ii) appear at such meeting for the purpose of establishing a quorum, (iii) vote all such shares against
any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Business Combination
or any of the other Transactions contemplated by the Business Combination Agreement, (iv) not to transfer, assign, or sell such Endurance
shares and warrants (or shares and warrants of SatixFy issuable to it upon consummation of the Business Combination) it owns (the “Sponsor
Interests”) (a) prior to the consummation of the Business Combination, except to certain permitted transferees, and (b) for
a period of one hundred eighty (180) days following the closing date of the Business Combination (which period has since expired), and
(v) waive any adjustment to the Initial Conversion Ratio (as defined in the Endurance Articles) that would otherwise apply pursuant
to the amended and restated memorandum and articles of association, and to any other anti-dilution protections or other rights with respect
to the Founder Shares or otherwise, as a result of the Transactions. Additionally, the Sponsor agreed not to redeem any Endurance ordinary
shares in connection with any shareholder approval of the Business Combination and to waive anti-dilution protections.
Pursuant to the Second Sponsor Letter Amendment the Sponsor irrevocably forfeited
immediately prior to the consummation of the Business Combination, for no consideration, 800,000 Founder Shares which would otherwise
be converted into SatixFy Ordinary Shares upon consummation of the Business Combination.
Pursuant to the Sponsor Letter Agreement, 628,000 Founder Shares and 2,652,000 SatixFy
Private Warrants (together with the shares underlying such warrants), which were converted into SatixFy Ordinary Shares and SatixFy Private
Warrants, respectively, upon consummation of the Business Combination, held by the Sponsor are subject to the vesting provisions set forth
below. All shares and warrants subject to such vesting, which vesting terms are presented below shall be referred to as the “Unvested
Sponsor Interests”. The vesting terms presented below give effect to the terms of the letter agreement, dated as of December 8,
2022, entered into between the Sponsor and SatixFy MS (the "December Letter Agreement").
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One-third of the Unvested Sponsor Interests will vest if at any time within the five year period following the closing of the
Business Combination, the VWAP of our ordinary shares is greater than or equal to $12.50 for any seven trading days within a period
of 30 consecutive trading days beginning at least 45 days after the date of effectiveness of the registration statement of which
this prospectrus forms a part was originally declared effective, January 23, 2023; |
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One-third of the Unvested Sponsor Interests will vest if at any time and within the five year period following the closing of
the Business Combination, the VWAP of our ordinary shares is greater than or equal to $14.00 for any seven trading days within a
period of 30 consecutive trading days beginning at least 45 days after the date of effectiveness of the registration statement of
which this prospectrus forms a part was originally declared effective, January 23, 2023; and |
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One-third of the Unvested Sponsor Interests will vest if at any time within the five year period following the closing of the
Business Combination, the VWAP of our ordinary shares is greater than or equal to $15.50 for any seven trading days within a period
of 30 consecutive trading days beginning at least 45 days after the date of effectiveness of the registration statement of which
this prospectrus forms a part was originally declared effective, January 23, 2023. |
In the event of a SatixFy change in control transaction within five years following
the closing of the Business Combination, all of the Unvested Sponsor Interests not earlier vested will vest immediately prior to the closing
of such change in control. If the aforementioned conditions are not met within five years following the closing of the Business Combination,
all of the Unvested Sponsor Interests not earlier vested will be forfeited. Additionally, to the extent the Sponsor forfeits any Escrow
Shares (as defined and described above under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital Resources—PIPE Financing”) to the PIPE Investors, an
equal number of the Unvested Sponsor Interests will vest immediately.
PIPE Financing
In connection with the PIPE Financing, we entered into a Subscription Agreement with
the Sponsor, pursuant to which affiliates of the Sponsor purchased 1,000,000 PIPE Units from us in a private placement. For a description
of the PIPE Financing and the Subscription Agreement, please see “Management’s Discussion
and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources—PIPE Financing.”
Warrant Letter Agreement.
On January 12, 2023, we entered into the Warrant Letter Agreement with the Sponsor
and Cantor pursuant to which the holders of warrants issued in connection with the PIPE agreed to exchange such warrants, on a one-for-one
basis, new PIPE warrants issued pursuant to the SatixFy A&R Warrant Agreement.
Development Agreement — Jet Talk
On February 6, 2018, SatixFy entered into two development agreements with Jet Talk
Limited, a joint venture company owned by SatixFy (51%) and ST Electronics (Satcom & Sensor Systems) Pte Ltd. (49%), an affiliate
of our shareholder ST Engineering iDirect, Inc., to provide an electronically steerable Panel Antenna Array and supporting modem for a
total consideration of $33,000 to be provided during 2018 through 2022.
See Note 6, under the heading “Investment in Jet-Talk”, to SatixFy’s
consolidated financial statements included elsewhere herein.
Product Development and Sales Arrangements — iDirect
On December 20, 2013, our subsidiary, SatixFy Israeli Ltd., signed an agreement with
an affiliate of our shareholder ST Engineering iDirect, Inc. (“iDirect”), for the manufacturing and sale of certain of SatixFy’s
products and modem chips. The products were delivered during 2017 and 2018.
On April 4, 2016, the Company signed a framework agreement with iDirect for the development,
manufacturing and sale of 90,000 S-IDU units manufactured by the Company. The framework agreement has a term of 10 years with an option
to mutually extend the agreement by an additional five years. To date, SatixFy has generated R&D/development revenues of approximately
$20 million and product sales of approximately $8 million dollars under the framework agreement.
On March 23, 2018, the Company and iDirect signed a memorandum of understanding (the
“MOU”), pursuant to which the parties agreed to cooperate to enter into a license agreement under which the Company would
grant iDirect a worldwide, non-exclusive, royalty-free license to produce and sell S-IDU products based on certain deliverables to be
provided by the Company, such as designs related to the S-IDU products. According to the MOU, the parties acknowledged that iDirect would
pay to SatixFy a one-time fee of $1.95 million for such deliverables. In addition, the Company would provide iDirect with the required
software tools that iDirect may use to develop an appropriate software package for manufacturing the S-IDU products. The MOU also provided
that the Company, through its contract manufacturer, would perform certain upgrades to the terminals already purchased by iDirect for
an additional fee. The MOU had an initial term of one year and was extended for an additional year to March 22, 2020.
On October 26, 2020, SatixFy and iDirect entered into an agreement for the purchase
of 18,000 S-IDU units and product support services, for a total value of approximately $2.25 million.
On December 1, 2020, the Company entered into an additional memorandum of understanding
with iDirect for a period of one year regarding the possible engagement of SatixFy for assistance in the development, engineering, business
development and sales of iDirect products.
During 2021 and 2022, SatixFy and iDirect entered into several purchase orders to
purchase a total of 38,000 SX-3000 chips manufactured by the Company including support services, for a total value of approximately $2.7
million.
Mary P. Cotton serves as a director on the SatixFy board. Ms. Cotton previously served
at ST Engineering iDirect, where she previously served as Chief Executive Officer from 2007 to 2017, as a director from 2007 to
2018 and as a Senior Advisor until 2022.
Shareholder Loan
In March 2020, our subsidiary, SatixFy UK Limited entered into a $5 million loan agreement
with an existing shareholder, Mr. Alfred H. Moses. The loan was repaid in full in February 2022. The loan bore interest at LIBOR plus
200 basis points for the first 12 months and stepped up an additional 50 basis points every six months thereafter, until it was repaid.
As part of the loan agreement, we granted the shareholder warrants, which, upon exercise,
will enable the shareholder to receive series C preferred shares, at an exercise price of $6.078 per share, without giving effect to the
Preferred Share Conversion or the Pre-Closing Recapitalization.
See Note 12 to SatixFy’s consolidated financial statements included elsewhere
herein.
Services Agreement — ArgoSat Consulting
Effective as of December 4, 2022, we entered into a Consulting Agreement with ArgoSat
Consulting LLC “ArgoSat”), an entity affiliated with Richard C. Davis, one of our directors (the “ArgoSat Consulting
Agreement”), and the Sponsor. Pursuant to the ArgoSat Consulting Agreement, ArgoSat agreed to provide various services to our management,
including consulting with respect to capital raising, strategic planning, customer acquisition and certain strategic opportunities. The
term of the ArgoSat Consulting Agreement is three (3) years and we or ArgoSat may terminate the agreement at any time upon written notice
to the other party. During the second and third years of the ArgoSat Consulting Agreement, we agreed to pay ArgoSat a monthly fee of $35,000
per month during such period and to pay ArgoSat for additional services rendered by it outside of the agreement at a rate of $400 per
man hour. We also agreed to reimburse ArgoSat for reasonably documented out-of-pocket expenses in connection with its performance under
the ArgoSat Consulting Agreement and to indemnify ArgoSat, its managers, members, officers, employees, consultants and affiliates against
liabilities incurred by ArgoSat as a result of a breach by us of the ArgoSat Consulting Agreement, laws or regulations, other than liabilities
arising from gross negligence or willful misconduct of ArgoSat.
December Letter Agreement
On December 8, 2022, we entered into the December Letter Agreement pursuant
to which (i) it was agreed that the start date for the Measurement Period (as defined in the Business Combination Agreement) under the
Business Combination Agreement with respect to the Price Adjustment Shares and the Measurement Period (as defined in the Sponsor Letter
Agreement) under the Sponsor Letter Agreement with respect to the Unvested Sponsor Interests shall be the date that is forty-five (45)
days following the date of effectiveness of the registration statement on Form F-1 (No. 333-268510) that we filed with the SEC on November
21, 2022, (ii) we agreed to irrevocably waive the lock-up restrictions under the Sponsor Letter Agreement with respect to 3,364,904 of
the 7,630,000 SatixFy Private Warrants held by the Sponsor that are not subject to vesting under the Sponsor Letter Agreement, solely
to permit the Sponsor to exercise such warrants for 2,000,000 SatixFy Ordinary Shares, (iii) the Sponsor agreed not to exercise any SatixFy
Private Warrants other than those described in (ii) until at least six months after the Business Combination (and such other SatixFy Private
Warrants shall not be exercisable until they are vested under the Sponsor Letter Agreement) and (iv) we agreed that if we elected to redeem
the SatixFy Private Warrants, the Sponsor (or its permitted transferees under the Sponsor Letter Agreement) shall be permitted to exercise
any SatixFy Private Warrants, whether vested or unvested, in accordance with the terms of the Warrant Agreement as if it exercised such
warrants on December 4, 2022.
Indemnification Agreements
We have entered into indemnification agreements with our directors and executive officers.
See “Management — Approval of Related Party Transactions under Israeli Law — Exculpation,
Insurance and Indemnification of Office Holders” for additional information.
Approval of Related Party Transactions under
Israeli Law
For a discussion of the approval of related party transactions under Israeli law, see
“Management — Approval of Related Party Transactions under Israeli Law.”
U.S. FEDERAL
INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material U.S. federal income tax considerations
of the ownership and disposition of SatixFy Ordinary Shares and SatixFy Warrants. This discussion applies only to SatixFy Ordinary Shares
and SatixFy Warrants, as the case may be, that are held as “capital assets” within the meaning of Section 1221 of the Code
(generally, property held for investment).
The following discussion does not purport to be a complete analysis of all potential
tax considerations arising in connection with the ownership and disposal of SatixFy Ordinary Shares and SatixFy Warrants. The effects
and considerations of other U.S. federal tax laws, such as estate and gift tax laws, alternative minimum tax or Medicare contribution
tax consequences and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury
Regulations promulgated thereunder, judicial decisions, published rulings and administrative pronouncements of the IRS and the income
tax treaty between the United States and Israel (the “Treaty”), in each case in effect as of the date hereof. These authorities
may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner
that could adversely affect the tax consequences discussed below. SatixFy has not sought nor will seek any rulings from the IRS regarding
the matters discussed below. There can be no assurance the IRS will not take or a court will not sustain a contrary position to that discussed
below regarding the tax consequences discussed below.
This discussion does not address all U.S. federal income tax consequences relevant to
a holder’s particular circumstances. In addition, it does not address consequences relevant to holders subject to special rules,
including, without limitation:
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banks, insurance companies, and certain other financial institutions; |
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regulated investment companies and real estate investment trusts; |
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brokers, dealers or traders in securities that use a mark to market method of tax accounting; |
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tax-exempt organizations or governmental organizations; |
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U.S. expatriates and former citizens or long-term residents of the United States; |
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persons holding SatixFy Ordinary Shares and/or SatixFy Warrants, as the case may be, as part of a hedge, straddle, constructive sale,
or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
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persons subject to special tax accounting rules as a result of any item of gross income with respect to SatixFy Ordinary Shares and/or
SatixFy Warrants, as the case may be, being taken into account in an applicable financial statement; |
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persons that actually or constructively own 5% or more (by vote or value) of the outstanding SatixFy Ordinary Shares; |
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“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate
earnings to avoid U.S. federal income tax; |
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S corporations, partnerships or other entities or arrangements treated as partnerships or other flow through
entities for U.S. federal income tax purposes (and investors therein); |
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persons subject to the “base erosion and anti-abuse” tax; |
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U.S. Holders having a functional currency other than the U.S. dollar; |
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persons who hold or received SatixFy Ordinary Shares and/or SatixFy Warrants, as the case may be, pursuant to the exercise of any
employee share option or otherwise as compensation; and |
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tax-qualified retirement plans. |
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes
holds SatixFy Ordinary Shares and/or SatixFy Warrants, the tax treatment of an owner of such entity will depend on the status of the owners,
the activities of the entity or arrangement and certain determinations made at the owner level. Accordingly, entities or arrangements
treated as partnerships for U.S. federal income tax purposes and the partners in such partnerships should consult their tax advisors regarding
the U.S. federal income tax consequences to them.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE U.S. FEDERAL,
STATE, AND LOCAL, AND NON-U.S. INCOME AND OTHER TAX CONSEQUENCES TO YOU, IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES,
OF ACQUIRING, HOLDING, AND DISPOSING OF SATIXFY ORDINARY SHARES AND SATIXFY WARRANTS.
For purposes of this discussion, a “U.S. Holder” is a person eligible for
Treaty benefits that is, for U.S. federal income tax purposes, a beneficial owner of SatixFy Ordinary Shares and/or SatixFy Warrants,
as the case may be, and:
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an individual who is a citizen or resident of the United States; |
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a corporation (or other entity taxable as a corporation) created or organized under the laws of the United States, any state thereof,
or the District of Columbia; |
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an estate, the income of which is subject to U.S. federal income tax regardless of its sources; or |
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a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons”
(within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a “United States
person” (within the meaning of Section 7701(a)(30) of the Code) for U.S. federal income tax purposes. |
Certain recent Treasury regulations may in some circumstances prohibit a U.S. person
from claiming a foreign tax credit with respect to certain non-U.S. taxes that are not creditable under applicable income tax treaties.
Accordingly, U.S. investors that are not eligible for Treaty benefits should consult their tax advisors regarding the creditability or
deductibility of any Israeli taxes imposed on dividends on, or dispositions of, SatixFy Ordinary Shares and/or SatixFy Warrants. This
discussion does not apply to investors in this special situation.
Ownership and Disposition of SatixFy Ordinary Shares and SatixFy Warrants by U.S. Holders
Distributions on SatixFy Ordinary Shares
If SatixFy makes distributions of cash or property on the SatixFy Ordinary Shares, such
distributions will be treated for U.S. federal income tax purposes first as a dividend to the extent of SatixFy’s current or accumulated
earnings and profits (as determined for U.S. federal income tax purposes), and then as a tax-free return of capital to the extent of the
U.S. Holder’s tax basis, with any excess treated as capital gain from the sale or exchange of the shares. SatixFy does not intend
to provide calculations of its earnings and profits under U.S. federal income tax principles. A U.S. Holder should expect all cash distributions
to be reported as dividends for U.S. federal income tax purposes. Any dividend generally will not be eligible for the dividends received
deduction allowed to corporations in respect of dividends received from U.S. corporations.
Subject to the discussion below under “— Passive
Foreign Investment Company Rules,” dividends received by certain non-corporate U.S. Holders (including individuals) may be
“qualified dividend income,” which is taxed at the lower applicable capital gains rate, provided that:
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the SatixFy Ordinary Shares are readily tradable on an established securities market in the United States; |
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SatixFy is neither a PFIC (as discussed below under “— Passive Foreign Investment Company
Rules”) nor treated as such with respect to the U.S. Holder in any taxable year in which the dividend is paid or the preceding
taxable year; |
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the U.S. Holder satisfies certain holding period requirements; and |
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the U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related
property. |
There can be no assurance that SatixFy Ordinary Shares will be considered “readily
tradable” on an established securities market in the United States in accordance with applicable legal authorities. Furthermore,
there can no assurance that SatixFy will not be treated as a PFIC in any taxable year. See discussion below under “— Passive
Foreign Investment Company Rules.” U.S. Holders should consult their tax advisors regarding the availability of the lower
rate for dividends paid with respect to SatixFy Ordinary Shares.
Subject to certain exceptions, dividends on SatixFy Ordinary Shares will constitute
foreign source income for foreign tax credit limitation purposes and will generally be treated as passive category income or, in the case
of certain types of U.S. Holders, general category income for purposes of computing allowable foreign tax credits for U.S. foreign tax
credit purposes. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible, subject to a
number of complex limitations, to claim a foreign tax credit not in excess of the applicable rate provided in the Treaty in respect of
any foreign withholding taxes imposed on dividends received on SatixFy Ordinary Shares. In lieu of claiming a foreign tax credit, a U.S.
Holder may elect to deduct foreign taxes in computing its taxable income, subject to applicable limitations.
An election to deduct foreign taxes instead of claiming foreign tax credits applies
to all foreign taxes paid or accrued in the taxable year.
THE RULES GOVERNING THE FOREIGN TAX CREDIT ARE
COMPLEX, AND THE OUTCOME OF THEIR APPLICATION DEPENDS IN LARGE PART ON THE U.S. HOLDER’S INDIVIDUAL FACTS AND CIRCUMSTANCES. ACCORDINGLY,
U.S. HOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE AVAILABILITY OF THE FOREIGN TAX CREDIT IN THEIR PARTICULAR
CIRCUMSTANCES.
Sale, Exchange, Redemption or Other Taxable Disposition of SatixFy
Ordinary Shares or SatixFy Warrants.
Subject to the discussion below under “— Passive
Foreign Investment Company Rules,” a U.S. Holder generally would recognize gain or loss on any sale, exchange, redemption
or other taxable disposition of SatixFy Ordinary Shares or SatixFy Warrants in an amount equal to the difference between (i) the amount
realized on the disposition and (ii) such U.S. Holder’s adjusted tax basis in such SatixFy Ordinary Shares or such SatixFy Warrants,
as applicable. Any gain or loss recognized by a U.S. Holder on a taxable disposition of SatixFy Ordinary Shares or SatixFy Warrants generally
will be capital gain or loss. A non-corporate U.S. Holder, including an individual, who has held the SatixFy Ordinary Shares or SatixFy
Warrants for more than one year generally will be eligible for reduced tax rates for such long-term capital gains. The deductibility of
capital losses is subject to limitations. Any such gain or loss recognized generally will be treated as U.S. source gain or loss. In the
event any non-U.S. tax (including Israeli withholding tax) is imposed upon such sale or other disposition, a U.S. Holder’s ability
to claim a foreign tax credit for such non-U.S. tax is subject to various limitations and restrictions. U.S. Holders should consult their
tax advisors regarding the ability to claim a foreign tax credit.
Exercise or Lapse of a SatixFy Warrant
Subject to the PFIC rules discussed under “— Passive
Foreign Investment Company Rules” below and except as discussed below with respect to the cashless exercise of a SatixFy
Warrant, a U.S. Holder generally will not recognize gain or loss upon the acquisition of a SatixFy Ordinary Share on the exercise of a
SatixFy Warrant for cash. A U.S. Holder’s initial tax basis in its SatixFy Ordinary Shares received upon exercise of the SatixFy
Warrant generally should equal the sum of its tax basis in the SatixFy Warrant exercised therefor and the exercise price. The U.S. Holder’s
holding period for an SatixFy Ordinary Share received upon exercise of the SatixFy Warrant will begin on the date following the date of
exercise (or possibly the date of exercise) of the SatixFy Warrant and will not include the period during which the U.S. Holder held the
SatixFy Warrant. If a SatixFy Warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to
such holder’s tax basis in the SatixFy Warrant.
The tax consequences of a cashless exercise of a SatixFy Warrant are not clear under
current tax law. Subject to the PFIC rules discussed under “— Passive Foreign Investment
Company Rules” below, a cashless exercise may be tax-deferred, either because the exercise is not a gain realization event
or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either situation, a U.S. Holder’s
basis in the SatixFy Ordinary Shares received generally would equal the U.S. Holder’s basis in the SatixFy Warrants exercised therefor.
If the cashless exercise is not treated as a gain realization event, a U.S. Holder’s holding period in the SatixFy Ordinary Shares
would be treated as commencing on the date following the date of exercise (or possibly the date of exercise) of the SatixFy Warrants and
will not include the period during which the U.S. Holder held the SatixFy Warrants. If the cashless exercise were treated as a recapitalization,
the holding period of the SatixFy Ordinary Shares would include the holding period of the SatixFy Warrants exercised therefor.
It is also possible that a cashless exercise of a SatixFy Warrant could be treated in
part as a taxable exchange in which gain or loss would be recognized in the manner set forth above under “— Sale,
Exchange, Redemption or Other Taxable Disposition of SatixFy Ordinary Shares or SatixFy Warrants.” In such event, a U.S.
Holder could be deemed to have surrendered warrants having an aggregate fair market value equal to the exercise price for the total number
of warrants to be exercised. Subject to the discussion below under “— Passive Foreign Investment
Company Rules”, the U.S. Holder would recognize capital gain or loss with respect to the SatixFy Warrants deemed surrendered
in an amount generally equal to the difference between (i) the fair market value of the SatixFy Ordinary Shares that would have been received
in a regular exercise of the SatixFy Warrants deemed surrendered, net of the aggregate exercise price of such SatixFy Warrants and (ii)
the U.S. Holder’s tax basis in such SatixFy Warrants. In this case, a U.S. Holder’s aggregate tax basis in the SatixFy Ordinary
Shares received would equal the sum of (i) U.S. Holder’s tax basis in the SatixFy Warrants deemed exercised and (ii) the aggregate
exercise price of such SatixFy Warrants. A U.S. Holder’s holding period for the SatixFy Ordinary Shares received in such case generally
would commence on the date following the date of exercise (or possibly the date of exercise) of the SatixFy Warrants and will not include
the period during which the U.S. Holder held the SatixFy Warrants.
Due to the absence of authority on the U.S. federal income tax treatment of a cashless
exercise of warrants, including when a U.S. Holder’s holding period would commence with respect to the SatixFy Ordinary Share received,
there can be no assurance regarding which, if any, of the alternative tax consequences and holding periods described above would be adopted
by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors regarding the tax consequences of a cashless
exercise of SatixFy Warrants.
Adjustment to Exercise Price
The terms of each SatixFy Warrant provide for an adjustment to the number of SatixFy
Ordinary Shares for which the SatixFy Warrant may be exercised or to the exercise price of the SatixFy Warrant in certain events, as discussed
under the heading “Description of SatixFy Warrants.” Under Section 305 of the Code,
if certain adjustments are made (or not made) to the number of shares to be issued upon the exercise of a SatixFy Warrant or to the SatixFy
Warrant’s exercise price, a U.S. Holder may be deemed to have received a constructive distribution with respect to the warrant,
which could result in adverse consequences for the U.S. Holder, including the inclusion of dividend income (with the consequences generally
as described above under the heading “— Distributions on SatixFy Ordinary Shares”).
The rules governing constructive distributions as a result of certain adjustments with respect to a SatixFy Warrant are complex, and U.S.
Holders are urged to consult their tax advisors on the tax consequences any such constructive distribution with respect to a SatixFy Warrant.
Passive Foreign Investment Company Rules
The treatment of U.S. Holders of the SatixFy Ordinary Shares and/or SatixFy Warrants
could be materially different from that described above, if SatixFy is treated as a PFIC for U.S. federal income tax purposes. A non-U.S.
entity treated as a corporation for U.S. federal income tax purposes generally will be a PFIC for U.S. federal income tax purposes for
any taxable year if either:
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at least 75% of its gross income for such year is passive income; or |
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at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is
attributable to assets that produce passive income or are held for the production of passive income. |
Passive income generally includes dividends, interest, royalties, rents, annuities,
net gains from the sale or exchange of property producing such income and net foreign currency gains. For this purpose, cash is categorized
as a passive asset and the company’s unbooked intangibles associated with active business activity are taken into account as a non-passive
asset. Goodwill is an active asset under the PFIC rules to the extent attributable to activities that produce active income. For this
purpose, SatixFy will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of
any other entity treated as a corporation for U.S. federal income tax purposes in which SatixFy owns, directly or indirectly, 25% or more
(by value) of the stock.
Whether SatixFy or any of its subsidiaries is treated as a PFIC is determined on an
annual basis. Based on the current and anticipated composition of our and our subsidiaries’ income, assets and operations, including
goodwill, which is based on the trading prices of our Satixfy Ordinary Shares, we do not expect to be a PFIC for our current taxable year,
but there can be no assurance in this regard. Whether we or any of our subsidiaries are a PFIC for any taxable year is a factual determination
that depends on, among other things, the composition of our and our subsidiaries’ income and assets. Changes in the composition
of our and our subsidiaries’ income or assets may cause us to be or become a PFIC for the current or subsequent taxable years. In
addition, because the value of our goodwill may be determined based on our market capitalization, the decline in our market capitalization
(or a further such decline) could cause us to be treated as a PFIC, the current taxable year. Moreover, if our market capitalization does
not increase significantly and we continue to hold substantial amounts of cash and financial investments, we may be a PFIC for our current
taxable year. Our PFIC status for our current taxable year can be determined only after the end of the year. Accordingly, we can
give no assurance that we will not be a PFIC for our current or any future taxable year. The application of the PFIC rules is subject
to uncertainty in several respects, and SatixFy can make no assurances that the IRS will not take a contrary position or that a court
will not sustain such a challenge by the IRS.
Under the PFIC rules, if SatixFy were considered a PFIC at any time that a U.S. Holder
owns SatixFy Ordinary Shares and/or SatixFy Warrants, SatixFy would continue to be treated as a PFIC with respect to such investment unless
(i) it ceased to be a PFIC and (ii) the U.S. Holder made a “deemed sale” election under the PFIC rules. If such election is
made, a U.S. Holder will be deemed to have sold its SatixFy Ordinary Shares and/or SatixFy Warrants at their fair market value on the
last day of the last taxable year in which SatixFy is classified as a PFIC, and any gain from such deemed sale would be subject to the
consequences described below. After the deemed sale election, the SatixFy Ordinary Shares and/or SatixFy Warrants with respect to which
the deemed sale election was made will not be treated as shares in a PFIC unless SatixFy subsequently becomes a PFIC.
For each taxable year that SatixFy is treated as a PFIC with respect to a U.S. Holder’s
SatixFy Ordinary Shares or SatixFy Warrants, the U.S. Holder will be subject to special tax rules with respect to any “excess distribution”
(as defined below) received and any gain realized from a sale or disposition (including a pledge) of its SatixFy Ordinary Shares or SatixFy
Warrants (collectively the “Excess Distribution Rules”), unless the U.S. Holder makes
a valid QEF election or mark-to-market election as discussed below.
Distributions received by a U.S. Holder in a taxable year that are greater than 125%
of the average annual distributions received during the shorter of the three preceding taxable years or the U.S. Holder’s holding
period for the SatixFy Ordinary Shares or SatixFy Warrants will be treated as excess distributions. Under these special tax rules:
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the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the SatixFy Ordinary Shares
and/or SatixFy Warrants; |
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the amount allocated to the current taxable year, and any taxable years in the U.S. Holder’s holding period prior to the first
taxable year in which SatixFy is a PFIC, will be treated as ordinary income; and |
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the amount allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations,
as applicable, for each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting
tax attributable to each such year. |
Under the Excess Distribution Rules, the tax liability for amounts allocated to taxable
years prior to the year of disposition or excess distribution cannot be offset by any net operating losses, and gains (but not losses)
realized on the sale of the SatixFy Ordinary Shares or SatixFy Warrants cannot be treated as capital gains, even though the U.S. Holder
holds the SatixFy Ordinary Shares or SatixFy Warrants as capital assets.
Certain of the PFIC rules may impact U.S. Holders with respect to equity interests in
subsidiaries and other entities which SatixFy may hold, directly or indirectly, that are PFICs (collectively, “Lower-Tier
PFICs”). There can be no assurance, however, that SatixFy does not own, or will not in the future acquire, an interest in
a subsidiary or other entity that is or would be treated as a Lower-Tier PFIC. U.S. Holders should consult their tax advisors regarding
the application of the PFIC rules to any of SatixFy’s subsidiaries.
If SatixFy is a PFIC, a U.S. Holder of SatixFy Ordinary Shares (but not SatixFy Warrants)
may avoid taxation under the Excess Distribution Rules described above by making a “qualified electing fund” (“QEF”)
election. However, a U.S. Holder may make a QEF election with respect to its SatixFy Ordinary Shares only if SatixFy provides U.S. Holders
on an annual basis with certain financial information specified under applicable U.S. Treasury Regulations. Because SatixFy currently
does not intend to provide U.S. Holders with such information on an annual basis, U.S. Holders generally would not be able to make a QEF
election with respect to the SatixFy Ordinary Shares.
A U.S. Holder of SatixFy Ordinary Shares (but not SatixFy Warrants) may also avoid taxation
under the Excess Distribution Rules by making a mark-to-market election. The mark-to-market election is available only for “marketable
stock,” which is stock that is regularly traded on a qualified exchange or other market, as defined in applicable U.S. Treasury
Regulations. The SatixFy Ordinary Shares, which are currently listed on the NYSE, are expected to qualify as marketable stock for purposes
of the PFIC rules, but there can be no assurance that they will be “regularly traded” for purposes of these rules. Because
a mark-to-market election cannot be made for equity interests in any Lower-Tier PFICs, a U.S. Holder generally will continue to be subject
to the Excess Distribution Rules with respect to its indirect interest in any Lower-Tier PFICs as described above, even if a mark-to-market
election is made for SatixFy.
If a U.S. Holder makes a valid mark-to-market election with respect to its SatixFy Ordinary
Shares, such U.S. Holder will include in income for each year that SatixFy is treated as a PFIC with respect to such SatixFy Ordinary
Shares an amount equal to the excess, if any, of the fair market value of the SatixFy Ordinary Shares as of the close of the U.S. Holder’s
taxable year over the adjusted basis in the SatixFy Ordinary Shares. A U.S. Holder will be allowed a deduction for the excess, if any,
of the adjusted basis of the SatixFy Ordinary Shares over their fair market value as of the close of the taxable year. However,
deductions will be allowed only to the extent of any net mark-to-market gains on the SatixFy Ordinary Shares included in the U.S. Holder’s
income for prior taxable years. Amounts included in income under a mark-to-market election, as well as gain on the actual sale or other
disposition of the SatixFy Ordinary Shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible
portion of any mark-to-market loss on the SatixFy Ordinary Shares, as well as to any loss realized on the actual sale or disposition of
the SatixFy Ordinary Shares, to the extent the amount of such loss does not exceed the net mark-to-market gains for such SatixFy Ordinary
Shares previously included in income. A U.S. Holder’s basis in the SatixFy Ordinary Shares will be adjusted to reflect any mark-to-market
income or loss. If a U.S. Holder makes a mark-to-market election, any distributions SatixFy makes would generally be subject to the rules
discussed above under “— Distributions on SatixFy Ordinary Shares,” except the lower rates applicable to qualified dividend
income would not apply.
A U.S. Holder that is eligible to make a mark-to-market election with respect to its
SatixFy Ordinary Shares may do so by providing the appropriate information on IRS Form 8621 and timely filing that form with the U.S.
Holder’s tax return for the year in which the election becomes effective. U.S. Holders should consult their tax advisors as to the
availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any Lower-Tier PFICs.
A U.S. Holder of a PFIC generally is required to file an IRS Form 8621 on an annual
basis. U.S. Holders are strongly encouraged to consult their tax advisors regarding the application of the PFIC rules and the associated
reporting requirements to their particular circumstances.
Non-U.S. Holders
The section applies to Non-U.S. Holders of SatixFy Ordinary Shares and SatixFy Warrants.
For purposes of this discussion, a Non-U.S. Holder means a beneficial owner (other than a partnership or an entity or arrangement so characterized
for U.S. federal income tax purposes) of SatixFy Ordinary Shares or SatixFy Warrants, as the case may be, that is not a U.S. Holder, including:
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a nonresident alien individual, other than certain former citizens and residents of the United States; |
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a foreign corporation; or |
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a foreign estate or trust. |
Ownership and Disposition of SatixFy Ordinary Shares and SatixFy
Warrants by Non-U.S. Holders
Any (i) distributions of cash or property paid to a Non-U.S. Holders in respect of SatixFy
Ordinary Shares or (ii) gain realized upon the sale or other taxable disposition of SatixFy Ordinary Shares or SatixFy Warrants generally
will not be subject to U.S. federal income taxation unless:
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the gain or distribution is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United
States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States
to which such gain is attributable); or |
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in the case of any gain, the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more
during the taxable year of the disposition and certain other requirements are met. |
Gain or distributions described in the first bullet point above generally will be subject
to U.S. federal income tax on a net income basis at the regular rates in the same manner discussed in “— Distributions
on SatixFy Ordinary Shares” and “— Sale, Exchange, Redemption or Other Taxable
Disposition of SatixFy Ordinary Shares or SatixFy Warrants.”
Gain described in the second bullet point above will be subject to U.S. federal income
tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses
of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has
timely filed U.S. federal income tax returns with respect to such losses.
The U.S. federal income tax treatment of a Non-U.S. Holder’s exercise of a SatixFy
Warrant, or the lapse of a SatixFy Warrant held by a Non-U.S. Holder, generally will correspond to the U.S. federal income tax treatment
of the exercise or lapse of a warrant by a U.S. Holder, as described under “— U.S. Holders
— Exercise or Lapse of a SatixFy Warrant” above, although to the extent a cashless
exercise or lapse results in a taxable exchange, the consequences would be similar to those described in the preceding paragraphs above
for a Non-U.S. Holder’s gain on the sale or other disposition of the SatixFy Ordinary Shares and SatixFy Warrants.
Non-U.S. Holders should consult their tax advisors regarding potentially applicable
income tax treaties that may provide for different rules.
Information Reporting and Backup Withholding
U.S. Holders. Information reporting requirements
may apply to distributions on the SatixFy Ordinary Shares and the proceeds received on sale or other taxable disposition of the SatixFy
Ordinary Shares or SatixFy Warrants effected within the United States (and, in certain cases, outside the United States), in each case
other than U.S. Holders that are exempt recipients (such as corporations). Backup withholding (currently at a rate of 24%) may apply to
such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number (generally on an IRS Form W-9 provided to
the paying agent of the U.S. Holder’s broker) or is otherwise subject to backup withholding. U.S. Holders should consult their tax
advisors regarding the application of the U.S. information reporting and backup withholding rules.
Non-U.S. Holders. Information returns may be
filed with the IRS in connection with, and Non-U.S. Holders may be subject to backup withholding on amounts received in respect of, a
Non-U.S. Holder’s disposition of SatixFy Ordinary Shares or SatixFy Warrants, unless the Non-U.S. Holder furnishes to the applicable
withholding agent the required certification as to its non-U.S. status, such as by providing a valid IRS Form W-8BEN, IRS Form W-8BEN-E
or IRS Form W-8ECI, as applicable, or the Non-U.S. Holder otherwise establishes an exemption. Dividends paid with respect to SatixFy Ordinary
Shares and proceeds from the sale of other disposition of the SatixFy Ordinary Shares or SatixFy Warrants received in the United States
by a Non-U.S. Holder through certain U.S.-related financial intermediaries may be subject to information reporting and backup withholding
unless such Non-U.S. Holder provides proof an applicable exemption or complies with certain certification procedures described above,
and otherwise complies with the applicable requirements of the backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding
generally may be credited against the taxpayer’s U.S. federal income tax liability, and a taxpayer may obtain a refund of any excess
amounts withheld under the backup withholding rules by timely filing the appropriate claim for a refund with the IRS and furnishing any
required information.
CERTAIN
MATERIAL ISRAELI TAX CONSIDERATIONS
The following description is not intended to constitute a complete analysis of all tax
consequences relating to the acquisition, ownership, and disposition of the SatixFy Ordinary Shares and SatixFy Warrants. 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 considerations
The following is a brief summary of certain material Israeli tax laws applicable to
SatixFy, and certain Israeli Government programs that benefit SatixFy. This section also contains a discussion of certain material Israeli
tax consequences concerning the ownership and disposition of SatixFy Ordinary Shares and SatixFy Warrants purchased by investors. 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. To the extent that
the discussion is based on tax legislation that has not yet been subject to judicial or administrative interpretation, SatixFy cannot
assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion below
is not intended, and should not be construed, as legal or professional tax advice and is not exhaustive of all possible tax considerations.
The discussion 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, possibly with a retroactive effect.
THEREFORE, YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISORS AS TO THE ISRAELI OR OTHER
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES AND WARRANTS, INCLUDING, IN PARTICULAR, THE EFFECT
OF ANY FOREIGN, STATE OR LOCAL TAXES.
General corporate tax structure in Israel
Israeli companies are generally subject to corporate tax at a flat rate. In December
2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017
and 2018 Budget Years) which reduced the corporate income tax rate from 25% to 24% effective from January 1, 2017, and to 23% effective
from January 1, 2018 and thereafter. However, the effective tax rate payable by a company that derives income from an Approved Enterprise,
a Preferred Enterprise, a Benefited Enterprise or a Technological Enterprise (as discussed below) may be considerably less. Capital gains
derived by an Israeli company are generally subject to corporate tax rate.
Law for the Encouragement of Industry (Taxes), 5729-1969
The Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to
as the Industry Encouragement Law, provides several tax benefits for “Industrial Companies.” SatixFy may qualify as an Industrial
Company within the meaning of the Industry Encouragement Law.
The Industry Encouragement Law defines an “Industrial Company” as an Israeli
resident-company, of which 90% or more of its income in any tax year, other than certain income (such as income from certain government
loans, capital gains, interest and dividends) is derived from an “Industrial Enterprise” owned by it and located in Israel
or in the “Area”, in accordance with the definition under section 3A of the Israeli Income Tax Ordinance (New Version) 1961,
or the Ordinance. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial
production.
Following are the main tax benefits available to Industrial Companies:
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Amortization of the cost of purchased patent, rights to use a patent, and know-how, which were purchased in good faith and are used
for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights
were first exercised; |
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Under limited conditions, an election to file consolidated tax returns with controlled Israeli Industrial Companies; |
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Expenses related to a public offering are deductible in equal amounts over three years commencing on the year of the offering.
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Eligibility for benefits under the Industry Encouragement Law is not contingent upon
approval of any governmental authority.
Tax benefits and grants for research and development
Israeli tax law allows, under certain conditions, a tax deduction for expenditures,
including capital expenditures related to scientific research and development, for the year in which they are incurred. Expenditures are
deemed related to scientific research and development projects, if:
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The research and development expenditures are approved by the relevant Israeli government ministry, determined by the field of research;
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The research and development must be for the promotion of the company; and |
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The research and development is carried out by or on behalf of the company seeking such tax deduction. |
The amount of such deductible expenses is reduced by the sum of any funds received through
government grants for the finance of such scientific research and development projects. No deduction under these research and development
deduction rules is allowed if such deduction is related to an expense invested in an asset depreciable under the general depreciation
rules of the Israeli Income Tax Ordinance (New Version) 5721-1961, or the Ordinance. Expenditures that are unqualified under the conditions
above are deductible, under certain conditions, in equal amounts over three years.
From time to time we may apply to the Israel Innovation Authority for approval to allow
a tax deduction for all or most of research and development expenses during the year incurred. There can be no assurance that such application
will be accepted. If we will not be able to deduct research and development expenses during the year of the payment, we may be able to
deduct research and development expenses in equal amounts over a period of three years commencing in the year of the payment of such expenses.
Law for the Encouragement of Capital Investments, 5719-1959
The Law for the Encouragement of Capital Investments, 5719-1959, generally referred
to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible assets). Generally,
an investment program that is implemented in accordance with the provisions of the Investment Law, referred to as an Approved Enterprise,
a Beneficiary Enterprise, a Preferred Enterprise, a Preferred Technological Enterprise, or a Special Preferred Technological Enterprise,
is entitled to benefits as discussed below. These benefits may include cash grants from the Israeli government and tax benefits, based
upon, among other things, the geographic location in Israel of the facility in which the investment is made. In order to qualify for these
incentives, the Company is required to comply with the requirements of the Investment Law.
The Investment Law was significantly amended effective as of April 1, 2005 (the “2005
Amendment”), as of January 1, 2011 (the “2011 Amendment”) and as of January
1, 2017 (the “2017 Amendment”). Pursuant to the 2005 Amendment, tax benefits granted
in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force but any benefits granted
subsequently are subject to the provisions of the amended Investment Law. Similarly, the 2011 Amendment introduced new benefits to replace
those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled
to benefits under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits,
provided that certain conditions are met, or elect instead, irrevocably, to forego such benefits and have the benefits of the 2011 Amendment
apply. The 2017 Amendment introduces new benefits for Technological Enterprises, alongside the existing tax benefits.
Tax benefits under the 2011 Amendment
The 2011 Amendment introduced new benefits for income generated by a “Preferred
Company” through its “Preferred Enterprise” (as such terms are defined in the Investment Law) as of January 1, 2011.
The definition of a Preferred Company includes a company incorporated in Israel that is not fully owned by a governmental entity, and
that has, among other things, Preferred Enterprise status and is controlled and managed from Israel. Pursuant to the 2011 Amendment, a
Preferred Company is entitled to a reduced corporate tax rate of 15% with respect to its income derived by its Preferred Enterprise in
2011 and 2012, unless the Preferred Enterprise is located in a specified development zone, in which case the rate will be 10%. Under the
2011 Amendment, such corporate tax rate was reduced from 15% and 10%, respectively, to 12.5% and 7%, respectively, in 2013, 16% and 9%
respectively, in 2014, 2015 and 2016, and 16% and 7.5%, respectively, in 2017 and thereafter. Income derived by a Preferred Company from
a “Special Preferred Enterprise” (as such term is defined in the Investment Law) would be entitled, subject to certain conditions
and during a benefits period of 10 years, to further reduced tax rates of 8%, or 5% if the Special Preferred Enterprise is located in
a certain development zone.
Dividends distributed from income which is attributed to a “Preferred Enterprise”
will be subject to tax at the following rates: (i) Israeli resident corporations — 0% (although, if such dividends are subsequently
distributed to individuals or a non-Israeli company the below rates detailed in sub sections (ii) and (iii) shall apply) (ii) Israeli
resident individuals — 20% (iii) non-Israeli residents (individuals and corporations) — 20%, or such lower rate under the
provisions of any applicable double tax treaty (subject to the receipt in advance of a valid withholding certificate from the ITA allowing
for a reduced tax rate). The withholding tax rate applicable to distribution of dividend from such income to non-Israeli residents is
25% (or 30% if distributed to a “substantial shareholder” at the time of the sale or at any time during the preceding twelve
months period, as defined below), which may be reduced by applying in advance for a withholding certificate from the Israel Tax Authority.
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.
The 2011 Amendment also provided transitional provisions to address companies already
enjoying existing tax benefits under the Investment Law. These transitional provisions provide, among other things, that unless an irrevocable
request is made to apply the provisions of the Investment Law as amended in 2011 with respect to income to be derived as of January 1,
2011, a Beneficiary Enterprise can elect to continue to benefit from the benefits provided to it before the 2011 Amendment came into effect,
provided that certain conditions are met.
SatixFy currently does not intend to implement the 2011 Amendment.
New tax benefits under the 2017 Amendment that became effective on January 1, 2017
The 2017 Amendment was enacted as part of the Economic Efficiency Law that was published
on December 29, 2016 and is effective as of January 1, 2017. The 2017 Amendment provides new tax benefits for two types of “Technological
Enterprises,” as described below, and is in addition to the other existing tax beneficial programs under the Investment Law.
The 2017 Amendment provides that a Preferred Company satisfying certain conditions will
qualify as having a “Preferred Technological Enterprise” and will thereby enjoy a reduced corporate tax rate of 12% on income
that qualifies as “Preferred Technological Income”, as defined in the Investment Law. The corporate tax rate is further reduced
to 7.5% with respect to a Preferred Technological Enterprise located in development zone “A.” In addition, a Preferred Company
that qualifies as having a “Preferred Technological Enterprise” will enjoy a reduced corporate tax rate of 12% on capital
gain derived from the sale of certain “Benefitted Intangible Assets” (as defined in the Investment Law) to a related foreign
company if the Benefitted Intangible Assets were acquired from a foreign company on or after January 1, 2017 for at least NIS 200 million,
and the sale receives prior approval from the Israel Innovation Authority.
The 2017 Amendment further provides that a Preferred Company satisfying certain conditions
(including group consolidated revenues of at least NIS 10 billion) may qualify as having a “Special Preferred Technological Enterprise”
and will thereby enjoy a reduced corporate tax rate of 6% on “Preferred Technological Income” regardless of the company’s
geographic location within Israel. In addition, a Special Preferred Technological Enterprise will enjoy a reduced corporate tax rate of
6% on capital gain derived from the sale of certain “Benefitted Intangible Assets” to a related foreign company if the Benefitted
Intangible Assets were either developed by the Special Preferred Enterprise or acquired from a foreign company on or after January 1,
2017, and the sale received prior approval from the Israel Innovation Authority. A Special Preferred Technological Enterprise that acquires
Benefitted Intangible Assets from a foreign company for more than NIS 500 million will be eligible for these benefits for at least ten
years, subject to certain approvals as specified in the Investment Law.
Dividends distributed by a Preferred Technological Enterprise or a Special Preferred
Technological Enterprise, paid out of Preferred Technological Income, are generally subject to tax at the rate of 20% (in the case of
non-Israeli shareholders — subject to the receipt in advance of a valid withholding certificate from the Israel Tax Authority allowing
for a reduced tax rate of 20%, or such lower rate as may be provided in an applicable tax treaty). However, if such dividends are paid
to an Israeli company, no tax is required to be withheld (although, if such dividends are subsequently distributed to individuals or a
non-Israeli company, the aforesaid will apply). The withholding tax rate applicable to distribution of dividend from such income to non-Israeli
residents is 25% (or 30% if distributed to a “substantial shareholder” at the time of the sale or at any time during the preceding
twelve months period), which may be reduced by applying in advance for a withholding certificate from the Israel Tax Authority. In addition,
if such dividends are distributed to a foreign company that holds solely or together with other foreign companies 90% or more in the Israeli
company and other conditions are met, the withholding tax rate will be 4% (subject to the receipt in advance of a valid certificate from
the Israel Tax Authority allowing for a reduced tax rate). However, if such dividends are paid to an Israeli company, no tax is required
to be withheld.
SatixFy believes that it may be eligible to the tax benefits under the 2017 Amendment.
Taxation of our shareholders
Capital Gains Tax on Sales of SatixFy Ordinary
Shares and SatixFy Warrants
Israeli law generally imposes a capital gains tax on the sale of any capital assets
by Israeli residents, as defined for Israeli tax purposes, and on the sale of capital assets located in Israel, including shares of Israeli
companies, by both Israeli residents and non-Israeli residents, unless a specific exemption is available or unless a tax treaty between
Israel and the shareholder’s country of residence provides otherwise. The Ordinance distinguishes between real gain and inflationary
surplus. The inflationary surplus is a portion of the total capital gain equivalent to the increase of the relevant asset’s purchase
price attributable to an increase in the Israeli consumer price index, or, in certain circumstances, a foreign currency exchange rate,
between the date of purchase and the date of sale. Inflationary surplus is currently not subject to tax in Israel. The real gain is the
excess of the total capital gain over the inflationary surplus.
Capital gains taxes applicable to non-Israeli
resident shareholders.
A non-Israeli resident who derives capital gains from the sale of shares and warrants
in an Israeli resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel, may
be exempt from Israeli tax if, among other conditions, the capital gain derived from the sale of shares was not attributed to a permanent
establishment that the non-resident maintains in Israel. However, non-Israeli corporations will not be entitled to the foregoing exemption
if Israeli residents: (i) have a controlling interest 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. In addition,
such exemption is not applicable to a person whose gains from selling or otherwise disposing of the shares are deemed to be business income.
Additionally, a sale of securities 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 (the “United
States Israel Tax Treaty”), the sale, exchange or other disposition of shares by a shareholder who is a United States resident
(for purposes of the treaty) holding the shares as a capital asset and is entitled to claim the benefits afforded to such a resident by
the U.S. Israel Tax Treaty (a “U.S. Resident”) is generally exempt from Israeli
capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in
Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising
from the such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such U.S.
Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12 month period preceding
the disposition, subject to certain conditions; or (v) such U.S. Resident is an individual and was present in Israel for 183 days or more
during the relevant taxable year. In any such case, the sale, exchange or disposition of such shares by the U.S. Resident would be subject
to Israeli tax (unless exempt under the Israeli domestic law as described above). Under the United States Israel Tax Treaty, the gain
may be treated as foreign source income for United States foreign tax credit purposes, upon an election by the U.S. Resident, and such
U.S. Resident may be permitted to claim a credit for such taxes against the United States federal income tax imposed on such sale, subject
to the limitations under the United States federal income tax laws applicable to foreign tax credits. The United States Israel Tax Treaty
does not provide such credit against any United States state or local taxes.
Regardless of whether shareholders may be liable for Israeli tax on the sale of SatixFy
Ordinary Shares and SatixFy Warrants, the payment of the consideration may be subject to the withholding of Israeli tax at source. Holders
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 (i.e., provide resident certificate and other documentation).
Capital gains taxes applicable to Israeli resident
shareholders.
An Israeli resident corporation that derives capital gains from the sale of shares in
an Israeli resident company will generally be subject to tax on the real capital gains generated on such sale at the corporate tax rate
(currently of 23% in 2022). An Israeli resident individual will generally be subject to capital gain tax at the rate of 25%. However,
if the individual shareholder is a “substantial shareholder” at the time of the sale or at any time during the preceding twelve
months period, such gain will be taxed at the rate of 30%. Individual holders dealing in securities in Israel for whom the income from
the sale of securities is considered “business income” as defined in section 2(1) of the Ordinance are taxed at the marginal
tax rates applicable to business income (up to 47% in 2022 plus 3% Surtax, if applicable). Certain Israeli institutions who are exempt
from tax under section 9(2) or section 129(C)(a)(1) of the Ordinance (such as exempt trust funds and pension funds) may be exempt from
capital gains tax from the sale of the shares.
Exercise of Warrants and Certain Adjustments
to the Warrants
Investors will generally not recognize gain or loss for Israeli tax purposes on the
exercise of a warrant and related receipt of an ordinary share (unless, for instance, cash is received in lieu of the issuance of a fractional
ordinary share). Nevertheless, the Israeli income tax treatment and the tax consequences of a cashless exercise of warrants into ordinary
shares is unclear. Furthermore, the exercise terms of warrants may be adjusted in certain circumstances. An adjustment to the number of
ordinary shares that will be issued on the exercise of the warrants or an adjustment to the exercise price of the warrants may be treated
as a taxable event under Israeli tax law even if the holder of such warrants does not receive any cash or other property in connection
with the adjustment. Investors should consult their tax advisors regarding the proper treatment of any exercise of and/or adjustments
to the warrants.
Taxation of Israeli shareholders on receipt
of dividends.
An Israeli resident individual is generally subject to Israeli income tax on the receipt
of dividends paid on our ordinary shares at the rate of 25%. 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%. Such dividends are
generally subject to Israeli withholding tax at a rate of 25% if the shares are registered with a nominee company (whether the recipient
is a substantial shareholder or not). If the recipient of the dividend is an Israeli resident corporation such dividend income will be
exempt from tax provided the income from which such dividend is distributed was derived or accrued within Israel and was received directly
or indirectly from another corporation that is liable to Israeli corporate tax. An exempt trust fund, pension fund or other entity that
is exempt from tax under section 9(2) or section 129C(a)(1) of the Ordinance is exempt from tax on dividend.
Dividend distribution by a Preferred Technological Enterprise or a Special Preferred
Technological Enterprise is subject to beneficial withholding tax rates. For a further discussion, see “Certain
Material Israeli Tax Considerations — Law for the Encouragement of Capital Investments, 5719-1959 — New tax benefits under
the 2017 Amendment that became effective on January 1, 2017.”
Taxation of non-Israeli shareholders on receipt
of dividends.
Non-Israeli residents (either 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%, which tax will be withheld at source, unless
relief is provided in a treaty between Israel and the shareholder’s country of residence. 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%. Such dividends are generally subject to Israeli withholding tax at a rate of 25% if the shares are registered with a nominee company
(whether the recipient is a substantial shareholder or not), unless a reduced rate is provided under an applicable tax treaty (subject
to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate). 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 is 25%. However, generally, the maximum rate of withholding tax on dividends, not generated by an Approved Enterprise,
that are paid to a United States 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, is 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, Benefited Enterprise or Preferred Enterprise are not entitled to such reduction under the tax treaty but are
subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation, provided that the conditions related to the outstanding
voting rights and the gross income for the previous year (as set forth in the previous sentences) are 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 may be a blended rate reflecting the relative portions of the two types of income. We cannot assure you that we will
designate the profits that we may distribute in a way that will reduce shareholders’ tax liability. Application for the reduced
tax rate requires appropriate documentation presented and specific instruction received from the Israeli Tax Authorities to the extent
tax is withheld at source at the maximum rates (see above), a qualified tax treaty recipient will have to comply with some administrative
procedures with the Israeli Tax Authorities in order to receive back the excess tax withheld.
A foreign resident who had income from a dividend that was accrued from Israeli source,
from which the full tax was deducted (among other conditions), will be generally exempt from filing a tax return in Israel, unless (i)
such income was generated from a business conducted in Israel by him, (ii) he has other taxable sources of income in Israel with respect
to which a tax return is required to be filed, or (iii) he is liable to additional Surtax (see below) in accordance with section 121B
of the Ordinance.
Dividend distribution by a Preferred Technological Enterprise or a Special Preferred
Technological Enterprise is subject to beneficial withholding tax rates. For a further discussion, see “Certain
Material Israeli Tax Considerations — Law for the Encouragement of Capital Investments, 5719-1959 — New tax benefits under
the 2017 Amendment that became effective on January 1, 2017.”
Surtax
Subject to the provisions of an applicable tax treaty, individuals who are subject to
tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) are also subject to an additional tax at a
rate of 3% on annual income (including, but not limited to, dividends, interest and capital gain) exceeding NIS 663,240 for 2022, which
amount is linked to the annual change in the Israeli consumer price index.
Estate and Gift Tax
Israeli law presently does not impose estate or gift taxes.
Israeli Tax Ruling
In addition to all of the above, any payment made by an Israeli resident company may
be subject to Israeli withholding tax, regardless of whether the recipient should be subject to Israeli tax with respect to the receipt
of such payment, unless the recipient provides the company with a valid certificate issued by the Israel Tax Authority to exempt the recipient
from such withholding tax liability.
PLAN OF DISTRIBUTION
We are registering the issuance by us of up to 10,000,000 SatixFy Ordinary Shares underlying
the SatixFy Public Warrants that may be issued upon exercise of SatixFy Public Warrants to purchase SatixFy Ordinary Shares. We previously
registered the issuance of the SatixFy Public Warrants in connection with the Business Combination.
We are registering the resale of up to 8,630,000 SatixFy Ordinary Shares underlying
the SatixFy Private Warrants and the PIPE Warrants that may be issued upon exercise such of SatixFy Warrants to purchase SatixFy Ordinary
Shares. We are also registering the resale by the Selling Shareholders of up to 14,043,676 SatixFy Ordinary Shares and up to 1,000,000
PIPE Warrants. We will receive proceeds from SatixFy Warrants exercised in the event that such SatixFy Warrants are exercised for cash.
The aggregate proceeds to the Selling Shareholders will be the purchase price of the securities less any discounts and commissions borne
by the Selling Shareholders. As discussed elsewhere in this prospectus, at least 6,362,440 of the SatixFy Ordinary Shares initially registered
on the registration statement of which this prospectus forms a part have been sold prior to the date hereof.
The Selling Shareholders, which as used here includes donees, pledgees, transferees
or other successors- in-interest selling warrants, ordinary shares or interests in ordinary shares received after the date of this prospectus
from a Selling Shareholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their warrants (including ordinary shares underlying such warrants once issued upon the exercise of such warrants),
ordinary shares or interests in ordinary shares on any stock exchange, market or trading facility on which the warrants or shares are
traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The Selling Shareholders may use any one or more of the following methods when disposing
of warrants, shares or interests therein:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
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block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block
as principal to facilitate the transaction; |
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purchases by a broker-dealer as principal and resale by the broker-dealer for their account; |
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an exchange distribution in accordance with the rules of the applicable exchange; |
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privately negotiated transactions; |
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short sales effected after the date the registration statement of which this prospectus is a part was originally declared effective
by the SEC; |
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through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
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broker-dealers may agree with the Selling Shareholders to sell a specified number of such shares at a stipulated price per share;
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a combination of any such methods of sale; and |
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any other method permitted by applicable law. |
The Selling Shareholders may, from time to time,
pledge or grant a security interest in some or all of the warrants or ordinary shares owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and sell the warrants or ordinary shares, from time to time, under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending
the list of Selling Shareholders to include the pledgee, transferee or other successors in interest as Selling Shareholders under this
prospectus. The Selling Shareholders also may transfer the warrants or ordinary shares in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our warrants, ordinary shares or interests therein, the
Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage
in short sales of the warrants or ordinary shares in the course of hedging the positions they assume.
The Selling Shareholders may also sell warrants or our ordinary shares short and deliver
these securities to close out their short positions, or loan or pledge the warrants or ordinary shares to broker-dealers that in turn
may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial
institution of warrants or shares offered by this prospectus, which warrants or shares such broker-dealer or other financial institution
may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
Each of the Selling Shareholders reserves the right to accept and, together with their
agents from time to time, to reject, in whole or in part, any proposed purchase of warrants or ordinary shares to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however,
we will receive the exercise price of the warrants.
The Selling Shareholders and any underwriters, broker-dealers or agents that participate
in the sale of the ordinary shares or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities
Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions
under the Securities Act. Selling shareholders who are “underwriters” within the meaning of Section 2(11) of the Securities
Act will be subject to the prospectus delivery requirements of the Securities Act.
In addition, a Selling Stockholder that is an entity may elect to make a pro rata in-kind
distribution of securities to its members, partners or stockholders pursuant to the registration statement of which this prospectus is
a part by delivering a prospectus with a plan of distribution. Such members, partners or stockholders would thereby receive freely tradeable
securities pursuant to the distribution through a registration statement.
To the extent required, the warrants or our ordinary shares to be sold, the names of
the Selling Shareholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any
applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the
warrants or ordinary shares may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in
some states the warrants or ordinary shares may not be sold unless they have been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied with.
We have advised the Selling Shareholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of warrants or shares in the market and to the activities of the Selling Shareholders and
their affiliates. In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from
time to time) available to the Selling Shareholders for the purpose of satisfying the prospectus delivery requirements of the Securities
Act. The Selling Shareholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
A holder of SatixFy Warrants may exercise its SatixFy Warrants in accordance with the
applicable governing warrant agreement on or before the expiration date set forth therein by surrendering, at the office of the warrant
agent, Continental Stock Transfer & Trust Company, the certificate evidencing such SatixFy Warrant, with the form of election to purchase
set forth thereon, properly completed and duly executed, accompanied by full payment of the exercise price and any and all applicable
taxes due in connection with the exercise of the SatixFy Warrant, subject to any applicable provisions relating to cashless exercises
in accordance with the applicable warrant agreement.
We have agreed to indemnify the Selling Shareholders
against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the warrants
or shares offered by this prospectus.
We have agreed with the Selling Shareholders to keep the registration statement of which
this prospectus constitutes a part effective until all of the shares covered by this prospectus have been disposed of pursuant to and
in accordance with the registration statement or the securities have been withdrawn.
LEGAL MATTERS
The legality of the SatixFy Ordinary Shares offered by this prospectus and certain other
Israeli legal matters will be passed upon for SatixFy by Gross Law Firm. The legality of the SatixFy Warrants offered by this prospectus
and certain legal matters relating to U.S. law will be passed upon for SatixFy by Davis Polk & Wardwell LLP, New York, New York.
EXPERTS
The consolidated financial statements of SatixFy Communications Ltd. as of December
31, 2022, 2021 and 2020 and for each of the three years in the period ended December 31, 2022 included in this prospectus and in the Registration
Statement have been so included in reliance on the report of Ziv Haft Certified Public Accountants (Isr.), a member firm of BDO International
Limited, an independent registered public accounting firm, appearing elsewhere herein and in the Registration Statement, given on the
authority of said firm as experts in auditing and accounting.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed a registration statement on Form F-1, including exhibits, under the Securities
Act of 1933, as amended, with respect to the ordinary shares and warrants offered by this prospectus. This prospectus does not contain
all of the information included in the registration statement. For further information pertaining to us and our securities, you should
refer to the registration statement and our exhibits.
In addition, we file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public on a website maintained by the SEC located at www.sec.gov.
We also maintain a website at https://www.satixfy.com.
Through our website, we make available, free of charge, annual, quarterly and current reports, proxy statements and other information
as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained on, or
that may be accessed through, our website is not part of, and is not incorporated into, this prospectus.