Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date hereof.

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

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

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

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

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

The information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

This is a firm commitment initial public offering of Silynxcom Ltd. We are offering 1,075,000 ordinary shares, no par value, of our Company, or the Ordinary Shares. Prior to this offering, there has been no public market for our Ordinary Shares. We anticipate that the initial public offering price of our shares will be between $4.00 and $6.00.

We intend to apply to list the Ordinary Shares on the NYSE American LLC, or the “NYSE American”, under the symbol “SYNX”. This offering is contingent upon the Ordinary Shares being listed. We will not complete this offering if the Ordinary Shares are not approved for listing.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and a “foreign private issuer”, as defined in Rule 405 under the U.S. Securities Act of 1933, as amended, or the Securities Act, and are subject to reduced public company reporting requirements.

We are, and following the consummation of this offering will continue to be, a “controlled company” as defined under the Israeli Companies Law 5759-1999, or the Companies Law, and under the NYSE American rules because our existing controlling shareholders, Mr. Nir Klein and Mr. Ron Klein, will own 52.11% of the total voting power of our issued and outstanding Ordinary Shares immediately after the consummation of this offering, assuming the sale of all of the Ordinary Shares we are offering. As a result, Mr. Nir Klein and Mr. Ron Klein will be able to exercise a significant level of control over all matters requiring shareholder approval, including the election of directors, amendment of our amended and restated articles of association and approval of significant corporate transactions.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 8.

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

You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not authorized anyone to provide you with information that is different. We are offering to sell the securities and seeking offers to buy the securities, only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities.

For investors outside of the United States: Neither we nor any of the underwriters have 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.

In this prospectus, “we,” “us,” “our,” the “Company”, “Silynx” and “Silynxcom” refer to Silynxcom Ltd., an Israeli corporation, Silynx Communications Inc., a Delaware corporation and Source of Sound Ltd., an Israeli corporation.

Our reporting currency and functional currency is the U.S. dollar. Unless otherwise expressly stated or the context otherwise requires, references in this prospectus supplement and the accompanying prospectus to “NIS” are to New Israeli Shekels, and references to “dollars” or “$” are to U.S. dollars.

We report under International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB. None of the financial statements were prepared in accordance with generally accepted accounting principles in the United States.

On August 6, 2023, a 5.612-for-one reverse split of our Ordinary Shares became effective. Furthermore, on November 28, 2023 a 1.065472054-for-one reverse split of our outstanding Ordinary Shares, or the November Reverse Split, became effective. Unless the context expressly indicates otherwise, all references to share and per share amounts referred to herein reflect the amounts after giving effect to the November Reverse Split. The number of Ordinary Shares currently issued and outstanding is 3,161,779.

This prospectus includes statistical, market and industry data and forecasts which we obtained from publicly available information and independent industry publications and reports that we believe to be reliable sources. These publicly available industry publications and reports generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the information. Although we believe that these sources are reliable, we have not independently verified the information contained in such publications. While we believe the estimated market position, market opportunity and market size information included in this prospectus is generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Other market data and industry information is based on management’s knowledge of the industry and good faith estimates of management. All of the market data, panel data and industry information used in this prospectus involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. Before you decide to invest in our securities, you should read the entire prospectus carefully, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.

Our Company

For over a decade, we have been developing, manufacturing, marketing, and selling ruggedized tactical communication headset devices as well as other communication accessories, all of which have been field-tested and combat-proven. Our in-ear headset devices, or In-Ear Headsets, are used in combat, the battlefield, riot control, demonstrations and weapons training courses. Our In-Ear Headsets seamlessly integrate with third party manufacturers of professional-grade ruggedized radios that are used by soldiers in combat or police officers in riot situations. Our In-Ear Headsets also fit tightly into the protective gear to enable users to speak and hear clearly and precisely while they are protected from the hazardous sounds of combat, riots or dangerous situations.

Our sleek, lightweight, In-Ear Headsets include active sound protection to eliminate unsafe sounds, while maintaining ambient environmental awareness, giving our customers 360° situational awareness.

We work closely with our customers and seek to improve the functionality and quality of our products based on actual feedback from soldiers and police officers “in the field.” Our headset devices are compatible and easily integrate with the various communication equipment devices currently being used by tens of thousands of military and law enforcement personnel in leading military and law enforcement units globally.

We sell our In-Ear Headsets and communication accessories directly to military forces, police and other law enforcement units around the world. We also sell indirectly, through a specialized network of local distributors in each geography in which we operate, as well as through key strategic partnerships with radio equipment manufacturers. Our direct sales are generally conducted through government-run official tender processes. Our indirect sales are conducted through our distributor network, specialized agents, and strategic original equipment manufacturers, or OEMs. Our distributor network has grown by six times from 2020 to 2022. While our primary markets are currently in Israel, Europe, Asia and the United States, we intend to expand our sales, marketing and distribution network into new markets such as Southeast Asia and Latin America.

Recent Developments

On October 7, 2023, Hamas terrorists invaded southern Israel and launched thousands of rockets in a widespread terrorist attack on Israel. On the same day, the Israeli government declared that the country was at war. In the days that followed, the Israeli military began to call-up reservists for active duty and deploy units across all service branches to take positions in preparation for a war that, according to Israeli government officials, could last for months.

We sell our products directly and indirectly to the Israel Defense Forces. From October 10, 2023 until the date of this prospectus, we received purchase orders from the Israel Defense Forces and police forces in Israel, amounting to an aggregate of over $4.0 million to supply certain products in the near-term to be used by all branches of the Israel Defense Forces and police departments in Israel as well as in the longer term to resupply inventory stockpiles of equipment for the Israel Defense Forces. We expect to receive additional purchase orders as a result of the ongoing war. There is no assurance, however, that any further purchase orders will materialize in connection with this war. For further information, see “Business—Our Technology—Sales and Marketing” and “Risk Factors—Risks Related to Israeli Law and Our Operations in Israel”.

Corporate Information

We are an Israeli corporation and were incorporated under the name Silynxcom Ltd. Our principal executive offices are located at 19 Yad Haruzim Street in Netanya, Israel. Our telephone number in Israel is +972 9-8658-370. Our website address https://www.silynxcom.com. The information contained on, or that can be accessed through, our website is not part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.

This prospectus contains trademarks, trade names and service marks, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to, and intend to, take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” such as not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenue exceeds $1.235 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.

Implications of being a Controlled Company under the Companies Law

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

As of the date of this prospectus, Mr. Nir Klein, the Company’s Chief Executive Officer, owns more than 50% of our voting power.

Following the consummation of the offering, Mr. Nir Klein and Mr. Ron Klein may not own, in the aggregate, more than 50% of the voting rights in the Company. The Board will periodically assess and decide whether any person(s) retain control of our Company within the meaning of the Companies Law.

For so long as we have one or more controlling shareholder(s) (as defined above) following the consummation of the offering, any transaction which involves the controlling shareholder(s) must be approved by a special majority of our shareholders general meeting, in addition to other required approvals under Companies Law, without taking the controlling shareholder(s) vote into consideration in the said matter. Certain exemptions may apply to transactions with our controlling shareholder(s), as described in the Companies Law regulations.

Additionally, for so long as the Company has a controlling shareholder(s), members of the audit and compensation committees of the board of directors may not be an employee or service provider of the controlling shareholder(s).

Under regulations promulgated pursuant to the Companies Law, in case we do not have a controlling shareholder(s) in the future, the Board may adopt exemptions from various corporate governance requirements of the Companies Law, so long as such company satisfies the requirements of applicable foreign country laws and regulations, including applicable stock exchange rules, that apply to companies organized in that country and relating to the appointment of independent directors and the composition of audit and compensation committees. Such exemptions include an exemption from the requirement to appoint external directors and the requirement that an external director be a member of certain committees, as well as exemption from limitations on directors’ compensation.

Implications of being a Controlled Company under NYSE American Rules

In addition for purposes of the NYSE American rules, we are a “controlled company”, meaning a company over which 50% of the voting power for the election of directors is held by an individual a group, or another company.

Since Mr. Ron Klein and Mr. Nir Klein will own together 52.11% of our Ordinary Shares immediately after the consummation of this offering, assuming the sale of all of the Ordinary Shares we are offering, which means that they will control 52.11% of our voting power, we are eligible for exemptions from certain NYSE American corporate governance standards.

Under these rules, a controlled company may elect to be exempt from the requirements that a majority of its board of directors are independent and that the compensation committee is composed entirely of independent directors. However, we have decided not to avail ourselves of the exemptions available for controlled companies under NYSE American rules. However, our decision not to rely on the “controlled company” exemption could change. As a result, you may in the future not have the same protection afforded to shareholders of companies that are subject to all of the NYSE American corporate governance requirements. See “Risk Factors – Risks Relating to this Offering and Ownership of our Securities – As a “controlled company” within the meaning of the NYSE American rules, we qualify for exemptions from certain corporate governance standards. We do not currently expect or intend to rely on any of these exemptions, but we cannot assure that we will not rely on these exemptions in the future.”

Implications of being a “Foreign Private Issuer”

We are subject to the information reporting requirements of the Exchange Act that are applicable to “foreign private issuers,” and under those requirements, we file reports with the SEC. As a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we are subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We also have four months after the end of each fiscal year to file our annual report with the SEC and are not required to file current reports as frequently or promptly as U.S. domestic reporting companies. Our officers, directors, and principal shareholders are exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we are not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. In addition, as a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under the NYSE American rules for domestic U.S. issuers and are not required to be compliant with all NYSE American rules as of the date of our initial listing on the NYSE American as would domestic U.S. issuers. These exemptions and leniencies will reduce the frequency and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting company. We intend to take advantage of the exemptions available to us as a foreign private issuer during and after the period we qualify as an “emerging growth company.”

Risk Factor Summary

Our business is subject to numerous risks, as more fully described in the section entitled “Risk Factors” immediately following this prospectus summary. You should read these risks before you invest in the Ordinary Shares. In particular, our risks include, but are not limited to, the following:

Risks Related to Our Business and Industry

●

Our consolidated financial statements contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms or at all.

●

A reduction in the spending patterns of government agencies or delays in obtaining government approval for our products could materially and adversely affect our net sales, results of operations, earnings and cash flow.

●

The markets in which we compete are highly competitive and some of our competitors have greater financial and other resources than we do. The competitive pressures faced by us could materially and adversely affect our business, results of operations and financial condition.

●

A significant portion of our revenues is derived from certain customers.

●

If any customer accounts for a significant portion of our revenue in our operations, the loss of any such customers or a material decline in the transaction would have an adverse effect on our operating results

●

We generally do not have long-term contracts with our distributors, which makes forecasting our revenues and operating results difficult.

Risks Related to the Supply and Manufacturing of our Products

●

Disruptions of our production could adversely affect our operating results.

●

We use a variety of raw materials, supplier-provided parts, electronic and acoustic among other components, local manufacturing sub-contractors and contract manufacturing services, and significant shortages, capacity constraints, production disruptions or price increases could increase our operating costs and adversely impact the competitive positions of our products.

●

Security, geopolitical and political conditions in Israel and across the world may adversely impact our financial conditions and business operations in particular impact on access to acquire components and raw material and other supply chain disruptions.

●

Our customers who purchase our products for defense applications typically incorporate our products into their products, which are sold to the U.S. government under contracts. U.S. government contracts generally are not fully funded at inception and may be terminated or modified prior to completion, which could adversely affect our business.

●

Unfavorable outcomes in legal proceedings may harm our business and results of operations.

Risks Related to Intellectual Property

●

Any loss or limitations on our right to use intellectual property licensed from third parties could have a material adverse effect on our business, operating results and financial condition.

●

We consider our industry know-how proprietary but own no registered intellectual property or technology, and others may seek to copy it without compensating us.

●

Our results of operations may be adversely affected if we are subject to a protracted infringement claim or a claim that results in a significant damage award.

Risks Related to this Offering and Ownership of Our Securities

●

The market price of our Ordinary Shares may be highly volatile, and you may not be able to resell your shares at or above the initial public offering price.

●

We will incur significantly increased costs and devote substantial management time as a result of operating as a public company.

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Section 404 of the Sarbanes-Oxley Act requires us to assess the effectiveness of our internal controls over financial reporting, which assessment, as a private company, we have not yet performed.

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Raising additional capital would cause dilution to our existing shareholders and may adversely affect the rights of existing shareholders.

●

If you purchase Ordinary Shares in this offering, you will incur immediate and substantial dilution in the book value of your shares.

●

Since we are deemed to be a controlled company under the Companies Law and NYSE American Rules, we qualify for exemptions from certain corporate governance requirements that would otherwise provide protection to shareholders of other companies. The controlling shareholder(s) will continue to be able to exert significant control over matters submitted to our shareholders for approval. Investors often perceive disadvantages in owning shares in companies with controlling shareholders which may adversely affect the trading price for our Ordinary Shares.

Risks Related to Israeli Law and Our Operations in Israel

●

Potential political, economic and military instability in the State of Israel, where our headquarters, members of our management team, our production and research and development facilities are located, may adversely affect our results of operations.

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Our financial performance is subject to risks associated with changes in the value of the U.S. dollar, Israeli shekel, versus local currencies.

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We may not be able to enforce covenants not-to-compete under current Israeli law that might result in added competition for our products.

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We may be required to pay monetary remuneration to our Israeli employees for their inventions, even if the rights to such inventions have been duly assigned to us.

●

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

THE OFFERING

Issuer		Silynxcom Ltd.

Ordinary Shares offered by us		1,075,000 Ordinary Shares.

Ordinary Shares currently issued and outstanding		3,161,779.

Ordinary Shares to be issued and outstanding after this offering		5,075,000 Ordinary Shares (or 5,236,250 Ordinary Shares if the underwriters exercise in full the over-allotment option to purchase additional Ordinary Shares).

Over-allotment option		We have granted the underwriters an option for a period of up to 45 days to purchase, at the public offering price, up to 161,250 additional Ordinary Shares, representing 15%, less underwriting discounts and commissions, to cover over-allotments, if any.

Use of proceeds		We expect to receive approximately $4.0 million in net proceeds from the sale of the securities offered by us in this offering (approximately $4.74 million if the underwriters exercise their over-allotment option in full ), based upon an assumed public offering price of $5.00 per Ordinary Share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We currently expect to use the net proceeds from this offering for the following purposes: ● approximately $1.5 million for marketing and business development; ● approximately $1.0 million for research and development; and ● the remainder for working capital and general corporate purposes. The amounts and schedule of our actual expenditures will depend on multiple factors. As a result, our management will have broad discretion in the application of the net proceeds of this offering. See “Use of Proceeds” on page 31 of this prospectus for a more complete description of the intended use of proceeds from this offering as well as “Risk Factors — Risks Related to this Offering and Ownership of Our Securities.”

Risk factors		Investing in our securities involves a high degree of risk. You should read the “Risk Factors” section starting on page 8 of this prospectus for a discussion of factors to consider carefully before deciding to invest in the Ordinary Shares.

Listing		We intend to apply to list our shares on the NYSE American, under the symbol SYNX.

The number of the Ordinary Shares to be outstanding immediately after this offering as shown above assumes that all of the Ordinary Shares offered hereby are sold and is based on 3,161,779 Ordinary Shares outstanding as of June 30, 2023. This number excludes:

	●	454,105 Ordinary Shares issuable upon the exercise of options to directors, employees and consultants under our Employee Share Option Plan, or the ESOP, outstanding as of June 30, 2023, at a weighted average exercise price of $2.15, of which 454,105 were vested as of June 30, 2023;

	●	53,624 Ordinary Shares issuable upon exercise of warrants issued to an employee, at an exercise price of NIS 2.965; and

●

696,171 Ordinary Shares reserved for future issuance under our ESOP.

Unless otherwise indicated, all information in this prospectus assumes or gives effect to:

	●	no exercise of the Representative’s Warrants;

	●	no exercise of the underwriters’ over-allotment option;

	●	no exercise of the outstanding options described above;
	●	102,346 Ordinary Shares issuable upon the conversion of certain equity investment agreements, which we refer to as Simple Agreements for Future Equity, or SAFEs, for aggregate proceeds of NIS 1.14 million (approximately $342 thousand), which will automatically convert upon the consummation of this offering, based on an offering price of $5.00, which is the midpoint of the price range set forth on the cover page of this prospectus; and

	●	735,875 Ordinary Shares to be issued upon consummation of this offering under the Investors Agreement (as defined below).

SUMMARY FINANCIAL DATA

The following table summarizes our financial data. We have derived the following statements of operations data for the years ended December 31, 2022 and 2021 from our audited consolidated financial statements, which are included elsewhere in this prospectus. We have derived the following statements of operations data for the six months ended June 30, 2023 and 2022, and balance sheet data as of June 30, 2023 from our unaudited interim consolidated financial statements, which are included elsewhere in this prospectus. Our consolidated financial statements have been prepared in accordance with IFRS, as issued by the IASB and its interpretations. Our historical results are not necessarily indicative of the results that may be expected in the future and interim results are not necessarily indicative of the results that may be achieved in an entire fiscal year. The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto, which are included elsewhere in this prospectus.

	Year Ended December 31,					Six Months Ended June 30,
U.S. dollars in thousands, except share and per share data	2022		2021			2023			2022
						(Unaudited)
Consolidated Statement of Comprehensive Income:
Revenues		7,264		9,581			3,096			1,980
Cost of revenue		4,836		6,379			1,901			1,318
Gross Profit		2,428		3,202			1,195			662
Research and development expenses		439		448			569			200
Selling and marketing expenses		672		852			1,989			348
General and administrative expenses		837		1,255			965			392
Other income		-		166			-			-
Operating profit (loss)		480		813			(2,328	)		(278	)
Finance income		1,443		-			35			69
Finance expenses		123		964			37			1,356
Income (loss) before income tax		1,800		(151	)		(2,326	)		1,009
Income tax expenses		2		2			-			-
Net income (loss)		1,798		(153	)		(2,326	)		1,009
Other comprehensive income (loss)
Gain (loss) from remeasurement of defined benefit plans		16		(5	)		-			-
Total comprehensive income (loss)		1,814		(158	)		(2,326	)		1,009
Basic earnings (loss) per share		0.605		(0.051	)		(0.783	)		0.339
Diluted earnings (loss) per share		0.577		(0.051	)		(0.783	)		0.305

	As of June 30, 2023
U.S. dollars in thousands	Actual			*Pro Forma* as Adjusted⁽¹⁾
Consolidated Balance Sheet Data:	(Unaudited)
Cash and cash equivalents		351			4,422
Total assets		4,541			8,612
Total non-current liabilities		155			155
Accumulated loss		(19,780	)		(21,065	)
Total shareholders’ equity		1,276			5,569

(1)

Pro forma as adjusted data gives effect to: (a) the sale of 1,075,000 Ordinary Shares in this offering, at an assumed public offering price of $5.00 per Ordinary Share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses (assuming no exercise of the over-allotment option and no exercise of any of the Representative’s Warrants issued pursuant to this offering), (b) the issuance of 102,346 Ordinary Shares to be issued upon the conversion of the SAFEs upon the consummation of this offering, and (c) the issuance of 735,875 Ordinary Shares to be issued upon consummation of this offering based on the Investors Agreement as if such events had occurred on June 30, 2023.

You should carefully consider the risks and uncertainties described below and the other information in this prospectus before making a decision to invest in our securities. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations. Our business, financial condition, or results of operations could be materially and adversely affected by any of these risks and uncertainties. The trading price and value of our securities could decline due to any of these risks and uncertainties and you may lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks and uncertainties faced by us described below and elsewhere in this prospectus.

Our independent registered public accounting firm has included in its report for the year ended December 31, 2022 an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. Our ability to continue as a going concern is contingent upon, other factors, our ability to raise additional capital through sales of our securities, including this offering, and incurrence of debt. Additionally, future capital requirements will depend on many factors, including the rate of revenue growth, the selling price of our products, the expansion of sales and marketing activities, and the continuing market acceptance of our products. These factors raise substantial doubt about our ability to continue as a going concern. There is no assurance that additional financing will be available at terms acceptable to us or at all. If we cannot continue as a viable entity, this could materially adversely affect the value of the shares of Ordinary Shares.

The demand for our products sold to the military market, the homeland security market and other government agencies is, in large part, driven by available government funding. Government budgets are set annually and may fluctuate. A significant reduction in available government funding could result in declines in our net sales, results of operations, earnings and cash flow.

A significant portion of our sales are made to government agencies (such as ministries of defense and ministries of interior affairs) or municipal parties (such as police departments, security departments and fire services), which operate in accordance with multi-year investment and work plans that are approved and budgeted by relevant government authorities. Our sales may be impacted if these government agencies divert funds to other areas, such as to the purchase of weapons or other needs. Further, because some government contracts are often for long term periods, such as three or five years, we may lose customer business for a significant period if we lose a government tender and such contract will not be reopened for bidding until such long term period nears expiration.

The military and law enforcement market and the homeland security market are highly competitive, with participants ranging in size from small companies focusing on single types of similar communication products, to large multinational corporations that manufacture and supply many types of safety products. Our main competitors vary by region and product. We believe that participants in this industry compete primarily on the basis of product characteristics (such as functional performance, technology, cost of ownership, comfort, design and style), price, service and delivery, customer support, the ability to meet the special requirements of customers, brand name trust and recognition. Some of our competitors have greater financial and other resources than we do and our business could be adversely affected by competitors’ new product innovations, technological advances made to competing products and pricing changes made by us in response to competition from existing or new competitors. We may not be able to compete successfully against current and future competitors and the competitive pressures faced by us could have a material adverse effect our business, consolidated results of operations and financial condition.

We have one customer that comprised 65.91% of our total revenues in 2021 but none of our total revenues in 2022 and 6.76% of our total revenues in the six months ended June 30, 2023. We have another customer that comprised 3.49% of our total revenues in 2021, 55.3% of our total revenues in 2022 and 14.1% of our total revenues in the six months ended June 30, 2023. The contracts entered into with these customers are generally one-off and repeated individual orders, without a term of any specific duration. There were no other customers that comprised greater than 10% of our total revenues during these years. While we consider our relationships with our major customers to be good, the reduction, delay or cancellation of orders from this customer or any delays in payments beyond their payment terms, for any reason, would reduce our revenue and operating income and could materially and adversely affect our business, operating results and financial condition in other ways.

If any customer accounts for a significant portion of our revenue, the loss of any such customer or a material decline in our transactions with such customer would have an adverse effect on our operating results.

Our management’s strategy plans to avoid customer concentration and is expanding the customer base by growing our distributor and agent network. However, one customer accounted for a significant portion of our revenue in the year ended December 31, 2021 and another customer accounted for a significant portion of our revenue for the year ended December 31, 2022. In the six months ended June 30, 2023, two customers exceeded 10% of total revenue but no single customer exceeded 15% of our total revenue for the period. Despite our efforts to expand our customer base, we cannot assure you that we will be able to create a wide customer base in future periods.

Although we continually seek to diversify our customer base, we cannot assure you that such customer concentration will not persist. Dependence on a limited number of major customers exposes us to the risks of substantial losses if any of them reduces or ceases business with us. Specifically, any one of the following events, among others, may cause material fluctuations or declines in our revenues and have a material and adverse effect on our business, results of operations, financial condition and prospects:

There are inherent risks whenever a large percentage of total revenues are concentrated in a limited number of customers. It is not possible for us to predict the future level of demand for our services that will be generated by these customers. In addition, revenues from these larger customers may fluctuate from time based on deal-flow, the timing of which may be affected by market conditions or other facts, some of which may be outside of our control. If any of these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our services and products which could have an adverse effect on our margins and financial position and could negatively affect our revenues and results of operations and/or trading price of our Ordinary Shares. If any of our large customers cease to procure from us, such cessation would negatively affect our revenues and results of operations and/or trading price of our Ordinary Shares. There is no assurance that we will be successful in our efforts to convince customers to accept our products. Our failure to sell our products could have a material adverse effect on our financial condition and results of operations.

For most of our sales and customers, we do not have long-term contracts. No assurance can be given that our customers will continue to do business with us. The loss of any of our significant customers will have a material adverse effect on our business, results of operations, financial condition and liquidity. In addition, the uncertainty of product orders can make it difficult to forecast our sales and allocate our resources in a manner consistent with actual sales, and our expense levels are based in part on our expectations of future sales. If our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls.

We generally do not have long-term contracts with our distributors, which makes forecasting our revenues and operating results difficult.

We generally do not enter into long-term agreements with our distributors obligating them to purchase our products. Our business is characterized by short-term purchase orders with shipment schedules within six months and we generally permit orders to be canceled or rescheduled before shipment without significant penalty. As a result, our distributors may cease purchasing our products at any time, which makes forecasting our revenues and operating results difficult. In addition, due to the absence of substantial non-cancelable backlog, we typically plan our production and inventory levels based on our distributors’ and partners’ forecasts of customer demand, which can fluctuate substantially. The uncertainty of product orders makes it difficult for us to forecast our sales and allocate our resources in a manner consistent with our actual sales. Moreover, our expense levels and the amounts we invest in capital equipment and new product development costs are based in part on our expectations of future sales and, if our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls and our results of operations and financial condition could be materially adversely affected.

Fluctuations in operating results make financial forecasting difficult and could adversely affect the price of our Ordinary Shares.

Our interim and annual revenues and operating results may fluctuate significantly for numerous reasons, including:

As a result of these and other factors, our revenues and our operating results for any one period or year may not be indictive of our future revenues or operating results. If our revenues or results of operations fall below expectations of investors or market analysts, the price of our Ordinary Shares could fall substantially.

We may incur significant costs or liabilities to satisfy obligations under the terms of the warranties we supply and the contractual terms under which we sell our products and services.

With respect to our products, we typically offer a warranty against any defects in manufacture or workmanship for a period up to one year from the date of purchase. Our customers may extend the warranty period for additional payment. An exercise of the warranty within such time is unusual based on our historical records and the expense is therefore negligible. However, we provide a reserve for these potential warranty expenses, which is based on an analysis of historical warranty issues. There is no assurance that future warranty claims will be consistent with past history and in the event that we experience a significant increase in warranty claims, there is no assurance that our reserves will be sufficient. Excessive warranty claims could have a material adverse effect on our business, financial condition and results of operations.

Our business is affected by the security, geopolitical and political conditions in the United States, Israel and across the world. Such trend may affect the demand for tactical speech and audio accessories as our Communication Devices products which may affect our business and operations.

Our business is affected by the security, geopolitical and political conditions in the United States, Israel and across the world. Unstable security conditions in the United States and Israel in particular may increase the demand for our communication devices products. Precarious political conditions may trigger sanctions, cancellation of export licenses or the stopping of manufacturing activities in a certain country which may affect our business and operations.

A cancellation of our authorized supplier approval issued by the Israeli Ministry of Defense, our security clearance and non-compliance with preconditions, rules and other regulations may affect our future revenues, cash flow and financial results for contracts with Israeli government or its agencies.

We are an authorized supplier of the Israeli Ministry of Defense and we maintain security clearance required for conducting business with them and, accordingly, we are required to comply with preconditions, rules and other regulations that apply to its engagement with the Ministry of Defense and contracts with the Israeli government or it agencies. If our authorized supplier approval with the Ministry of the Defense is cancelled or if we fail to comply with preconditions, rules and other applicable regulations it could have a material adverse effect on our operations and future revenues, cash flow and financial results.

Our earnings and margin depend on our ability to perform on our contracts.

When agreeing to contractual terms, our management team makes assumptions and projections about future conditions and events. The accounting for our contracts and programs requires assumptions and estimates about these conditions and events. These projections and estimates assess:

If there is a significant change in one or more of these circumstances, estimates or assumptions, or if the risks under our contracts are not managed adequately, the profitability of contracts could be adversely affected. This could affect earnings and margin materially.

Our earnings and margin depend in part on subcontractor and supplier performance.

We rely on other companies to provide materials, components and subsystems for our products. We depend on these subcontractors and suppliers to meet their contractual obligations in full. We manage our supplier base carefully to avoid or minimize customer issues. We sometimes rely on only one or two sources of supply that, if disrupted, could have an adverse effect on our ability to meet our customer commitments. Our ability to perform our obligations may be materially adversely affected if one or more of these suppliers is unable to provide the agreed-upon materials, perform the agreed-upon services in a timely and cost-effective manner, or engages in misconduct or other improper activities.

Damage to our reputation or the reputation of one or more of our product brands could adversely affect our business.

Developing, maintaining and enhancing our reputation, as well as the reputation of our brands, is a critical factor in our relationship with customers, distributors and others. Our inability to address negative publicity or other issues, including concerns about product safety or quality, real or perceived, could negatively impact our business which could have a material adverse effect on our business, consolidated results of operations and financial condition. In addition, any errors, defects, disruptions, or other performance problems with our products could harm our brand and may damage the safety of our end-users.

Our future success depends in part on our ability to continue to develop and improve our products and technologies and maintain a qualified workforce to meet the needs of our customers.

Many of the products and services we provide involve sophisticated technologies and engineering, with related complex manufacturing and system-integration processes. Our customers’ requirements may change and evolve. Accordingly, our future performance depends in part on our ability to continue to develop, manufacture and provide innovative products and services and bring those offerings to market quickly at cost-effective prices. Some new products must meet extensive and time-consuming regulatory requirements that are often outside our control and may result in unanticipated delays. Additionally, due to the highly specialized nature of our business, we must hire and retain the skilled and qualified personnel. To the extent that the demand for skilled personnel exceeds supply, we could experience higher labor, recruiting or training costs in order to attract and retain such employees. If we were unable to develop new products that meet customers’ changing needs and satisfy regulatory requirements in a timely manner or successfully attract and retain qualified personnel, our future revenue and earnings may be materially adversely affected.

Claims of injuries or potential safety issues related to alleged product defects, or quality concerns against us could have a material adverse effect on our business, operating results, financial condition and liquidity.

Our mission, reputation and business success rely on our ability to design and provide safe, high quality and reliable products that earn and maintain customer trust. Our products are often used in high-risk and unpredictable environments, and we face an inherent business risk of exposure to product liability claims. In the event the parties using our products are injured or any of our products are alleged to be defective, we could be subject to claims. In addition, we may be required to or may voluntarily recall or redesign certain products or components due to concern about product safety, quality, or reliability. Any significant claims, recalls or field actions that result in significant expense or negative publicity against us could have a material adverse effect on our business, operating results, financial condition and liquidity, including any successful claim brought against us in excess or outside of available insurance coverage.

We derive a significant portion of our revenues from international sales and are exposed to the risks of doing business in multiple countries.

In 2022, our primary markets for deriving our revenues were Israel and the United States. Our non-Israel and U.S. customers, which includes international military sales, accounted for approximately 60.3% of our revenues. We expect that sales from a variety of international markets will continue to account for a significant portion of our revenues for the foreseeable future. As a result, we are exposed to the risks of doing business in multiple countries.

Government policies on international trade and investment and changes in regulatory requirements can affect the demand for our products, impact the competitive position of our products or prevent us from being able to sell or manufacture products in certain countries. The implementation of more restrictive trade policies, such as higher tariffs or new barriers to entry, in countries in which we sell large quantities of products and services could negatively impact our business, financial condition and results of operations. For example, a government’s adoption of “buy national” policies or retaliation by another government against such policies could have a negative impact on our results of operations. If we were unable to navigate the foreign regulatory environment, or if we were unable to enforce our contract rights in foreign countries, our business could be adversely impacted. Any of these events could reduce our sales, limit the prices at which we can sell our products, interrupt our supply chain or otherwise have an adverse effect on our operating performance. Furthermore, volatility in international political and economic environments changes in governments’ national priorities and budgets can lead to delays or fluctuations in orders.

While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations in the future. For example, changing tax treaties between Israel and countries to which we ship products may levy tariffs or taxes on us, which would affect our cash flow. Impacts from these or future potential tariffs, or deterioration in trade relations between Israel and one or more other countries, sanctions and other trade restrictions could have a material adverse impact on our financial position, results of operations and cash flows.

We are subject to various U.S and foreign tax laws and any changes in these laws related to the taxation of businesses and resolutions of tax disputes could adversely affect our results of operations.

The U.S. Congress, the Organization for Economic Co-operation and Development or, OECD, and other government agencies in jurisdictions in which we and our affiliates invest or do business, including the Israeli Tax Authority, have maintained a focus on issues related to the taxation of multinational companies. The OECD has changed numerous long-standing tax principles through its base erosion and profit shifting project which could adversely impact our effective tax rate.

We are subject to regular review and audit by both foreign and domestic tax authorities. While we believe our tax positions will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in our consolidated financial statements, which could have a material adverse effect on our consolidated results of operations, financial condition and cash flows.

We depend on the recruitment and retention of qualified personnel, including our key executives, and our failure to attract, train and retain such personnel and to maintain our corporate culture and high ethical standards could seriously harm our business.

Due to the specialized nature of our business, our future performance is highly dependent upon the continued services of our key technical personnel and executive officers, the development of additional management personnel, and the hiring of new qualified technical, manufacturing, marketing, sales and management personnel for our operations. Our defense business in particular requires qualified personnel with security clearances due to our classified programs. Competition for personnel is intense and we may not be successful in attracting, training or retaining qualified personnel with the requisite skills or security clearances. In addition, certain existing personnel may be required to receive various security clearances and substantial training in order to work on certain programs or perform certain tasks. Necessary security clearances may be delayed, which may impact our ability to perform on our U.S. government contracts. To the extent that we lose experienced personnel, it is critical that we develop other employees, hire new qualified personnel and successfully manage the transfer of critical knowledge. In addition, new qualified personnel may have different expectations from our current workforce, which could result in difficulties attracting and retaining new employees. Loss of key employees, increased attrition for various reasons, failure to attract new qualified employees or adequately train them, delays in receiving required security clearances, or delays in hiring key personnel could seriously harm our business. Moreover, we believe that a critical element of our ability to successfully attract, train and retain qualified personnel is our corporate culture, which we believe fosters innovation, collaboration, diversity and inclusion, and a focus on execution, all in an environment of high ethical standards. Our global operations may present challenges in maintaining these important aspects of our corporate culture. Any failure to maintain these elements of our corporate culture could negatively impact our ability to attract, train and retain essential qualified personnel who are vital to our business and the value of our company. Further, we rely on our key personnel to lead with integrity and to meet our high ethical standards that promote excellent performance and cultivate diversity, equity and inclusion. To the extent any of our key personnel were to behave in a way that is inconsistent with our values, including with respect to product safety or quality, legal or regulatory compliance, financial reporting or people management, we could experience a materially adverse impact to our reputation and our operating results.

The loss of top management and key personnel could significantly harm our business, and our ability to put in place a succession plan and recruit experienced, competent management is critical to the success of the business.

The continuity of our officers and executive team is vital to the successful implementation of our business model and growth strategy designed to deliver sustainable, consistent profitability.

Because of the specialized, technical nature of our business, we are highly dependent on certain members of our management, sales, engineering and technical staff. A top management priority has been the development and implementation of a formal written succession plan to mitigate the risks associated with the loss of senior executives. While we have a formal written succession plan in place, there is no guarantee that we will be successful in our efforts to effectively implement our succession plan. The loss of these employees could have a material adverse effect on our business, financial condition and results of operations. Our ability to effectively pursue our business strategy will depend upon, among other factors, the successful retention of our key personnel, recruitment of additional highly skilled and experienced managerial, sales, engineering and technical personnel, and the integration of such personnel obtained through business acquisitions. We cannot be certain that we will be able to retain or recruit this type of personnel. An inability to hire sufficient numbers of people or to find people with the desired skills could result in greater demands being placed on limited management resources which could delay or impede the execution of our business plans and have other material adverse effects on our business, financial condition and results of operations.

Our business and financial performance may be adversely affected by cyber-attacks on information technology infrastructure and products.

Our business may be impacted by disruptions to our own or third-party information technology (IT) infrastructure, which could result from, among other causes, cyber-attacks on or failures of such infrastructure or compromises to its physical security. Cybersecurity threats are evolving and include, but are not limited to, both attacks on our IT infrastructure and attacks on the IT infrastructure of our customers, suppliers, subcontractors and other third parties with whom we do business routinely, both on premises and in the cloud, attempting to gain unauthorized access to our confidential or other proprietary information, classified information, or information relating to our employees, customers and other third parties, or to disrupt our systems. We have experienced cyber-based attacks, and due to the evolving threat landscape, may continue to experience them going forward, potentially with more frequency. The threats we face vary from attacks common to most industries to more advanced and persistent, highly organized adversaries, including nation states, which target us and other defense contractors. We continue to make investments and adopt measures designed to enhance our protection, detection, response, and recovery capabilities, and to mitigate potential risks to our technology, products, services and operations from potential cybersecurity threats. However, given the unpredictability, nature and scope of cyber-attacks, it is possible that we are unable to prevent cyber-attacks, that potential vulnerabilities could go undetected for an extended period, that we may be unsuccessful in defending an attack against those vulnerabilities, or that we may otherwise be unable to mitigate other potential consequences of these attacks. We could be exposed to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromise of confidential information, intellectual property or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our or third-party systems, networks or products, financial losses from remedial actions, loss of business, or potential liability, penalties, fines and/or damage to our reputation, any of which could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity. Some of these risks may be heightened due to our Company and its suppliers and other third parties operating with a significant number of employees working remotely. Due to the evolving nature of such risks, the impact of any potential incident cannot be predicted. Further, our insurance coverage may not be adequate to cover all related costs and we may not otherwise be fully indemnified for them.

Unauthorized access to our information and systems could negatively impact our business.

We face certain security threats, including threats to the confidentiality, availability and integrity of our data and systems. We maintain an extensive network of technical security controls, policy enforcement mechanisms, monitoring systems and management oversight in order to address these threats. While these measures are designed to prevent, detect and respond to unauthorized activity in our systems, certain types of attacks, including cyber-attacks, could result in significant financial or information losses and/or reputational harm. If we cannot prevent the unauthorized access, release and/or corruption of our confidential, classified or personally identifiable information, our reputation could be damaged, and/or we could face financial losses.

Business disruptions could seriously affect our future sales, results of operations and financial condition or liquidity and competitive position or increase our costs and expenses.

Our business may be impacted by disruptions including threats to physical security, information technology, or cyber-attacks or failures, damaging or extreme weather (including effects of climate change), or other acts of nature and pandemics or other public health crises. Any of these disruptions could affect our internal operations or our suppliers’ operations and delay delivery of products and services to our customers. Any significant production delays, or any destruction, manipulation or improper use of our Company or our suppliers’ data, information systems or networks could impact our sales, results of operations, financial condition or liquidity and competitive position or increase our expenses and/or have an adverse effect on our reputation and of our products and services.

The U.S. government may modify, curtail or terminate one or more of our contracts.

The U.S. government contracting party may modify, curtail or terminate its contracts and subcontracts with us, without prior notice and either at its convenience or for default based on performance. In addition, funding pursuant to our U.S. government contracts may be reduced or withheld as part of the U.S. Congressional appropriations process due to fiscal constraints, changes in U.S. national security strategy and/or priorities or other reasons. Further uncertainty with respect to ongoing programs could also result in the event that the U.S. government finances its operations through temporary funding measures such as “continuing resolutions” rather than full-year appropriations. Any loss or anticipated loss or reduction of expected funding and/or modification, curtailment or termination of one or more large programs could have a material adverse effect on our financial position, results of operations and/or cash flows.

Global inflationary pressure could negatively impact our operations and cash flows.

While inflation in the U.S. has significantly reduced, we nonetheless still face two possible inflationary pressures: a general pressure from a global inflation-related economic slowdown and the effect on the price of raw materials due to inflation. The former inflationary pressure was initially triggered by the slowdown in production and disruption to supply chains due to governmental responses to COVID-19, which was then subsequently exacerbated by the Russian Invasion of Ukraine, or the Invasion, which led to a resulting increase in fuel prices, which in turn led to worsening economic conditions stemming from a decrease in worldwide productivity. Our business has managed to maintain a continuous supply of components and raw materials to meet its customers’ needs despite increased costs and delayed shipment times. There is, however, still a risk that this global inflationary pressure could potentially impact operations and cash flows if global disruptions to the supply chain continue or are exacerbated by certain fallouts from the Invasion.

Global interest rate increases may affect our borrowing and financing costs.

Fluctuations in market interest rates may negatively affect our financial condition, the cost of financing projects, increased costs for components, higher outsourced labor costs and results of operations. We are exposed to floating interest rate risk on cash deposit and borrowings rate, and the risks due to changes in interest rates are not material. We have not used any derivative financial instruments to manage our interest risk exposure.

Our ability to market and sell our products is subject to existing government laws, regulations and standards, including by the Israeli Defense Export Control Agency within the Israeli Ministry of Defense, or DECA, and the U.S. State Department’s Directorate of Defense Trade Controls, or DDTC. Changes in such laws, regulations and standards (in Israel and in the United States) or our failure to comply with them could materially and adversely affect our results of operations.

Most of our products are required to meet performance and test standards designed to protect the safety of people around the world. Our inability to comply with these standards could result in declines in revenue, profitability and cash flow. Changes in laws and regulations could reduce the demand for our products or require us to re-engineer our products, thereby creating opportunities for our competitors. Regulatory approvals for our products may be delayed or denied for a variety of reasons that are outside of our control. Additionally, market anticipation of significant new standards can cause customers to accelerate or delay buying decisions.

In particular, our operations are subject to U.S. and foreign anti-corruption and trade control laws and regulations, such as the Foreign Corrupt Practices Act, or FCPA, export controls and economic sanctions programs, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, the State Department’s Directorate of Defense Trade Controls, or DDTC, and the Bureau of Industry and Security, or BIS, of the Department of Commerce. As a result of doing business in foreign countries and with foreign customers, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations.

As part of our business, we may deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA’s prohibition on providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. In addition, the provisions of anti-bribery and anti-corruption laws in some jurisdictions extend beyond bribery of foreign public officials and also apply to transactions with individuals that a government does not employ. Some of the international locations in which we may operate lack a developed legal system and have higher than normal levels of corruption. Our continued expansion worldwide could increase the risk of FCPA, OFAC or other similar violations in the future.

We may be subject, both directly and indirectly, to the adverse impact of existing and potential future government regulation of our products, technology, operations and markets. For example, the marketing and export of defense related equipment, services, ‘know-how’ are subject to DECA’s regulation under the Defense Export Act, collectively, Israeli Trade Control Laws, which impact our operations, for example by limiting our ability to sell, export, or otherwise transfer our products or technology, or to release controlled technology to non-Israeli companies.

In the U.S., these laws include the International Traffic in Arms Regulations, or ITAR, administered by the DDTC, the Export Administration Regulations, or EAR, administered by the BIS and trade sanctions against embargoed countries and destinations administered by OFAC and collectively, American Trade Control Laws. The EAR governs products, parts, technology and software which present military or weapons proliferation concerns, so-called “dual use” items, and ITAR governs military items listed on the United States Munitions List, or USML. Prior to shipping certain items, we must obtain an export license or verify that license exemptions are available. Any failures to comply with these laws and regulations could result in fines, adverse publicity and restrictions on our ability to export our parts, and repeat failures could carry more significant penalties.

We may not be able to retain licenses and other authorizations required under the applicable American Trade Control Laws and Israeli Trade Control Laws. The failure to satisfy the requirements under the American Trade Control Laws and Israeli Trade Control Laws, including the failure or inability to obtain necessary licenses or qualify for license exceptions, could delay or prevent the development, production, export, import, and/or in-country transfer of our products and technology, which could adversely affect our revenues and profitability.

If we fail to comply with complex procurement laws and regulations, we could lose business and be liable for various penalties or sanctions.

We must comply with laws and regulations relating to the formation, administration and performance of federal government contracts. These laws and regulations affect how we conduct business with our federal government customers. In complying with these laws and regulations, we may incur additional costs, and non-compliance may result in fines and penalties, including contractual damages. Among the more significant laws and regulations affecting our business are:

Our contracting agency customers may review our performance under and compliance with the terms of our federal government contracts. If a government review or investigation uncovers improper or illegal activities, we may be subject to civil or criminal penalties or administrative sanctions, including:

Additionally, the False Claims Act provides for substantial civil penalties where, for example, a contractor presents a false or fraudulent claim to the government for payment or approval. Civil actions under the False Claims Act may be brought by the government or by other persons on behalf of the government (who may then share a portion of any recovery).

If we fail to comply with these laws and regulations, we may also suffer harm to our reputation, which could impair our ability to win awards of contracts in the future or receive renewals of existing contracts. If we are subject to civil or criminal penalties and administrative sanctions or suffer harm to our reputation, our current business, future prospects, financial condition or operating results could be materially harmed.

The U.S. government may also revise its procurement practices or adopt new contracting rules and regulations, including cost accounting standards, at any time. Any new contracting methods could be costly to satisfy, be administratively difficult for us to implement and could impair our ability to obtain new contracts.

Our sales to the U.S. government are subject to extensive procurement regulations, and changes to those regulations could increase our costs.

New procurement regulations, or changes to existing requirements, could increase our compliance costs or otherwise have a material impact on the operating margins. Any new U.S. procurement requirements or regulations that are enacted may also result in withheld payments and/or reduced future business if we fail to comply. For example, proposals to raise domestic content thresholds for our U.S. government contracts could have negative impacts on our business. Compliance costs attributable to current and potential future procurement regulations such as these could negatively impact our financial position, results of operations and/or cash flows.

Environmental, social and corporate governance, or ESG, issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.

There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet regulatory requirements or investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, Board of Director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us.

Customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, energy and water use, plastic waste and other sustainability concerns. Concern over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Changing customer and consumer preferences or increased regulatory requirements may result in increased demands or requirements regarding plastics and packaging materials, including single-use and non-recyclable plastic products and packaging, other components of our products and their environmental impact on sustainability, or increased customer and consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of substances present in certain of our products. Complying with these demands or requirements could cause us to incur additional manufacturing, operating or product development costs.

If we do not adapt to or comply with new regulations, or fail to meet evolving investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in our Company, and customers and consumers may choose to stop purchasing our products, which could have a material adverse effect on our reputation, business or financial condition.

We are subject to Israeli and U.S. government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under U.S. government contracts.

Under the Defense Export Act the Israeli Ministry of Defense and DECA have various audit and supervision powers to ensure compliance with the Defense Export Act, to which violations are subject to criminal and administrative penalties. We are also required to submit quarterly reports to DECA, and to maintain and retain records as to the information and documents pertaining to defense export transactions.

U.S. government agencies, including the Defense Contract Audit Agency and the Defense Contract Management Agency, routinely audit government contractors. These agencies review our performance under contracts, cost structure and compliance with applicable laws, regulations and standards, as well as the adequacy of and our compliance with our internal control systems and policies. Any costs found to be misclassified or inaccurately allocated to a specific contract will be deemed non-reimbursable, and to the extent already reimbursed, must be refunded. Any inadequacies in our systems and policies could result in withholds on billed receivables, penalties and reduced future business. Furthermore, if any audit, inquiry or investigation uncovers improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with the U.S. government. We also could suffer reputational harm if allegations of impropriety were made against us, even if such allegations are later determined to be false.

We are subject to governmental export and import and marketing controls in Israel and in the United States that could subject us to liability in the event of non-compliance or impair our ability to compete in international markets.

We are also subject to U.S. and Israeli export control and economic sanctions laws, which prohibit the delivery and sale of certain products to embargoed or sanctioned countries, governments and persons. Our products could be exported to these sanctioned targets by our channel partners despite the contractual undertakings they have given us and any such export could have negative consequences, including government investigations, penalties and reputational harm.

In addition, we are subject to defense-related export controls. For example, currently certain of our Communication Devices are subject to supervision under the Israeli Defense Export Control Act, 5767-2007, or the Defense Export Act, and we retain and maintain licenses from DACA for marketing activities and export limitations covered by the Defense Export Act. In particular, under the Defense Export Control Act, an Israeli company may not conduct “defense marketing activity” without a defense marketing license from the Israeli Ministry of Defense, or the MOD, and may be subject to a requirement to obtain a specific license from the MOD for any export of defense related products and/or knowhow. The definition of defense marketing activity is broad and includes any marketing of “defense equipment,” “defense knowhow” or “defense services” outside of Israel, which includes “dual-use goods and technology,” (material and equipment intended in principle for civilian use and that can also be used for defensive purposes, such as our Communication Devices) that is specified in the list of Goods and Dual-Use Technology annexed to the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, if intended for defense use only, or is specified under Israeli legislation. “Dual-use goods and technology” will be subject to control by the Ministry of Economy if intended for civilian use only.

We could be subject to liability in the event of non-compliance or impair our ability to compete in international markets (including, if we fail to submit quarterly reports to DECA, to maintain and retain records as to the information and documents pertaining to defense export transactions or to otherwise not comply with the terms of the licenses). Furthermore, there is no certainty that the above-mentioned licenses will be renewed or remain in effect. In addition, DECA may not renew such licenses when they expire and DECA may cancel them in accordance with the regulations and powers vested in DECA by law.

Furthermore, any change in export or import regulations, 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 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. Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition and results of operations.

Disruptions of our production could adversely affect our operating results.

If we were to experience any significant disruption in the operation of our facilities, we would be unable to supply our products to our customers. Some of our sales contracts include financial penalties for late delivery. In the past, we have experienced power outages at our facilities, which generally lasted of one day. Additionally, our products could be subject to especially wide variations in manufacturing yields and efficiency. We may experience manufacturing problems that would result in delays in product introduction and delivery or yield fluctuations.

Our products are composed mainly of electronic components, acoustic components, connectors, cables, plastic parts and seals, that are manufactured by subcontractors in accordance with dedicated and unique specifications. Our reliance on U.S. and non-U.S. suppliers (including third-party manufacturing suppliers, subcontractors and service providers) and commodity markets to secure raw materials, parts, components and sub-systems used in our products exposes us to volatility in the prices and availability of these materials and services. In many instances, we depend upon a single source of supply, manufacturing, services support or assembly, or participate in commodity markets that may be subject to allocations of limited supplies by suppliers. Generally, the final assembly of the product is carried out in our Netanya factory. However, in certain cases, we may be required to manufacture our products locally in one of its target markets; manufacturing is carried out by sub-contractors.

Electronic and acoustic components are commercial off-the-shelf components, while plastic components are manufactured using means of production that belong to us and are located at subcontractors’ premises.

Generally, components may be acquired and supplied within a relatively short period, and we, through our subcontractors, buy the components ahead of time, while attempting to maintain minimum inventory levels in accordance with our short-term manufacturing plan. However, a disruption in deliveries from our suppliers, supplier capacity constraints, supplier production disruptions, supplier quality issues (such as issues with defects or fraudulent parts), closing, bankruptcy or financial difficulties of our suppliers, price increases due to inflation or otherwise, or decreased availability of raw materials or commodities, including as a result of war, natural disaster, health pandemic or other business continuity events, could have a material adverse effect on our ability to meet our commitments to customers or increase our operating costs.

We believe that our supply management and production practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Nonetheless, price increases, supplier capacity constraints, supplier production disruptions or the unavailability of some raw materials may have a material adverse effect on our competitive position, results of operations, financial condition or liquidity.

Our defense businesses are subject to specific procurement requirements that limit the types of materials they use, which may further limit the suppliers and subcontractors they may utilize. They also must require suppliers to comply with various governmental cybersecurity requirements.

Furthermore, our Company enters into engagement agreements with the subcontractors through specific purchase orders or as part of master agreements. Generally, our Company’s terms of payment range between 30-90 days. In exceptional cases, our Company pays in advance for the components. Our engagement agreements with some suppliers are carried out by ad-hoc orders.

Reduced availability or higher prices for the raw materials used in manufacturing our products, other higher costs and expenses associated with the manufacturing of our products, disruptions to manufacturing of our products and supply and distribution chains and other factors that may result in higher prices or lower demand for our products arising directly or indirectly from the continuing impact of the ongoing Invasion could result in decreases from any projections of sales and margins for our business, making past performance less predictive of the future performance of our business. In addition, any deterioration in credit markets resulting directly or indirectly from the ongoing Invasion could limit our ability to obtain external financing to fund our operations and capital expenditures. We may experience losses on our holdings of cash and investments due to failures of financial institutions and other parties. Adverse economic conditions may also result in a higher rate of losses on accounts receivable that we accrue in the future due to credit defaults. As a result, a downturn in the worldwide economy resulting from the Invasion and other conflicts with a global impact that may arise from time to time could have a material adverse effect on our business, results of operations, and/or financial condition.

The board of directors closely follows the fallout from the Invasion and, as a result oversees any possible risks related to the Invasion, which includes, but is not limited to, risks related to cybersecurity, sanctions, employees based in affected regions, and supply chain/suppliers/service providers in affected regions as well as risks connected with ongoing or halted operations or investments in affected regions.

We do not believe that we are more vulnerable to potential cyberattacks by state actors or others since the Invasion. We maintain cybersecurity protocols and procedures we believe are appropriate for a company of our size.

Congress funds the vast majority of the federal budget on an annual basis, and Congress often does not provide agencies with all the money requested in their budget. Many of our customers’ contracts cover multiple years and, as such, are not fully funded at contract award. If Congress or a U.S. government agency chooses to spend money on other programs, our customers’ contracts may be terminated for convenience. Federal laws, collectively called the Anti-Deficiency Act, prohibit involving the government in any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by law. Therefore, the Anti-Deficiency Act indirectly regulates how agencies award our contracts and pay our invoices. Federal government contracts generally contain provisions that provide the federal government rights and remedies not typically found in commercial contracts, including provisions permitting the federal government to, among other things: terminate our existing contracts; modify some of the terms and conditions in our existing contracts; subject the award to protest or challenge by competitors; suspend work under existing multiple year contracts and related delivery orders; and claim rights in technologies and systems invented, developed or produced by us.

The federal government may terminate a contract with us or our customers either “for convenience” (for instance, due to a change in its perceived needs) or if we default due to our failure or the failure of a general or subcontractor to perform under the contract. If the federal government terminates a contract with one of our customers, our contract with our customers generally would entitle us to recover only our incurred or committed costs, settlement expenses and possibly retain any profit on the work that was completed prior to termination. However, under certain circumstances, our recovery costs upon termination for convenience of such a contract may be limited. As is common with government contractors, we have experienced occasional performance issues under some of our contracts. We have received Stop Work Orders wherein work is suspended pending a review of the program. We may in the future receive show-cause or cure notices under contracts that, if not addressed to the federal government’s satisfaction, could give the government the right to terminate those contracts for default or to cease procuring our services under those contracts.

In addition, U.S. government contracts and subcontracts typically involve long purchase and payment cycles, competitive bidding, qualification requirements, delays or changes in funding, extensive specification and performance requirements, price negotiations and milestone requirements. Each U.S. government agency often also maintains its own rules and regulations with which we must comply, and which can vary significantly among agencies.

Unfavorable outcomes in legal proceedings may harm our business and results of operations.

Our business and results of operations may be affected by the outcome of any future litigation, claims, investigations, legal and administrative cases and proceedings, whether civil or criminal, or lawsuits by governmental agencies or private parties. Regardless of whether or not there is merit to the claims underlying any legal proceedings to which we are subject, and regardless of whether or not we are found as a result of such proceedings to have violated any applicable laws, such proceedings can be expensive to defend or respond to, and could result in substantial costs and diversion of management’s attention and resources, which could harm our business, and potentially could cause substantial and irreparable harm to our public reputation. Moreover, if the results or settlement of these legal proceedings are unfavorable to us or if we are unable to successfully defend against third-party lawsuits, we may be required to pay monetary damages or may be subject to fines, penalties, injunctions or other censure that could have an adverse effect on our business, results of operations, financial condition and reputation. Further, our liability insurance coverage may not be sufficient to satisfy, or may not cover, any expenses or liabilities that may arise. Even if we adequately address the issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address these issues, which could harm our business, results of operations and financial condition.

Any loss or limitations on our right to use intellectual property licensed from third parties could have a material adverse effect on our business, operating results and financial condition.

We have been granted an exclusive license to use certain intellectual property. While we are not aware of any disputes between the owner of such intellectual property and us or any third party, the owner may determine not to protect the intellectual property rights that we license from it and we may be unable to defend such intellectual property rights on our own or we may have to undertake costly litigation to defend the intellectual property rights of the owner. Any loss or limitations on our right to use the intellectual property licensed from the owner could have a material adverse effect on our business, operating results and financial condition.

We consider our industry know-how proprietary but own no registered intellectual property or technology, and others may seek to copy it without compensating us.

We have no registered intellectual property rights as to the industry know-how and trade secrets that we believe we have developed relating to our decontamination chambers and pumps and certain other minor products, and we cannot be sure that others will not independently develop the same or similar industry know-how, or otherwise obtain access to or duplicate our industry know-how without compensating us. To protect our rights in these areas, we require all employees, consultants and others who work for or with us to enter into confidentiality agreements. We cannot be sure that these agreements will provide meaningful protection for our industry know-how, trade secrets or other information in the event of any unauthorized use, misappropriation or disclosure. We do not consider the grant of patents, trademarks or other registered intellectual property essential to the success of our business.

Our results of operations may be adversely affected if we are subject to a protracted infringement claim or a claim that results in a significant damage award.

There is considerable patent and other intellectual property development activity in our industry. Our success depends on our not infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities, may own or claim to own intellectual property rights relating to our industry and may challenge the validity or scope of our intellectual property rights. A claim may also be made relating to technology or intellectual property rights that we acquire or license from third parties. If we were subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:

The market price of our Ordinary Shares may be highly volatile, and you may not be able to resell your shares at or above the initial public offering price.

Prior to this offering, there has not been a public market for our securities. Although we intend to apply to list our Ordinary Shares on the NYSE American, an active trading market for the Ordinary Shares may not develop or be sustained. If an active trading market for our Ordinary Shares does not develop following this offering, you may not be able to sell your Ordinary Shares quickly or at the market price. The initial public offering price for the Ordinary Shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the trading market.

The trading price of each of our Ordinary Shares is likely to be volatile. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of such securities:

In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of small companies. Broad market and industry factors may negatively affect the market price of our Ordinary Shares, regardless of our actual operating performance. Further, a systemic decline in the financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly.

The trading price of our Ordinary Shares is likely to be volatile, which could result in substantial losses to investors.

Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

In addition, the price and trading volume for our Ordinary Shares may be highly volatile for factors specific to our own operations, including the following:

The impact of one or more of the foregoing or other factors may cause our results of operations to vary significantly. Such fluctuations make forecasting more difficult and could cause us to fail to meet the expectations of investors and securities analysts, which could cause the trading price of our Ordinary Shares to fall substantially, resulting in the loss of all or part of your investment, and subject us to costly lawsuits, including securities class action suits.

We will incur significantly increased costs and devote substantial management time as a result of operating as a public company.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. For example, we will become subject to the reporting requirements of the Exchange Act, and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.

We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an emerging growth company, as defined by the JOBS Act. We will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and maintain an internal audit function. We cannot predict or estimate the amount of additional costs we may incur as a result of operating as a public company or the timing of such costs.

We believe that being a public company will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and skilled executive officers. As a result of disclosure of information in our publicly-filed documents, our business and financial condition will become more visible, which we believe may result in potential or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be materially adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and materially adversely affect our business, financial condition and operating results.

Section 404 of the Sarbanes-Oxley Act requires us to assesses the effectiveness of our internal controls over financial reporting, which assessment, as a private company, we have not yet performed.

We are not currently required to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act, or Section 404 and, therefore, are not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a publicly traded company, we will be required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will 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 will be 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 until the year following our first annual report required to be filed with the SEC.

Additionally, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 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 currently have limited accounting personnel and we have begun the process of evaluating the adequacy of our accounting personnel staffing level and other 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. If we identify one or more material weaknesses once we are a public company, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements. As a result, the market price of our Ordinary Shares could be negatively affected, and we could become subject to 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.

Raising additional capital would cause dilution to our existing shareholders and may adversely affect the rights of existing shareholders.

We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the issuance of equity (such as this offering) or otherwise including through convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Future sales of our Ordinary Shares or of securities convertible into our Ordinary Shares, or the perception that such sales may occur, could cause immediate dilution and adversely affect the market price of our Ordinary Shares.

If you purchase Ordinary Shares in this offering, you will incur immediate and substantial dilution in the book value of your shares.

The assumed public offering price of the Ordinary Shares being offered hereby is substantially higher than the net tangible book value per share of our outstanding Ordinary Shares. Therefore, if you purchase securities in this offering, you will pay a price per Ordinary Share that substantially exceeds our net tangible book value per Ordinary Share after this offering. To the extent outstanding options are exercised, you will incur further dilution. Based on an assumed offering price of $5.00 per Ordinary Share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $3.27 per Ordinary Share, representing the difference between our pro forma net tangible book value per Ordinary Share after giving effect to this offering and the offering price. See “Dilution” for further information.

Our articles of association to be in effect upon the consummation of this offering provide that, unless we consent to an alternative forum, the federal district courts of the United States shall be the exclusive forum for resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our shareholders’ ability to choose the judicial forum for disputes with us, our directors, shareholders, or other employees.

Our articles of association to be in effect upon the consummation of this offering provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for U.S. federal and state courts over all such Securities Act actions. Accordingly, both U.S. state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our articles of association to be in effect upon the consummation of this offering provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. This exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, and our shareholders cannot and will not be deemed to have waived our compliance with the U.S. federal securities laws and the rules and regulations promulgated under the Securities Act or the Exchange Act as a result of our exclusive forum provision.

Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to the foregoing provision of our 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 provision in our articles of association. If a court were to find the exclusive forum provision contained in our 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.

Although we believe the exclusive forum provision benefit us by providing increased consistency in the application of U.S. federal securities laws or the Israeli Companies Law, 5759-1999, or the Companies Law, as applicable, in the types of lawsuits to which they apply, such exclusive forum provision may limit a shareholder’s ability to bring a claim in the judicial forum that they find favorable and may increase certain litigation costs for disputes with us or any of our directors, shareholders, officers, or other employees, which may discourage lawsuits with respect to such claims against us and our current and former directors, shareholders, officers, or other employees.

If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, or if they change their recommendations regarding our Ordinary Shares adversely, the trading price or trading volume of our Ordinary Shares could decline.

The trading market for our Ordinary Shares will be influenced in part by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors. If one or more of the analysts initiate research with an unfavorable rating or downgrade our Ordinary Shares, provide a more favorable recommendation about our competitors or publish inaccurate or unfavorable research about our business, the market prices of our Ordinary Shares would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume of our Ordinary Shares to decline.

We do not know whether a market for the Ordinary Shares will be sustained or what the trading price of the Ordinary Shares will be and as a result it may be difficult for you to sell your Ordinary Shares.

Although we intend to list our Ordinary Shares on the NYSE American, an active trading market for the Ordinary Shares may not be sustained. It may be difficult for you to sell your Ordinary Shares without depressing the market price for the Ordinary Shares or at all. As a result of these and other factors, you may not be able to sell your Ordinary Shares at or above the offering price or at all. Further, an inactive market may also impair our ability to raise capital by selling Ordinary Shares and may impair our ability to enter into strategic partnerships or acquire companies, products, or services by using our equity securities as consideration.

Sales, or the perception of future sales, of a substantial number of our Ordinary Shares in the public market by our existing shareholders could cause our share price to fall.

Sales of a substantial number of our Ordinary Shares in the public market or the perception that these sales might occur, could depress the market price of our Ordinary Shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Ordinary Shares. While Ordinary Shares sold to non-affiliates in this offering will be freely tradable, without restriction, in the public market, approximately 3,912,682 of the outstanding Ordinary Shares prior to this offering are expected to be subject to lock-up agreements with the underwriters of this offering that restrict the ability of these shareholders to transfer our Ordinary Shares held by them for at least 180 days from the date of this prospectus. These outstanding shares that are subject to lock-up agreements are expected to become eligible for unrestricted sale upon expiration of the lockup period, as described in the section of this prospectus entitled “Shares Eligible for Future Sale.” In addition, Ordinary Shares issued or issuable upon exercise of options vested as of the expiration of the lock-up period will be eligible for sale at that time. Sales of shares by these shareholders could have a material adverse effect on the trading price of our Ordinary Shares.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior 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 operating results.

Our principal shareholders and management own a significant percentage of our Ordinary Shares and will be able to exert significant influence over matters subject to shareholder approval.

After the closing of this offering, our executive officers, directors, five percent shareholders and their affiliates will, in the aggregate, beneficially own approximately 70.51% of our Ordinary Shares (assuming no exercise of the underwriters’ over-allotment option). Therefore, these shareholders, and in particular, our largest shareholder, Mr. Nir Klein, will have the ability to influence us through their ownership positions. These shareholders may be able to determine all matters requiring shareholder approval. For example, these shareholders, acting together, may be able to control elections of directors, amendments of our organizational documents or approval of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our Ordinary Shares that you may believe are in your best interest as one of our shareholders.

Management will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds effectively.

Our management will have broad discretion in the allocation of the net proceeds and could use them for purposes other than those contemplated at the time of this offering and as described in the section titled “Use of Proceeds.” Our management could spend the proceeds in ways that you do not agree with or that do not improve our results of operations or enhance the value of our Ordinary Shares.

We may be a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes in the current taxable year or may become one in any subsequent taxable year. There generally would be negative tax consequences for U.S. taxpayers that are holders of the Ordinary Shares if we are or were to become a PFIC.

Based on the composition of our income and valuation of our assets, we were not a PFIC for 2022 and we do not expect to become a PFIC in the future, although there can be no assurance in this regard. The determination of whether we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. We will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross income is “passive income” or (2) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account. The tests for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of the Ordinary Shares. Accordingly, there can be no assurance that we currently are not or will not become a PFIC in the future. If we are a PFIC in any taxable year during which a U.S. taxpayer holds the Ordinary Shares, such U.S. taxpayer would be subject to certain adverse U.S. federal income tax rules. In particular, if the U.S. taxpayer did not make an election to treat us as a “qualified electing fund”, or QEF, or make a “mark-to-market” election, then “excess distributions” to the U.S. taxpayer, and any gain realized on the sale or other disposition of the Ordinary Shares by the U.S. taxpayer: (1) would be allocated ratably over the U.S. taxpayer’s holding period for the Ordinary Shares; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the U.S. Internal Revenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. taxpayer to make a timely QEF or mark-to-market election. U.S. taxpayers that have held the Ordinary Shares during a period when we were a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. taxpayer who made a timely QEF or mark-to-market election. A U.S. taxpayer can make a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance with the instructions thereto. We do not intend to notify U.S. taxpayers that hold the Ordinary Shares if we believe we will be treated as a PFIC for any taxable year in order to enable U.S. taxpayers to consider whether to make a QEF election. In addition, we do not intend to furnish such U.S. taxpayers annually with information needed in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. U.S. taxpayers that hold the Ordinary Shares are strongly urged to consult their tax advisors about the PFIC rules, including tax return filing requirements and the eligibility, manner, and consequences to them of making a QEF or mark-to-market election with respect to the Ordinary Shares in the event that we are a PFIC. See “Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Companies” for additional information.

We have not paid, and do not intend to pay, dividends on our Ordinary Shares and, therefore, unless our traded securities appreciate in value, our investors may not benefit from holding our Ordinary Shares.

We have never declared or paid any dividends on our Ordinary Shares. We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our business. Our board of directors has sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our directors may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends. See “Dividend Policy.”

As a “foreign private issuer” we are subject to less stringent disclosure requirements than domestic registrants and are permitted, and intend, to follow certain home country corporate governance practices instead of otherwise applicable SEC and NYSE American requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. registrants.

As a foreign private issuer, we may be subject to different disclosure and other requirements than domestic U.S. registrants. For example, as a foreign private issuer we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we intend to rely on exemptions from certain U.S. rules which will permit us to follow Israeli legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants.

We will follow Israeli laws and regulations that are applicable to Israeli companies. However, Israeli laws and regulations applicable to Israeli companies do not contain any provisions comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or 8-K or the U.S. rules relating to liability for insiders who profit from trades made in a short period of time, as referred to above.

Furthermore, foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic registrants 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, although we will be subject to Israeli laws and regulations which we believe will have substantially the same effect as Regulation Fair Disclosure. As a result of the above, even though we are required to file reports on Form 6-K disclosing the limited information which we have made or are required to make public pursuant to Israeli law, or are required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. registrant.

These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.

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, 2024. In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens and/or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic registrant may be significantly higher.

As a “controlled company” within the meaning of the NYSE American rules, we qualify for exemptions from certain corporate governance standards. We do not currently expect or intend to rely on any of these exemptions, but we cannot assure that we will not rely on these exemptions in the future.

For purposes of the NYSE American rules, we are a “controlled company”, meaning a company over which 50% of the voting power for the election of directors is held by an individual a group, or another company. Since Mr. Ron Klein and Mr. Nir Klein will hold together 52.11% of our Ordinary Shares immediately after the consummation of this offering, assuming the sale of all Ordinary Shares we are offering, which means that they control 52.11% of our voting power, we are eligible for exemptions from certain NYSE American corporate governance standards.

Under the NYSE American rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that:

We have decided not to rely on or avail ourselves of the exemptions available for controlled companies under NYSE American rules. However, our decision not to rely on the “controlled company” exemption could change and we cannot assure that we will not rely on these exemptions in the future. If we make such an election, we would disclose such reliance in our next annual report on Form 20-F or annual meeting proxy statement and you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE American. In the event that we cease to be a controlled company within the meaning of the applicable rules of the NYSE American, and at such time we have availed ourselves of such corporate governance exemptions available to controlled companies, we will then be required to comply with these requirements after specified transition periods.

The JOBS Act allows us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our Company and adversely affect the market price of our Ordinary Shares.

For so long as we remain an “emerging growth company” as defined in the JOBS Act, we intend to take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies” including:

We intend to take advantage of these exemptions until we are no longer an “emerging growth company.” We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, as defined in the rule under the Exchange Act as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We cannot predict if investors will find our Ordinary Shares less attractive because we may rely on these exemptions. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for each such traded security, and the trading price of each may be more volatile and may decline.

We may be subject to securities litigation, which is expensive and could divert management attention.

In the past, companies that have experienced volatility in the market price of their shares have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.

The requirements associated with being a public company will require significant company resources and management attention.

Following this offering, we will become subject to the reporting requirements of the Exchange Act, NYSE American listing requirements and other applicable securities rules and regulations. The Exchange Act requires that we file periodic reports with respect to our business and financial condition and maintain effective disclosure controls and procedures and internal control over financial reporting. In addition, subsequent rules implemented by the SEC and the NYSE American may also impose various additional requirements on public companies. As a result, we will incur additional legal, accounting and other expenses that we did not incur as a non-public company, particularly if we are no longer an “emerging growth company” as defined in the JOBS Act. In the period following this offering, we estimate that these expenses will be at least several hundred thousand dollars annually. Further, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our development plans. We have made changes to our corporate governance standards, disclosure controls and financial reporting and accounting systems to meet our reporting obligations. The measures we take, however, may not be sufficient to satisfy our obligations as a public company, which could subject us to delisting of our Ordinary Shares, fines, sanctions and other regulatory action and potentially civil litigation.

Our executive offices and research and development facilities are located in Netanya, Israel. In addition, the majority of our employees, officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and groups in its neighboring countries, Hamas (an Islamist militia and political group that has historically controlled the Gaza Strip) and Hezbollah (an Islamist militia and political group based in Lebanon). In addition, several countries, principally in the Middle East, restrict doing business with Israel, and additional countries may impose restrictions on doing business with Israel and Israeli companies whether as a result of hostilities in the region or otherwise. Any hostilities involving Israel, terrorist activities, political instability or violence in the region or the interruption or curtailment of trade or transport between Israel and its trading partners could adversely affect our operations and results of operations and the market price of our Ordinary Shares.

Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or, if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and results of operations.

Further, many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the age of 40 (or older for certain reservists) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists.

Additionally, having already passed into law a bill that removes the power of the Israeli judiciary to strike down legislation it deems unreasonable, the Israeli government also announced its plans to pass into legislation other judicial reforms that would, for example, increase political influence over the selection of judges. These plans have been met with mass protests in Israel and criticism from leading Israeli business leaders and certain foreign leaders. If such government plans are eventually enacted, they may cause operational challenges for us since we are headquartered in Israel and the majority of our employees are located in Israel. In addition, if foreign policy is negatively impacted with regard to Israel, this could impact our business with suppliers and customers which could in turn adversely impact our reputation, results of operations or financial condition.

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted an orchestrated series of attacks on civilian and military targets, resulting in the mass death, maiming and kidnapping of civilians and soldiers. Hamas also launched extensive rocket attacks on Israeli population and industrial centers in Israel. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks.

Following the attack, the Israeli government declared that the country was at war and the Israeli military began to call up reservists for active duty, including one of our employees, in anticipation of an active military campaign. While none of our facilities or infrastructure have been damaged nor have our supply chains been impacted since the war broke out on October 7, 2023, the import and export of goods may experience disruptions in and out of Israel as a result of such military conflict. A prolonged war could result in further military reserve duty call-ups in the future as well as irregularities to our supply chain and the movement of components and raw material into Israel and our finished products exported from Israel, which could disrupt our operations. Such disruption could materially adversely affect our business, prospects, financial condition and results of operations.

The intensity and duration of Israel’s current war against Hamas is difficult to predict, as are its economic implications on the Company’s business and operations and on Israel’s economy in general.

Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could have a material adverse effect on our business. The political and security situation in Israel may result in parties, with whom we have contracts, claiming that they have been discharged from performance, based on force majeure provisions. Political and economic implications of these hostilities, therefore, could harm our operations and product development.

Any hostilities involving Israel and the potential interruption and curtailment of trade between Israel and its trading partners could adversely affect our operations and make it more difficult for us to raise capital. We may experience disruptions if acts associated with such hostilities result in serious damage to our business and manufacturing facilities. Our business interruption insurance may not adequately compensate us for potential losses that may occur as a result of events associated with the security situation in the Middle East. Any losses or damages incurred by us could have a material adverse effect on our business.

Our financial performance is subject to risks associated with changes in the value of the U.S. dollar, Israeli shekel, versus local currencies.

Our primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses worldwide. Weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of our foreign currency-denominated sales and earnings, and generally leads us to raise international pricing, potentially reducing demand for our products. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the dollar’s strengthening, or at all, which would adversely affect the U.S. dollar value of our foreign currency denominated sales and earnings. Conversely, a strengthening of the Israeli shekel or foreign currencies relative to the U.S. dollar will increase our Israeli operations costs and could cause us to increase our international pricing and become less competitive. Additionally, strengthening of foreign currencies may also increase our cost of product components denominated in those currencies, thus adversely affecting gross margins.

We may not be able to enforce covenants not-to-compete under current Israeli law that might result in added competition for our products.

We have non-competition agreements with all of our executive officers and the majority of our key employees, all of which are governed by Israeli law. These agreements prohibit our employees from competing with or working for our competitors, generally during their employment and for up to a range of 3-12 months after termination of their employment. However, Israeli courts are reluctant to enforce non-compete undertakings of former employees and tend, if at all, to enforce those provisions for relatively brief periods of time in restricted geographical areas, and only when the employee has obtained unique value to the employer specific to that employer’s business and not just regarding the professional development of the employee. If we are not able to enforce non-compete covenants, we may be faced with added competition.

We may be required to pay monetary remuneration to our Israeli employees for their inventions, even if the rights to such inventions have been duly assigned to us.

We enter into agreements with our Israeli employees pursuant to which such individuals agree that any inventions created in the scope of their employment are either owned exclusively by us or are assigned to us, depending on the jurisdiction, without the employee retaining any rights. A portion of our intellectual property has been developed by our Israeli employees during their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the course of his or her employment and within the scope of said employment are considered “service inventions.” Service inventions belong to the employer by default, absent a specific agreement between the employee and employer otherwise. The Patent Law also provides that if there is no agreement regarding the remuneration for the service inventions, even if the ownership rights were assigned to the employer, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for these inventions. The Committee has not yet determined the method for calculating this Committee-enforced remuneration. Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Although our Israeli employees have agreed that we exclusively own any rights related to their inventions, we may face claims demanding remuneration in consideration for employees’ service inventions. As a result, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negatively affect our business.

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

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

Israeli law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. For example, a merger may not be consummated unless at least 50 days have passed from the date on which a merger proposal is filed by each merging company with the Israel Registrar of Companies and at least 30 days have passed from the date on which the shareholders of both merging companies have approved the merger. In addition, a majority of each class of securities of the target company must approve a merger. Moreover, a tender offer for all of a company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the tender offer, unless, following consummation of the tender offer, the acquirer would hold at least 98% of our Company’s outstanding shares. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, claim that the consideration for the acquisition of the shares does not reflect their fair market value, and petition an Israeli court to alter the consideration for the acquisition accordingly, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisal rights, and the acquirer or the company published all required information with respect to the tender offer prior to the tender offer’s response date.

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

Our articles of association to be effective upon the closing of this offering may be deemed to have an anti-takeover effect.

Certain provisions of our articles of association to be effective upon the closing of this offering may make a change in control of us more difficult to effect. Our articles of association will provide for a staggered board of directors consisting of three classes of directors. Directors of each class are chosen for three-year terms upon the expiration of their current terms and each year one class of our directors will be elected by our shareholders. This classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of our board of directors. Thus, the classified board provision could increase the likelihood that incumbent directors will retain their positions. The staggered terms of directors may delay, defer or prevent an attempt to change control of us, even though a change in control might be considered by our shareholders to be in their best interest.

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

The rights and responsibilities of the holders of our Ordinary Shares are governed by our articles of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in U.S. companies. 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 such company, including, among other things, in voting at a general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and related party transactions requiring shareholder approval, as well as a general duty to refrain from discriminating against other shareholders. In addition, a shareholder who is aware that it possesses the power to determine the outcome of a vote at a meeting of the shareholders or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the nature of these duties or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our Ordinary Shares that are not typically imposed on shareholders of U.S. companies.

The termination or reduction of tax and other incentives that the Israeli government provides to Israeli companies may increase our costs and taxes.

The Israeli government currently provides tax and capital investment incentives to Israeli companies, as well as grant and loan programs relating to research and development and marketing and export activities. In recent years, the Israeli government has reduced the benefits available under these programs and the Israeli governmental authorities may in the future further reduce or eliminate the benefits of these programs. We may take advantage of these benefits and programs in the future; however, there can be no assurance that such benefits and programs will be available to us. If we qualify for such benefits and programs and fail to meet the conditions thereof, the benefits could be cancelled and we could be required to refund any benefits we might already have enjoyed and become subject to penalties. Additionally, if we qualify for such benefits and programs and they are subsequently terminated or reduced, it could have an adverse effect on our financial condition and results of operations.

Some of the statements made under “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” “intends” or “continue,” or the negative of these terms or other comparable terminology.

These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this prospectus in greater detail under the heading “Risk Factors” and elsewhere in this prospectus. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

We have applied to list the Ordinary Shares on the NYSE American under the symbol “SYNX” . This offering is contingent upon the Ordinary Shares being listed; however, no assurance can be given that our listing application will be approved by the NYSE American or that a liquid trading market will develop. As of the date of this prospectus our only listed class of securities will be Ordinary Shares outstanding. All of the Ordinary Shares have the same rights and privileges. See “Description of Share Capital.”

We expect to receive approximately $4.0 million in net proceeds from the sale of the securities offered by us in this offering (approximately $4.74 million if the underwriters exercise their over-allotment option in full), based upon an assumed public offering price of $5.00 per Ordinary Share, which is the midpoint of the price range set forth on the cover page of this prospectus.

A $1.00 increase or decrease in the assumed public offering price of $5.00 per Ordinary Share would increase or decrease the proceeds from this offering by approximately $0.99 million, assuming that the number of Ordinary Shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 100,000 Ordinary Shares offered would increase or decrease our proceeds by approximately $0.46 million, assuming the assumed public offering price remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We currently expect to use the net proceeds from this offering for the following purposes:

To the extent the underwriters exercise their over-allotment option or any Representative’s Warrants are exercised, we currently expect to use the net proceeds from such exercise for working capital and general corporate purposes, including potential acquisitions.

Changing circumstances may cause us to consume capital significantly faster than we currently anticipate. The amounts and timing of our actual expenditures will depend upon numerous factors, including the progress of our global marketing and sales efforts, the development efforts and the overall economic environment. Therefore, our management will retain broad discretion over the use of the proceeds from this offering. We may ultimately use the proceeds for different purposes than what we currently intend. Pending any ultimate use of any portion of the proceeds from this offering, if the anticipated proceeds will not be sufficient to fund all the proposed purposes, our management will determine the order of priority for using the proceeds, as well as the amount and sources of other funds needed.

Pending our use of the net proceeds from this offering, we may invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.

We have never declared or paid any cash dividends on our Ordinary Shares and do not anticipate paying any cash dividends in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.

Under the Companies Law, we may declare and pay dividends only if, upon the determination of our board of directors, there is no reasonable concern that the distribution will prevent us from being able to meet the terms of our existing and foreseeable obligations as they become due. Under the Companies Law, the distribution amount is further limited to the greater of retained earnings or earnings generated over the two most recent years legally available for distribution according to our then last reviewed or audited consolidated financial statements, provided that the end of the period to which the consolidated financial statements relate is not more than six months prior to the date of distribution. In the event that we do not meet such earnings criteria, we may seek the approval of the court in order to distribute a dividend. The court may approve our request if it is convinced that there is no reasonable concern that the payment of a dividend will prevent us from satisfying our existing and foreseeable obligations as they become due.

Payment of dividends may be subject to Israeli withholding taxes. See “Taxation—Israeli Tax Considerations and Government Programs” for additional information.

The following table sets forth our cash and cash equivalents and our capitalization as of June 30, 2023:

	●	on an actual basis;

	●	on a pro forma as adjusted basis to give effect to (a) the sale of 1,075,000 Ordinary Shares in this offering, at an assumed public offering price of $5.00 per Ordinary Share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses and assuming no exercise of the over-allotment option and no exercise of any of the Representative’s Warrants issued pursuant to this offering, (b) the issuance of 102,346 Ordinary Shares to be issued upon the conversion of SAFEs upon the consummation of this offering, and (c) the issuance of 735,875 Ordinary Shares to be issued upon consummation of this offering based on the Investors Agreement, as if such events had occurred on June 30, 2023.

The pro forma as adjusted information set forth in the table below is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

You should read this table in conjunction with the sections titled “Summary Financial Data”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

Unless otherwise indicated, all information in this prospectus assumes or gives effect to:

If you invest in our securities, your interest will be diluted immediately to the extent of the difference between the public offering price per Ordinary Share you will pay in this offering and the pro forma net tangible book value per Ordinary Share after this offering.

As of June 30, 2023, we had a net tangible book value of $1,276 thousand, corresponding to a net tangible book value of $0.40 per Ordinary Share. Net tangible book value per share or per Ordinary Share represents the amount of our total tangible assets less our total liabilities, divided by 3,161,779, the total number of Ordinary Shares issued and outstanding on June 30, 2023.

After giving effect to (i) the issuance and sale of the securities offered by us in this offering, assuming no exercise of the underwriters’ over-allotment option and no exercise of any of the Representative’s Warrants issued pursuant to this offering, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the issuance of Ordinary Shares issuable upon the closing of this offering in connection with the conversion of certain outstanding loans, our as adjusted net tangible book value estimated at June 30, 2023 would have been approximately $5.57 million, representing $1.1 per Ordinary Share. Based on the assumed public offering price of $5.00 per Ordinary Share which is the midpoint of the price range set forth on the cover page of this prospectus, this represents an immediate increase in historical net tangible book value of $0.69 per Ordinary Share to existing shareholders and an immediate dilution in net tangible book value of $3.9 per Ordinary Share to purchasers of Ordinary Shares in this offering. Dilution for this purpose represents the difference between the price per Ordinary Share paid by investors in this offering and as adjusted net tangible book value per Ordinary Share immediately after the completion of this offering.

The following table illustrates this dilution on a per Ordinary Share basis to purchasers of Ordinary Shares in this offering:

The dilution information set forth in the table above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

A $1.00 increase or decrease in the assumed initial public offering price of $5.00 per Ordinary Share would increase or decrease our as adjusted net tangible book value per Ordinary Share after this offering by $0.19 and the dilution per Ordinary Share to new investors by $0.81, assuming the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, and assuming no exercise of the over-allotment option and no exercise of any of the Representative’s Warrants issued pursuant to this offering. We may also increase or decrease the number of Ordinary Shares we are offering. An increase or decrease of 100,000 in the number of Ordinary Shares offered by us would increase or decrease our as adjusted net tangible book value after this offering by approximately $0.46 million and the increase or decrease as adjusted net tangible book value per Ordinary Share after this offering by $0.07 per Ordinary Share and would increase or decrease the dilution per Ordinary Share to new investors by $0.07, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and estimated offering expenses payable by us.

The information above assumes that the underwriters do not exercise their over-allotment option. If the underwriters exercise their over-allotment option in full for Ordinary Shares, the as adjusted net tangible book value for the offering will increase to $1.21 per Ordinary Share, representing an immediate increase to existing shareholders of $0.80 per Ordinary Share and an immediate dilution of $3.8 per Ordinary Share to new investors.

The foregoing discussion and table do not take into account further dilution to new investors that could occur upon the exercise or conversion of outstanding options having a per share exercise or conversion price less than the per Ordinary Share initial public offering price in this offering.

We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders.

The following table summarizes, on an as adjusted basis as of June 30, 2023, the differences between the number of Ordinary Shares acquired from us, the total amount paid and the average price per Ordinary Share paid by the existing holders of our Ordinary Shares and by investors in this offering and based upon an assumed public offering price of $5.00 per Ordinary Share, which is the midpoint of the price range set forth on the cover page of this prospectus.

Unless otherwise indicated, all information in this prospectus assumes or gives effect to:

●

735,875 Ordinary Shares to be issued upon consummation of this offering based on the Investors Agreement

If all of such issued and outstanding options had been exercised as of June 30, 2023, the number of Ordinary Shares held by existing shareholders would increase to 3,669,508, or 66% of the total number of Ordinary Shares outstanding after this offering (in each case, not taking into account the conversion of SAFEs and the issuance of Ordinary Shares to Investors Agreement investors as described above), and the average price per Ordinary Share paid by the existing shareholders would be $0.67.

If the underwriters exercise their option to purchase additional Ordinary Shares in full in this offering, the number of Ordinary Shares held by new investors will increase to 1,236,250, or 23.6% of the total number of Ordinary Shares issued and outstanding after this offering and the percentage of Ordinary Shares held by existing shareholders will decrease to 60.38% of the total Ordinary Shares issued and outstanding (in each case, not taking into account the conversion of SAFEs and the issuance of Ordinary Shares to Investors Agreement investors as described above).

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with both our audited consolidated financial statements as of and for the years ended December 31, 2022, and 2021 and our unaudited interim consolidated financial statements as of and for the six months ended June 30, 2023, and 2022, and the accompanying notes included elsewhere in this prospectus. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” elsewhere in this prospectus.

For over a decade, we have been developing, manufacturing, marketing and selling ruggedized tactical communication headset devices (“Personal Headset Devices”) as well as other communications accessories, all of which have been battlefield-tested and combat-proven. We specialize in developing the In-Ear Headset device, a subsegment of the Personal Headset Device market. The In-Ear Headset device is used in both in training and operations by the military, law enforcement, and disaster recovery industry professionals. Our agility, innovation, pricing, and technical performance have enabled us to gain early traction in commercial and industrial markets where a growing emphasis is being placed on safety and reducing certain long-term health issues related to hearing loss as a result of working on the factory floor.

Our In-Ear Headsets seamlessly integrate with third-party manufactured, professional-grade ruggedized radios sold to these aforementioned markets. The key driving factors in the growth of our business has been the recent dramatic growth in the In-Ear Headset subsegment of the Personal Headset Device market coupled with our unique ergonomic design and technology which enables users to both speak and hear clearly and precisely, providing the 360° situational awareness that they require while simultaneously protecting them from hazardous sounds around them.

In addition, we also develop, market and sell push-to-talk devices, communication controllers, and communication device cables and connectors. Our products are designed to be compatible with other products that we offer and compatible with other third-party communication products available in the market that are used by our customers.

Set forth below is a table presenting breakdown of our revenues by our two product groups in the periods presented:

Set forth below is information about our revenues from sale of our products by geography for the periods presented:

Our current operating expenses consist of three components — research and development expenses, selling and marketing expenses and general and administrative expenses.

Our research and development expenses consist primarily of salaries and related personnel expenses, subcontractor’s expenses and other related research and development expenses.

The following table discloses the breakdown of research and development expenses for the periods presented:

We expect that our research and development expenses will materially increase as we continue to develop our products and recruit additional research and development employees.

Our selling and marketing expenses consist primarily of consultants and other marketing and sales expenses.

The following table presents a breakdown of selling and marketing expenses for the periods presented:

General and administrative expenses consist primarily of salaries and related expenses, professional service fees for accounting, legal and bookkeeping, facilities, travel expenses and other general and administrative expenses.

The following table presents a breakdown of general and administrative expenses for the periods presented:

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

Our revenues for the six months ended June 30, 2023 amounted to $3,096 thousand, representing an increase of $1,116 thousand, or 56.4 %, compared to $1,980 thousand for the six months ended June 30, 2022. The increase was due to deliveries to new customers and an increase in deliveries to existing customers.

Our cost of revenue for the six months ended June 30, 2023 amounted to $1,901 thousand, representing an increase of $583 thousand, or 44.2 %, compared to $1,318 thousand for the six months ended June 30, 2022. The increase was primarily due to an increase in sales and share-based payment expenses, the latter of which is a result of options granted in January 2023.

Our research and development expenses for six months ended June 30, 2023, amounted to $569 thousand representing an increase of $369 thousand, or 184.5%, compared to $200 thousand for the six months ended June 30, 2022. The increase was primarily due to share-based payment expenses, the latter of which is a result of options granted in January 2023.

Our marketing and sales expenses for the six months ended June 30, 2023 amounted to $1,989 thousand, representing an increase of $1,641 thousand, or 471.6%, compared to $348 thousand for the six months ended June 30, 2022. Selling and marketing expenses increased primarily due to share-based payment expenses, the latter of which is a result of options granted in January 2023.

Our general and administrative expenses totaled $965 thousand for the six months ended June 30, 2023, representing an increase of $573 thousand, or 146.2%, compared to $392 thousand for the six months ended June 30, 2022. These expenses increased primarily due to shared-based payment expenses, the latter of which is a result of options granted in January 2023.

As a result of the foregoing, our operating loss totaled $2,328 for the six months ended June 30, 2023, representing an increase of $2,050 thousand or 737.4%, compared to $278 thousand for the six months ended June 30, 2022. The increase in operating loss was primarily due to recognizing share-based payment expenses of $2,804 thousand and a decrease of $832 thousand in the cost of revenue.

We recognized financial income of $2 thousand for the six months ended June 30, 2023, representing a decrease of $1,285, or 99.8%, compared to financial income of $1,287 for the six months ended June 30, 2022. The decrease was primarily attributable to a change in the fair value of warrants of $1,033 thousand for the six months ended June 30, 2022.

As a result of the foregoing, our total comprehensive loss totaled $2,326 thousand for the six months ended June 30, 2023, representing a decrease of $3,335 thousand, or 330.5%, compared to a profit of $1,009 for the six months ended June 30, 2022. The decrease in profit is primarily attributable to finance income, mentioned in the preceding paragraph, that was recorded in the six months ended June 30, 2022 and to share-based compensation expenses recorded in the six months ended June 30, 2023.

Our revenues for the year ended December 31, 2022, amounted to $7,264 thousand, representing a decrease of $2,317 thousand, or 24.2%, compared to $9,581 thousand for the year ended December 31, 2021. The decrease was primarily attributable to the lack of working capital availability because we did not have enough funds to receive and carry out orders.

Our cost of revenue for the year ended December 31, 2022, amounted to $4,836 thousand, representing a Decrease of $1,431 thousand, or 22.8%, compared to $6,379 thousand for the year ended December 31, 2021. The decrease was primarily due to a decrease in sales.

Our research and development expenses for the year ended December 31, 2022, amounted to $439 thousand representing a decrease of $9 thousand, or 2%, compared to $448 thousand for the year ended December 31, 2021. The decrease was primarily due to a reduction in cost of materials, due to focusing on software instead of purchasing hardware components, which is more capital intensive than research and development related to our software.

Our marketing and sales expenses for the year ended December 31, 2022 amounted to $672 thousand, representing a decrease of $180 thousand, or 21.12%, compared to $852 thousand for the year ended December 31, 2021. Selling and marketing expenses decreased primarily due to a decrease in salaries expenses.

Our general and administrative expenses totaled $837 thousand for the year ended December 31, 2022, representing a decrease of $418 thousand, or 33.3%, compared to $1,255 thousand for the year ended December 31, 2021. These expenses decreased primarily due to a decrease in professional consulting fees following the completion of our structural reorganization in August 2021. For more information on our structural reorganization, see “Business — M&A and Organizational Structure.”

We had other income totaling $166 thousand for the year ended December 31, 2021. No other income was record for the year ended December 31, 2022. The other income received for the year ended December 31, 2021 was primarily attributed to Pandemic grants received from the Israeli government, and we did not receive any such grants during the year ended December 31, 2022.

As a result of the foregoing, our operating profit totaled $480 thousand for the year ended December 31, 2022, representing a decrease of $333 thousand or 41%, compared to $813 thousand for the year ended December 31, 2021.

We recognized financial income of $1,320 thousand for the year ended December 31, 2022, representing an increase of $2,284, or 237%, compared financial expenses of $964 for the year ended December 31, 2021. Financial income includes $300 thousand in bank fees and exchange rate fluctuations. A difference in income of $1,509 thousand for the year ended December 31, 2022 compared to expenses of $433 thousand for the year ended December 31, 2021 was attributable to refinancing warrants. Additionally, a difference in income of $437 thousand, $368 thousand in income for the year ended December 31, 2022 compared to expenses of $69 thousand for the year ended December 31, 2021 was attributable to exchange rate differences.

As a result of the foregoing, our net profit totaled $1,814 thousand for the year ended December 31, 2022, representing an increase of $1,972 thousand, or 1,248%, compared to loss of $158 for the year ended December 31, 2021. The increase in profit is primarily attributable to finance expenses in 2021 and finance revenues in 2022.

Since our inception through June 30, 2023, we have funded our operations primarily with cash generated from our operating activities. As of June 30, 2023 and December 31, 2022, we had $351 thousand and $69 thousand in cash and cash equivalents, respectively.

During the six months ended June 30, 2023, net cash provided by operating activities was $403 thousand, compared to $1,366 thousand used in operating activities during the six months ended June 30, 2022, primarily attributable to generating revenue from deliveries to new customers and an increase in deliveries to existing customers and the evolution of our working capital. The principal drivers of working capital during this period was a decrease of $1,993 thousand in trade receivables, offset by trade payables that decreased by $1,021 thousand in the six months ended June 30, 2023, compared to a decrease of $983 in trade receivables, offset by trade payables that decreased by $1,514 in the six months ended June 30, 2022.

During the year ended December 31, 2022, net cash used in operating activities was $1,739 thousand, compared to net cash provided by operating activities of $1,619 thousand during the year ended December 31, 2021, primarily attributable to receiving and fulfilling fewer orders in 2022 compared to 2021 and the evolution of our working capital. The principal drivers of working capital during this period was a decrease of $197 thousand in trade payables and a decrease of $46 thousand in other accounts payable in the year ended December 31, 2022 compared to an increase of $1,671 in trade payables and an increase of $879 thousand in other accounts payable in the year ended December 31, 2021.

As of December 31, 2020, our unaudited current assets were $1,837 and current liabilities were $2,830, which resulted in a working capital deficit of $991.7 thousand as of such date.

Net cash used in investing activities was $15 thousand during the six months ended June 30, 2023, compared to $9 thousand during the six months ended June 30, 2022. The cash used in the investing activities was primarily attributable to the purchase of property, plant and equipment.

Net cash used in investing activities was $20 thousand during the year ended December 31, 2022, compared to $125 thousand during the year ended December 31, 2021. The cash used in the investing activities was primarily attributable to the purchase of property, plant and equipment.

Net cash flow used in financing activities was $101 thousand during the six months ended June 30, 2023, compared to net cash provided by financing activities of $271 thousand during the six months ended June 30, 2022. The cash provided by financial activities in the six months ended June 30, 2022 was primarily attributable to proceeds from the SAFE agreements.

Net cash flow provided by financing activities was $255 thousand during the year ended December 31, 2022, compared to $74 thousand used in financing activities during the year ended December 31, 2021. The cash provided by financial activities in the six months ended June 30, 2022 was primarily attributable to proceeds from the SAFE agreements.

On May 5, 2020, we entered into a loan agreement with Bank Mizrahi for NIS 1 million (approximately $284 thousand). Pursuant to the terms of the loan, the loan’s principal was to be repaid in 48 consecutive monthly installments starting on May 30, 2021, and the interest shall be repaid in 48 consecutive monthly installments starting on May 30, 2020. Early repayment is permitted. As of September 30, 2023, the balance of the loan is approximately $116 thousand.

On December 29, 2021, we entered into an agreement, or the Investors Agreement, with Shlomi Amsallem and Ofer Amir, or the Investors, whereby they invested NIS 700 thousand (approximately $225 thousand) for the issuance of securities either directly by the Investors and/or by way of raising capital from other investors that will be introduced by the Investors, or the Additional Investors. The Investors and the Additional Investors will be subject to a dilution of up to 40% of our Company’s issued and paid up share capital as a result of an initial public offering, and if the offering amount in such initial public offering will exceed NIS 16 million (approximately $5,145 thousand) , than the Investors and the Additional Investors will be diluted on a pro rata basis, in accordance with their stake in our Company’s shares. The Investors Agreement was amended October 26, 2022, or the Amendment, to include any initial public offering on Nasdaq or the NYSE American (and, in such event, cease promoting any public offering on the TASE). Further, the Amendment specified that, subject to the Investors’ commitment in the original agreement, we will work to complete a public offering on a U.S. stock exchange by June 30, 2023, with a minimum amount raised of $17 million. If we are deemed to have started the process of raising capital in a public offering on an American stock exchange pursuant to the provisions of the Amendment, even though this condition was not completed by June 30, 2023, and the process of raising public capital continues to proceed in conjunction with an underwriter, then the relevant provisions of the Amendment continue to apply after June 30, 2023 until the completion date of the public offering. In addition, the Investors Agreement was amended such that, in the event of an initial public offering on a U.S. stock exchange: (1) existing shareholders will hold 50% of our issued and outstanding share capital following the offering (including 442,118 options to be assigned to our Company’s vice president); (2) the Investors would hold a minimum of 13.48% of our issued and outstanding share capital following the offering; (3) following the completion of the offering, we may allocate 12% of our share capital to our option plan; and (4) we will list the Investors’ shares for trading up to six months following the completion of the offering. The Investors also agreed to transfer to us an amount of $200 thousand in connection with any expenses associated with our initial public offering. Finally, upon completion of the offering, we will enter into a service agreement with Mr. Amir whereby he will provide advisory services to us until the earliest of: (a) the end of a period of 3 years from the date of completion of the offering; or (b) the date on which Mr. Amir’s holdings in the share capital of our Company will be less than 3%.

On June 1, 2022, we entered into SAFEs for an aggregate net proceeds of NIS 1.14 million (approximately $342 thousand). The amounts we received under the SAFEs will be converted into our Ordinary Shares at a discount rate of (i) 67% (i.e., 33% discount) with respect to an initial public offering or change of control, or a Liquidity Event, or (ii) 70% (i.e., 30% discount) with respect to a bona fide transaction with the principal purpose of raising capital, pursuant to which our Company issues and sells shares in consideration for investment in an aggregate amount of at least NIS 10,000 thousand (approximately $3,007 thousand) in one or more related closings, or Equity Financing.

On May 20, 2015, we entered a warrant agreement with Bank Mizrahi, as amended on January 16, 2017, granting Bank Mizrahi the right to purchase from us 335,959 warrants at an exercise price of $0.89 per ordinary share, for a total amount of $300 thousand. The warrants had an exercise period of six years from the effective date of January 16, 2017. On September 22, 2022, we signed a warrant buyback agreement with Bank Mizrahi, cancelling the bank’s warrants for a one-time fee of NIS 600 thousand (approximately $157 thousand). No warrants were exercised by Bank Mizrahi prior to the buyback agreement and the cancellation of its warrants. The cancellation of the options is conditional on the Company becoming public by March 31, 2024.

As of June 30, 2023 and December 31, 2022, our cash and cash equivalents were $351 thousand and $69 thousand, respectively. We expect to generate revenues from the sale of our products and other revenues in the future. However, we do not expect these revenues to support all of our operations in the near future. We expect our expenses to increase in connection with our activities, particularly as we continue the development of our products, and continue our commercialization efforts. Accordingly, we expect that we will require substantial additional funding in connection with the growth of our operations and commercializing our products. Until we can generate significant recurring revenues and profit, we expect to satisfy our future cash needs through this public offering, as well as other debt and equity financings. However, there is no assurance that we will be successful accomplishing these plans. If we are unable to obtain sufficient capital we may need to reduce, delay, or adjust our operating expenses, including commercialization of existing products or be unable to expand our operations, as desired. As a result of these expected losses and negative cash flows from operations, along with our current cash position, our management and auditors have concluded that a material uncertainty exists that may cast significant doubt about our ability to continue as a going concern. In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:

We describe our significant accounting policies more fully in Note 2 to our audited consolidated financial statements for the year ended December 31, 2022 included elsewhere in this prospectus.

We prepare our financial statements in accordance with IFRS. At the time of the preparation of the financial statements, our management is required to use estimates, evaluations and assumptions which affect the application of the accounting policy and the amounts reported for assets, obligations, income and expenses. Any estimates and assumptions are continually reviewed. The changes to the accounting estimates are credited during the period in which the change to the estimate is made.

Estimates and judgments are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

We make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

The investments and loan agreements which we entered, as described in Note 15 to our audited consolidated financial statements, involve the sale of shares as well as loans obtained from investors, and require as such require the allocation of the total consideration raised in these funding rounds to the share and debt instruments sold, with the difference between the consideration amount allocated to the loans and the contractual loan amounts being recorded in equity with a corresponding discount on the loans. The amount allocated to the loan was determined based on the fair value of the loans at the date of the investment, using a capitalized value of future payments, in different scenarios method, using a discount rate of 4.65% and 5.7% for our investors loans, respectively.

As of December 31, 2022, the discounts recorded on our investors’ loans were $41,934.

As of December 31, 2022, we do not believe we had any off-balance sheet arrangements and commitments.

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our current investment policy is to invest available cash in bank deposits with banks that have a credit rating of at least A-minus. Accordingly, some of our cash and cash equivalents is held in deposits that bear interest. Given the current low rates of interest we receive, we will not be adversely affected if such rates are reduced. Our market risk exposure is primarily a result of U.S. dollar/NIS exchange rates, which is discussed in detail in the following paragraph.

Our functional and reporting currency is the U.S. dollar. We incur some of our expenses in other currencies. As a result, we are exposed to the risk that the rate of inflation in countries in which we are active other than the United States will exceed the rate of devaluation of such countries’ currencies in relation to the dollar or that the timing of any such devaluation will lag behind inflation in such countries. To date, we have been affected by changes in the rate of inflation or the exchange rates of other countries’ currencies compared to the dollar, and we cannot assure you that we will not be adversely affected in the future.

The annual rate of inflation in Israel was 5.3% in 2022 and 2.8% in 2021. The NIS weakened against the U.S. dollar by approximately 11.6% in 2022 and strengthened 3.26% in 2021.

The main impact of inflation for the Company in its production and operations capacity has been felt in terms of increased costs for components, higher outsourced labor costs and, due to increasing interest rates in response to inflation, an increase in the cost of financing projects.

The Invasion has not directly affected us. As of the date of this prospectus, we do not engage in commercial activity in Russia or Ukraine; therefore, the Invasion and sanctions imposed by governments and other sanctioning authorities have not affected our financial position our activity. Our acquisition of components and raw materials has been affected by the invasion insofar as commodity prices have risen. There has been no material impact to our cash flows, liquidity, capital resources, cash requirements, financial position, or results of operations arising from, related to, or caused by the global disruption from the Invasion.

Rising commodity and energy prices, as a result of the import or export bans resulting from the Invasion, have affected us indirectly.

On October 7, 2023, Hamas terrorists invaded southern Israel and launched thousands of rockets in a widespread terrorist attack on Israel. On the same day, the Israeli government declared that the country was at war. Our facilities, infrastructure and acquisition of components and raw materials have not been affected by the war. However, certain of our employees who are military reservists have been called-up for active duty.

We sell our products directly and indirectly to the Israel Defense Forces. From October 10, 2023 until the date of this prospectus, we received purchase orders from the Israel Defense Forces and police forces in Israel amounting to an aggregate of over $4.0 million to supply certain products in the near-term to be used by all branches of the Israel Defense Forces and police departments in Israel as well as in the longer term to resupply inventory stockpiles of equipment for the Israel Defense Forces. We expect to receive additional purchase orders as a result of the ongoing war. There is no assurance, however, that any further purchase orders will materialize in connection with this war.

We are closely monitoring the developments of this war. See “Prospectus Summary—Recent Developments” and “Risk Factors—Risks Related to Israeli Law and Our Operations in Israel—Potential political, economic and military instability in the State of Israel, where our headquarters, members of our management team, our production and research and development facilities are located, may adversely affect our results of operations.”

For over a decade, we have been developing, manufacturing, marketing and selling ruggedized Personal Headset Devices as well as other communications accessories, all of which have been battlefield-tested and combat-proven. We specialize in developing the In-Ear Headset device, a subsegment of the Personal Headset Device market. The In-Ear Headset device is used in both in training and operations by the military, law enforcement, and disaster recovery industry professionals. Our agility, innovation, pricing, and technical performance have enabled us to gain early traction in commercial and industrial markets where a growing emphasis, as evidenced by the growing demand for our products from major companies in private industry, is being placed on safety and reducing certain long-term health issues related to hearing loss as a result of working on the factory floor.

We sell our products directly to military forces, law enforcement, and government agencies and indirectly, through a specialized network of local distributors, specialized agents, and, in some cases, strategic long-term original equipment manufacturer (OEM) agreements with large military equipment providers. While our primary markets are in Israel, Europe, and the United States, we intend to expand our sales, marketing and distribution network into new markets such as Southeast Asia and Latin America.

The sound protection personal tactical communication headset device market is comprised of two types of headsets:

According to the Global Tactical Headset Market Research Report, published by Wantstats Research and Media Pvt Ltd in 2022 (the “GTHM Report”), the tactical communications equipment market was estimated to be worth $2.66 billion as of 2021 and is expected to grow to $3.8 billion by 2027, with a compound annual growth rate of 6.09%. North America accounts for the largest market share (35.81%) followed by Europe (24.07%) and then Asia Pacific (22.92%). This market includes both personal headsets and communication equipment mounted on certain types of vehicles and tanks.

According to the GTHM Report, the personal headset segment of the defense, military and law enforcement tactical communication headset market, defined as headsets that are worn by the user is the largest segment of accounting for 72.25%. In 2021, this segment was estimated at $1.845 billion and is forecasted to reach $2.616 billion by 2027, reflecting a compound annual growth rate of 5.99% between 2021-2027.

More specifically, our market, the In-Ear Headset market was estimated at $87.8 million in 2021 and is expected to reach $726.3 million by 2027, reflecting a compound annual growth rate of 40.93% for years 2021-2027. According to the GTHM report, Over-The-Ear Headsets accounted for 92% of this market. However, it is expected that over this same period, In-Ear Headsets will overtake Over-The-Ear Headsets in terms of market share growing from 8% of this market in 2021 to 42% of this market in 2027.

The following table provides data and estimated forecast regarding the size of the global tactical headset market broken down by active sound protection headsets type from 2018 through 2027:

Source: GTHM Report: https://www.marketresearchfuture.com/reports/tactical-headset-market-3840

We believe that In-Ear Headsets have the following advantages above Over-the-Ear Headsets:

Personal Headset Devices typically have three operational requirements. First, the user needs to be aware of and able to hear ambient noise around them. Second, the user needs to be able to hear and be heard clearly while using his or her communication device, such as a radio, cellular phone, or satellite phone. Third, the user needs to be protected from unpredictable and unsafe sounds, such as explosions, sounds on a battlefield, large demonstrations and weapons training courses.

These requirements seemingly contradict each other. However, our In-Ear Headsets incorporate our electronically enhanced hearing technology along with our active sound protection technology that cuts off or compresses potentially harmful sounds, such as explosions or gunshots.

We focus on developing, marketing and selling two types of In-Ear Headset products. In addition, we also develop, market and sell push-to-talk devices, communication controllers, and communication device cables and connectors.

Our products are designed to be compatible with other products that we offer, as well as compatible with other existing third-party communication products available on the market that are used by our customers. The image below demonstrates the typical Silynxcom System Configuration Options:

Our In-the-Ear Headset products are designed and manufactured with modular integration that enable our customers to use them together with various different radios, cellphones, intercom systems, Bluetooth adaptor and other communications devices. We manufacture two main types of tactical Headsets: (1) In Ear Headsets; and (2) Single-Sided Headsets, or “SST Headsets”.

In-Ear Headset. Our In-Ear Headset enables customers to enjoy high quality, clear communication and multi-directional hearing while providing a high rate of sound protection.

Our In-Ear Headset is unique in its structure, comfort and design. It is composed of lightweight (five gram) earbuds with foam tips. Because it is an In-Ear solution, it is more comfortable to wear than an Over-the-Ear Headset.

This technology allows us to manufacture a headset that enables our customers to speak and be heard clearly even when they are in a noisy environment. This quality enables our customers to use their headset in situations where traditional Over-The-Ear headsets with boom microphones cannot be used properly. The In-Ear Headset integrates active noise protection with surrounding hearing enhancement technologies ,while incorporating our “talking from the ear” technology. Our “talking from the ear” technology detects minute air movements (naturally created in the ear canal when a person speaks) and converts them into audio signals. In contrast to Over-the-Ear Headsets, our In-Ear Headset not only does not limit our customers, given its size, but it can also be worn with additional head or face gear, such as a protective mask, breathing apparatus or respirator, which may be critical for the safety of our customers. Furthermore, our In-Ear Headset may be used with any type of helmet, including full-cut ballistic helmets, full-face riot helmets, driving helmets and other helmets that supply better head and face protection, protecting our customers while they navigate precarious situations.

Both models share the same earbuds. The image below exhibits our Protego headset’s ear bud structure.

As shown in the image below, the Protego PRO includes an additional plug to allow an external microphone to be connected to the headset, a feature that is not available in the Protego STD.

We expect that our In-Ear Headset family of products will be our main growth driver in the near term.

Our SST Headsets are mounted on a user’s head, helmet or protective vest and are equipped with a boom microphone- creating a weapon-mounted wireless push-to-talk device. These SST Headsets are designed to be highly ruggedized and withstand extreme environments.

We offer push-to-talk-only devices and communications controller products. Both products are hardware devices with embedded software. Controlling multiple communication networks at the same time is crucial for our customers because they often need to communicate simultaneously with multiple people and groups, each of whom is on a different network. We are seeing increasing demand for these products as we see dramatic growth in our customers’ adoption of multi-network-based and software-defined radios and cellular phones.

We have designed our controllers for multiple levels of configurations, modularity, and flexibility, enabling our customers to use these controllers with either our own In-Ear Headsets or third party manufactured headsets. We believe that our controllers provide an opportunity to monetize the cross-selling of our In-Ear Headsets once they have purchased our controllers.

Our push-to-talk-only products are used with our SST Headsets or sold separately. Our communication controller products are used with our Protego headsets and include “push-to-talk” audio processing features, like a push-to-talk control box, and enhanced sound protection processing. We believe our push-to-talk products also provide an opportunity to cross-sell our controller products in addition to our In-Ear Headsets.

We manufacture two main models of communication controllers, the Clarus and the Fortis:

We manufacture, market and sell our communication cables and connectors in order to provide a full end-to-end solution so that our customers can connect our In-Ear Headsets with the different radios that they may use. Based on our in-house developed and proprietary Quick Disconnect Connector (“QDC”) technology we have developed a 10 pin QDC that enables customers to easily connect our In-Ear Headsets with a variety of different signal and power input/output sources. A QDC is a robust, proprietary, multi-pin, twenty-meter diving-certified connector. We provide our customers with different QDC integration options that give our customers more configuration flexibility and levels of modularity.

We believe that our family of QDC products provide an opportunity to monetize cross-selling of our other products, particularly, our controller products as well as our In-Ear Headsets.

In January 2023, we signed a Converter & Reseller Agreement with Peltor Protective Communications (“Peltor”), a 3M company, and one of the world’s leading manufacturers and an iconic brand name of headsets and two-way radio accessory products for military, law enforcement, hunting, sport shooting, racing, rally sports, aviation, and manufacturing industries. Under the agreement, Silynxcom will purchase Peltor’s family of Over-the Ear headset products from Peltor and will resell a modified version of the Peltor Over-the-Ear Headset which includes Silynxcom’s QDC connector, an upgraded electronic wiring system embedded with a Silynxcom-designed circuit board. We believe this enables Silynxcom to compete in the high-end market for Over-the-Ear Headsets with a more advanced battery power source and can also provide the end-user the versatility of hearing from two different radios simultaneously from each earpiece respectively.

We also believe this agreement will assist our endeavors to lead in the transformation from Over-the-Ear headsets to In-Ear headsets. We anticipate that our certified embedded technology inside this iconic 3M Peltor brand family of headsets will provide us with both quicker access to a still large customer base of Over-the-Ear headsets and the opportunity to eventually cross-sell our In-Ear Headsets and ancillary connector products to these new customers. We also believe that our certified embedded technology provides excellent market validation and a natural barrier to entry to our competitors. In July 2023, we received a first order to deliver 360 modified units (combined with Silynxcom products) from a first-time military client.

We provide professional services and maintenance support for all our products through our one-year warranty and extended paid-for warranty programs. This support is available either onsite or remotely at the customer’s location.

The technologies that drive our In-Ear Headsets are based on our in-house developed real-time use of software and hardware, hardware miniaturization techniques, ergonomic design, and “hardening” manufacturing techniques.

We sell our products both directly to security and rescue forces, military, and law enforcement units around the world, and indirectly, through a specialized network of distributors and agents.

As of the date of this prospectus, we have engagements with distributors who specialize either in various territories and/or with certain customers from such territories as presented in the table below:

Direct sales of our products are normally conducted as result of either being chosen by the customer after successful tender process or through receipt of a purchase order from a customer. In both cases, receipt of the entire sale proceeds, or a substantial part thereof, is conditional upon receipt from the customer of confirmation of delivery and the receipt of our products and that all post-delivery acceptance tests and inspections have been completed to the satisfaction of the customer. The payment terms in direct sales situations are similar in nature to the payment terms of distributors.

Generally, in view of the nature of our customers, the sales process can range anywhere between several months to several years (in the case of multi-year contracts). When selling to military customers (either directly or indirectly), we are typically prohibited from disclosing the customer’s identity and/or the products that they purchased.

As of the date of this prospectus, we have over three hundred active customers. We have two large customers (Customer A and Customer B), one of which serves as the agent for one of the end users listed above. Set forth below is a breakdown of our five major customers, the revenues arising from which constitute 5% or more of our total revenues in 2020 through 2022, none of whom are one of the end users listed above:

In addition, our marketing budget is partially financed by the Israeli Ministry of Economy and Industry. As participants in the Israeli Government’s “Smart Money Program,” we have been awarded with a participation grant (for up to $392 thousand) to finance an orderly marketing plan in one of our key target markets. To date, we have not yet received any grant funds under the program. If such a grant is received, we will be required to repay it by paying the Ministry of Economy royalties in the amount of 3% (up to the amount of the grant) of any proceeds out of sales in this market.

Silynxcom’s agility, innovative technology, price, and technical performance have allowed us to gain early traction in commercial and industrial markets as well, including:

Gentek manufactures their “pure flow” hooded respiratory suits used by fire fighters and hospitals where protective gear is required. Since 2021, we have been selling our headsets under the Silynxcom brand which have been integrated into Gentex’s “pure flow” suite of products.

Our In-Ear Headsets have been used by employees at Exelon Corporation’s nuclear power plants in the United States since 2021. Exelon Corporation, a utility services holding company, engages in the energy distribution and transmission businesses in the United States and Canada. Previously, employees at their nuclear power facilities, while covered in full body protective clothing, could not clearly hear and communicate with each other by using Over-the Ear Headsets or makeshift In-Ear pieces. With Silynxcom’s In-Hear Headsets, they can hear and communicate clearly while drowning out the corrosive and hazardous sounds of the nuclear power plant floor. We expect to receive further orders in the near term from Exelon and its broad range of utility holdings.

Nucor Corporation is one of the largest manufacturers and marketers of hot-rolled, cold-rolled, and galvanized sheet steel products in the United States. Nucor began purchasing Silynxcom’s In-Hear headsets in 2022 in order to replace their Over-the- Ear Headsets. In our understanding, Nucor was looking for a headset communication system that provided better situational awareness and communication for their employees on their steel mill floors.

We are currently conducting a trial with the Australian arm of Glencore Plc (“Glencore”), one of the world’s leading producers, refiners, processors and marketers of commodities in the world. We have provided Glencore our In-Ear Headsets for use in one of their iron smelting facilities in Australia. We expect initial sales from this pilot project in the first quarter of 2024.

We recently began selling our In-Ear Headsets to a leading road bicycle racing team. Our headsets were chosen as the solution to be embedded into the team’s riding helmets which combine advanced AI-engineered biometric data and voice alerts through our In-Ear Headsets. In May 2023, our headsets were first used in a professional road race at the Giro d’Italia.

As of December 5, 2023 the number of requests for information we have responded to so far in 2023 is 72, up from 11, 32, and 40 in 2020, 2021 and 2022, respectively.

In order to increase our market share in the high-growth in-ear headset segment that we operate in, we rely on the following key growth strategies:

Below are some recent examples of our defense and law enforcement related customer growth:

Since our inception in 2005, we have had over $151 million in sales. We have also achieved several milestones in the last three years as detailed below.

Since 2020, we increased our international distributor network from eleven active distributors to 70 as of December 5, 2023.

In 2021, we received orders for Republic of Korea, Austrian and Dutch army projects, totaling over $9 million in sales. The order size for the Republic of Korea Armed Forces deal amounted to 17,000 systems for $6.3 million. We anticipate that we will receive repeat orders from the Republic of Korea Armed Forces.

In October 2021, we agreed to commence a non-binding collaboration with a large Israeli-based OEM of communication devices. This opportunity relates to modifying the Company’s standard headset for the large Israeli-based OEM for its radio family. We also agreed to collaborate with this large Israeli-based OEM on an opportunity in an Asian country. The first batch of the joint product prototype was supplied in August, 2023.

In each of the last three financial years, we received several orders of over NIS 1 million from Elbit Systems Ltd.

In November 2022, we began a non-binding collaboration with one of the largest European-based OEM of communication devices, and the first orders are expected at the beginning of 2025.

In January 2023, we signed a “converter agreement” with 3M Israel, or 3M, a world leader in the field of sound protection and communication equipment. Per the agreement, we are appointed as the authorized non-exclusive convertor in Israel for the same of 3M products, allowing us to re-sell 3M products in Israel as well as sell modified Peltor headsets to our customers worldwide – expanding our product catalogue with unique over-the-ear headsets integrated with our QDC. The agreement is for a term of one (1) year, unless terminated earlier upon a 60-day written notice and may be renewed by written agreement between the parties for one (1) year thereafter.

As providers of tactical communication headsets, we face competition from both Over-the-Ear Headset producers and other In-Ear Headset producers.

In the In-Ear headset segment of the overall headset market, we compete with Invisio AB (Nasdaq Stockholm: IVSO.ST), Savox Communications Ltd., Ops-Core (a Gentex Corporation company), and Nihon FalCom Corporation.

As defense, military and law enforcement bodies around the world become more familiar with the advantages of In-Ear Headsets, we believe that our position in this market will strengthen.

While we do not consider ourselves as competing directly with traditional Over-the Ear Headset manufacturers, we do compete with them as a solution concept. The market participants who compete in the over-the-ear headset market include Ops-Core, Otto Engineering Inc., Sordin AB, Racal and 3M’s Peltor^TM.

We believe the competitive factors customers are concerned with in the sound protection industry primarily include:

We outsource certain off-the-shelf components of our products from third-party manufacturers and suppliers. Thereafter, we manufacture and assemble in facilities in Israel and other countries, including several countries in Asia, Germany, and the U.S. Finished product are mostly assembled and pass quality control at our facility in Israel.

We consistently monitor our inventory levels, our outsourced manufacturing and distribution capabilities, and maintain recovery plans to address potential disruptions that we may encounter. We do not have a written agreement with these manufacturers and suppliers and work with them on a statement-of-work and purchase order. We are ISO 9001 certified and follow production protocols accordingly.

As of the date of this prospectus, we have no registered intellectual property rights. We consider the processes that we have developed to manufacture our products to be proprietary as industry know-how. We require all employees, consultants and others who work for or with us to enter into confidentiality agreements. In addition, we have the exclusive right to use certain third-party intellectual property (except in relation to various commercial off-the-shelf components that are used in the manufacturing of our products under standard licenses from the owners of those components, the use of which is regulated by contract). We have registered a domain name for Silynxcom and a number of trademarks in the United States. We take reasonable measures as is generally accepted to protect our trade secrets.

As of the date of this prospectus we have 31 full-time employees, including some of the senior management. We have 14 part-time employees. In addition, we have several consultants and sub-contractors, some of whom are engaged on a part time basis. All of our employees are located in Israel and in the US.

None of our employees are represented by labor unions or covered by collective bargaining agreements. We believe that we maintain good relations with all of our employees. In Israel, we are subject to certain Israeli labor laws, regulations and national labor court precedent rulings, as well as certain provisions of collective bargaining agreements applicable to us by virtue of extension orders issued in accordance with relevant labor laws by the Israeli Ministry of Economy and Industry and which apply such agreement provisions to our employees even though they are not part of a union that has signed a collective bargaining agreement.

Our corporate headquarters and warehouse are located 19 Yad Ha’Harutzim St., Netanya, Israel. This facility comprises approximately 433 square meters of space. The total amount paid by us in rent in 2021 and 2022 was $75 thousand and $79 thousand, respectively.

In addition, we rent offices in California in the United States, for $2 thousand per month. The offices are leased on a month-to-month basis.

We consider that our current office space is sufficient to meet our anticipated needs for the foreseeable future and is suitable for the conduct of our business.

We were established in Israel on August 22, 2021 and have two wholly-owned subsidiaries, Silynx Communications Inc., or Silynx USA, which was incorporated in Delaware in September 2005, and Source of Sound Ltd., or SOS, which was incorporated in Israel in September 2005.

As a result of a structural reorganization which took place on August 26, 2021 pursuant to a share exchange agreement between us and Silynx USA, Silynx USA became our wholly owned subsidiary and we acquired all the outstanding shares of Silynx USA from its shareholders in exchange for a full distribution of our outstanding shares to Silynx USA’s shareholders in proportion with their holdings in Silynx USA. In addition, all of Silynx USA’s convertible securities were replaced with convertible securities conferring identical and equal rights in our Company.

Furthermore, on August 26, 2021, Silynx USA’s board of directors resolved to distribute to our Company all the shares Silynx USA holds in SOS as a dividend in kind, such that, as of the date of this prospectus, our Company directly holds all the issued and outstanding shares of SOS. In addition, following the structural reorganization, all options that were allocated to Silynx USA’s employees under option plans adopted by Silynx USA confer such grantees identical rights to shares of our Company and all other terms of the Silynx USA plans continue to apply under the ESOP.

From time to time, we may be involved in various claims and legal proceedings relating to claims arising in the ordinary course of our business. We are not currently a party to any legal proceedings that, if determined adversely to us, could reasonably be expected, individually or taken together, to have a material adverse effect on our business, financial condition or results of operations. 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.

We are subject to a number of laws and regulations that affect our business. These laws and regulations are often complex and evolve frequently. Regulations include, but are not limited to, those related to import and export controls, corruption, bribery, the protection of the environment, product safety, workplace health and safety, employment, labor and data privacy. In addition, as a government contractor and/or subcontractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and grants, which affect how we and our partners do business with government agencies. Government contracts often contain provisions and are subject to laws and regulations that provide government customers with additional rights and remedies not typically found in commercial contracts. Ensuring compliance with government contracting laws, regulations, or contractual provisions may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements could lead to claims for damages, civil or criminal penalties, termination of contracts and/or suspension or debarment from obtaining government contracts and grants.

The following describes significant regulations in the countries in which we primarily operate that may impact our businesses.

Some of our export activity outside Israel is supervised by DECA, within the Israeli Ministry of Defense, and is subject to the provisions of the Defense Export Act. The purpose of the Defense Export Act is to regulate, inter alia, export of defense equipment or services by government regulation. The Defense Export Act requires a defense marketing license to be obtained in advance of any defense marketing activity promoting export of defense equipment or services by a company or person, or Defense Marketing License. Once such defense marketing license, a company is also required to obtain in advance a defense export license to conduct such transactions related to the defense marketing license it has been granted, or a Defense Export License. Such defense export license is required for each export transaction. The Defense Export License is granted with such specificity to certain transfer of defense related information or equipment to and of a specific approved party and end user and end usage. For any changes in such information, DECA must provide another Defense Export License. Under the Defense Export Act a license holder must submit quarterly reports to DECA, to maintain and retain records as to the information and documents pertaining to defense export transactions. The Defense Export Act also provides the competent government agency various audit and supervision powers to ensure compliance with the Defense Export Act and sets up criminal and administrative rules and penalties for violations. Furthermore, according to the Defense Export Supervision Regulations (The Scope of Defense Export by Virtue of an Agreement Between the State of Israel and Another Country that will Brought for Approval by the National Security Ministerial Committee), 5768-2008, defense export by virtue of an agreement between the State of Israel and another country in excess of NIS 200 million must be brought for approval by a sub-committee of the National Security Ministerial Committee; headed by the Prime Minister, and its members to include the Minister of Defense, the Minister of Foreign Affairs, the Minister of Justice, and the Minister of Finance.

As mentioned above, DECA has the power to grant marketing and/or export licenses and to include in those licenses’ conditions for their receipt and cancellation. DECA is also the agency within the Ministry of Defense authorized to provide exports’ applications in cases where they are required to obtain other approvals from other countries, which set various export restrictions on follow-on export from Israel or on follow-on sales in Israel of products or know-how acquired from that country. In accordance with the Defense Export Supervision Regulations (Licensing), 5768-2008, or the Licensing Regulations, DECA’s decisions regarding the granting a marketing license in connection with defense equipment, defense knowhow, or defense services are given within up to 40 or up to 120 days from the day DECA has received the application, depending on if such defense equipment, defense knowhow, or defense services have been determined to be non-classified or classified, respectively. In addition, the Licensing Regulations stipulate that a decision regarding Defense Export License application will be issued no later than 30 days from the application receipt date by DECA (unless the application requires approval of the sub-committee of the sub-committee of the National Security Ministerial Committee, in which case decision will be issued by no later than 45 days from the application receipt date by DECA).

Based on our past experience with DECA, when the application is urgent or where there is any other justified reason for receiving licenses within shorter periods than those specified above, companies can ask for licenses to be issued within shorter periods, and in most cases DECA issues such license within a significantly shorter period. In addition, there are countries for which there are exemptions from the requirement of applying to Defense Marketing License or Defense Export License. As of the date of this prospectus, DECA supervision relates to certain products that in terms of overall sales volume, accumulate to less than 20% of our annual sales volume, in the last three years. Our most popular range of products that generate most of our sales volume – the Clarus In-Ear Headset system family of products – was excluded by DECA from the regulated products list in 2022. However, we have the appropriate licenses required to market and export our regulated products, where such licenses are needed. We have never been denied a Defense Export License; however, in a small number of transactions, we were refused Defense Marketing Licenses and DECA did not provide approval to execute a transaction in a certain country for reasons that unrelated to our Company but rather due to DECA’s considerations, since a Defense Marketing License is awarded at DECA’s sole discretion. Furthermore, there is no certainty that the above-mentioned licenses will be renewed or remain in effect. In addition, DECA may not renew such licenses when they expire and DECA may cancel them in accordance with the regulations and powers vested in DECA by law.

We also have been an authorized supplier of the Israeli Ministry of Defense since 2006. We maintain the relevant security clearances and accordingly are required to comply with preconditions, rules and other regulations that apply to our engagement with the Ministry of Defense and contracts with the Israeli government or its agencies.

Our products are or may in the future be subject to trade and export control laws and regulations in the United States. For example, our direct sales through our website, which are managed by our Company’s U.S. based sales office, are subject to restrictions under ITAR. These regulations control the manufacture, sale, and distribution of defense and space related products (including technical data) and services as defined in the USML and, accordingly, we are required to register with the Directorate of Defense Trade Controls. The Directorate of Defense Trade Controls is primarily a means to provide the U.S. Government with necessary information on who is involved in certain ITAR controlled activities and registration alone does not confer any export or temporary import rights or privileges. Registration is generally a precondition for the issuance of any license or other approval and use of certain exemptions.

We are also subject to the EAR, ITAR, trade and economic sanctions maintained by the Office of Foreign Asset Control as well as foreign direct investment rules and regulations, tariffs and quotas, and other related regulations. In particular, an export license may be required to export or re-export our products and technology to certain countries or end-users or for certain end-uses or may be prohibited. Additionally, we may be required to register with the Directorate of Defense Trade Controls in order to conduct some aspects of our future business activities and we may be required to obtain licenses in order to conduct development activities. Obtaining the necessary export license for a particular sale or offering or business activity may not be possible or may be time-consuming and may result in the delay or loss of sales opportunities. Any failure to adequately address these legal obligations could result in civil fines or suspension or loss of our export privileges.

Any such damages, penalties, disruption, or limitation in our ability to do business with a government could have a material adverse effect on our business, results of operations, financial condition, public perception and growth prospects.

The FCPA, prohibits any U.S. individual or business from paying, offering or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the companies to maintain books and records that accurately and fairly reflect all transactions of the companies, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-United States nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. Our presence outside of the United States, requires dedicating additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The SEC may also suspend or bar issuers from trading securities on the United States exchanges for violations of the FCPA’s accounting provisions.

The following table sets forth information regarding our executive officers, key employees, directors and director nominees as of December 19, 2023. Immediately following the completion of this offering, our board is expected to consist of seven directors.

Mr. Nir Klein has served as our Chief Executive Officer since January 2011 and as a member of our board of directors since August 2021. Mr. Klein graduated from Tel Aviv University with a B.A. in accounting and economics. Mr. Klein has vast operational experience as Chief Executive Officer and director, about which the Board of Directors believes qualifies him to serve as a director.

Mr. Ilan Akselrod has served as our Chief Financial Officer since September 2014. Mr. Akselrod served as a controller in Mobile Technologies Ltd. from June 2010 to August 2014. Mr. Akselrod received his Bachelor of Arts in Economics and Accounting from Bar Ilan University and a Master’s degree in Economics from Bar Ilan University.

Ms. Gal Nir Klein has served as our Vice President of Marketing and Israel Sales since October 2005 and as a member of our board of directors since August 2021. Ms. Nir Klein received her Bachelor of Arts in Economics from Tel Aviv University.

Mr. Elihay Cohen has served as our Vice President of Marketing and International Sales since July 2021. Mr. Cohen served as our Vice President of Marketing and International Sales from October 2017 to December 2020. Mr. Cohen previously served as vice president of marketing and international sales at a large tactical gear producer and has twenty years of prior management and sales experience in the Hi-Tech sector, Mr. Cohen received his Bachelor of Science in Industrial Engineering from Tel Aviv University.

Mr. Ronen Hananis has served as our Vice President of Operations and Development since October 2016. Mr. Hananis has served in various positions in our Company since August 2006. From February 2014 through October 2016, Mr. Hananis served as our R&D and Engineering Manager. Prior to that, Mr. Hananis served as our Engineering Manager. Mr. Hananis received his Bachelor of Science in electronics from the Holon Institute of Technology.

Mr. Ron Klein has served as the Chairman of our board of directors since August 2017. Mr. Klein has been the co-founder, Chief Operating Officer and Chief Financial Officer of Xinteza API Ltd. since January 2022. Mr. Klein has also served as a director at Vgarden since January 2022, Histour-Eltive Ltd. since October 2022, and the Israel Bar Publishing House Ltd. since September 2021. From June 2018 through December 2021, Mr. Klein served as the Chief Executive Officer of ChickP Protein Ltd. Mr. Klein received an executive MBA from Kellog Recanati (Northwestern University and Tel Aviv University) in 2006. He holds a B.A. in accounting and finance from Tel Aviv University.

Mr. Yossi Tisch will become our director immediately after the closing of this offering and will serve as an external director under the Companies Law subject to the ratification of his appointment at a general meeting of our shareholders to be held following the completion of this offering. Mr. Tisch has been vice president of operations and engineering at Shikun & Binui Energy since 2018. From 2009 through 2018, Mr. Tisch served as chief executive officer of two companies in the electricity production and energy sectors. Mr. Tisch also serves as a director at Orim Renewable Energies, Etgal Energy Ltd., Beit Hagadi Green Energies Ltd., Nevatim Renewable Energies Ltd., PSP Investments Ltd, Negev Energy Ashalim Thermo-Solar Ltd, and Ramat Hovav Power Plant Operation and Maintenance, LP. Mr. Tisch received his B.Sc. in industrial and management engineering and his MBA from the Ben-Gurion University of the Negev.

Ms. Yafit Keret will become our director immediately after the closing of this offering. Ms. Keret has been the owner and chief executive officer of Proximo Ltd. since 2011. From 2000 through 2010, Ms. Keret was the chief financial officer of Titan Systems Engineering Ltd. Ms. Keret also serves as director at Matrix Ltd. and Migdalor Investments. Ms. Keret received her B.A. in accounting and business administration and her MBA from the College of Management in Tel Aviv.

Mr. Adler Adrian will become our director immediately after the closing of this offering. Mr. Adrian has worked as a systems engineer at Israel Aerospace Industries since 2019, a project manager at TechMer Ltd. since 2016 and a project manager and engineer at Mistral Group since 2013. From 2014 through 2016, Mr. Adrian worked as a project manager at Motorola Solutions Ltd. Mr. Adrian received his MBA from the Ben-Gurion University of the Negev and his B.Sc. in electrical engineering from Tel Aviv University.

Mr. Itiel Efrat will become our director immediately after the closing of this offering and will serve as an external director under the Companies Law subject to the ratification of her appointment at a general meeting of our shareholders to be held following the completion of this offering. Mr. Efrat is CEO of ERB Financial Group (“ERB”), an entity he co-founded in 1995. Mr. Efrat has twenty-eight years of experience in controllership services with ERB acting as chief financial officer to approximately one thousand five hundred start-up companies, mainly in the technology sector. Mr. Efrat also serves as director of Matrix IT Ltd, a leading Israeli IT company. Mr. Efrat received his B.A. in accounting and finance from the College of Management in Tel Aviv and is a certified public accountant.

Nir Klein, our Chief Executive Officer and Director is a brother to Ron Klien, the Chairman of our board of directors, and husband to Gal Nir Klein, our Israel Marketing and Sales Officer and Director. See “Related Party Transactions” for additional information.

The following table presents in the aggregate all compensation we paid to all of our directors and senior management for the year ended December 31, 2022. All amounts reported in the tables below reflect the cost to our Company, in U.S. Dollars, for the year ended December 31, 2022.

For so long as we qualify as a foreign private issuer, we will not be required to comply with the proxy rules applicable to U.S. domestic companies regarding disclosure of the compensation of certain executive officers on an individual basis. Pursuant to the Companies Law, we will be required, after we become a public company, to disclose the annual compensation of our five most highly compensated officers on an individual basis. This disclosure will not be as extensive as that required of a U.S. domestic issuer. We intend to commence providing such disclosure, at the latest, in the annual proxy statement for our first annual meeting of shareholders following the closing of this offering, which will be filed under cover of a report on Form 6-K.

We have entered into written service agreements with each of our executive officers and the majority of our key employees, as further detailed below. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and intellectual property and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance. For a description of the terms of our options and option plans, see “Management—Share Incentive Plan” below.

In 2005, SOS entered into an employment agreement with Mr. Nir Klein, as amended on August 29, 2013, by which Mr. Klein to serve as the Chief Executive Officer, or CEO, of SOS for a full-time position. As of the date of our Company’s establishment, Mr. Klein became CEO of our Company with continuous rights. Mr. Klein is entitled to a monthly salary (gross) of NIS 35 thousand (approximately $11 thousand) and accompanying benefits, including 23 annual vacation days (accumulation of vacation days is limited to an allotment of 24 months only), recreation days and sick days pursuant to the law, a company car, payment for fuel expenses, a mobile phone and laptop, executive insurance/pension insurance, contributions to an education fund up to the ceiling that is exempted from tax under Israeli laws, and reimbursement of reasonable expenses incurred in relationship of his position. The Company also intends to execute Section 14 of the Severance Pay Law – 1963, or the Severance Pay Law, with Mr. Klein, and this will be valid as of the execution date. In addition, Mr. Klein is entitled to an annual bonus pursuant to meeting certain targets as described in his employment agreement. The employment agreement is for an unlimited term, and each party is entitled to terminate the employment agreement by a two months’ prior written notice. Upon conclusion of his employment at our Company for a reason that does not establish cause for termination pursuant to the terms of the employment agreement, Mr. Klein will be entitled to a prior notice period of four additional months (beyond the two months period noted above).

Furthermore, during his tenure as CEO, Mr. Klein has been granted 13,301 options to purchase of 13,301 Ordinary Shares.

Periodically, Mr. Klein waived a variable amount of the monthly salary (gross) due to him pursuant to his employment agreement. This amounted to approximately $57 thousand, $106 thousand and $131 thousand, respectively, in each of the years 2019, 2020 and 2021. On December 31, 2022, Mr. Klein executed an absolute and irrevocable disclaimer for the total amount that he waived throughout the aforementioned period and beginning in 2017, which was approximately $699 thousand.

Mr. Klein is not entitled to any compensation with respect to his membership on our board of directors.

Following the completion of this offering, Mr. Klein shall receive a monthly salary of NIS 60,000, will receive an annual discretionary bonus subject to our compensation policy that would be the higher of the equivalent of NIS 180 thousand or 25% of certain variable components subject to adoption by our board.

Employment Agreement with Mrs. Gal Nir Klein, VP Marketing and Israel Sales, and Director

In 2005, SOS entered into an employment agreement with Mrs. Gal Nir Klein, by which Mrs. Klein serves as the VP Marketing and Israel Sales, of SOS for a full-time position. Mrs. Klein is entitled to a monthly salary (gross) of NIS 22 thousand (approximately $7 thousand) and accompanying benefits, including 23 annual vacation days (accumulation of vacation days is limited to an allotment of 24 months only), recreation days and sick days pursuant to Israeli law, a company car, fuel expenses, a mobile phone and laptop, executive insurance/pension insurance, contributions to an advanced education fund for her full salary, and reimbursement of reasonable expenses incurred in relationship of her position. The Company also intends to execute Section 14 of the Severance Pay Law with Ms. Klein, and this will be valid as of the execution date. In addition, Mrs. Klein is entitled to an annual bonus pursuant to meeting certain targets as described in her employment agreement. The employment agreement is for an unlimited term, and each party is entitled to terminate the employment agreement by a two months’ prior written notice. Upon conclusion of his employment at our Company for a reason that does not establish cause for termination pursuant to the terms of the employment agreement, Mrs. Klein will be entitled to a prior notice period of four additional months (beyond the two months period noted above).

Furthermore, during her tenure, Mrs. Klein has been granted 998 options to purchase of 998 Ordinary Shares.

Periodically, Mrs. Klein waived a variable amount of the monthly salary (gross) due to her pursuant to her employment agreement. This amounted to approximately $52 thousand, $41 thousand and $54 thousand, respectively, in each of the years 2019, 2020 and 2021. On December 31, 2022, Mrs. Klein executed an absolute and irrevocable disclaimer for the total amount that she waived throughout the aforementioned period and beginning in 2017, which was approximately $301 thousand.

Mrs. Klein is not entitled to any compensation with respect to her membership on our board of directors.

Following the completion of this offering, Mrs. Klein shall receive a monthly salary of NIS 39,000, a discretionary annual bonus linked to the Company’s compensation policy, an annual leave quota of twenty-three days, and a notice period of sixty days.

In 2014, SOS entered into an employment agreement with Mr. Ilan Akselrod, pursuant to which Mr. Akselrod serves as Chief Financial Officer, or CFO, of our Company for a full-time position. As of the date of our Company’s establishment, Mr. Akselrod became CFO of our Company with continuous rights. In respect of his tenure, Mr. Akselrod is entitled to a monthly salary (gross) of NIS 26 thousand (approximately $7 thousand) and accompanying benefits, including 17 annual vacation days, recreation days and sick days pursuant to the law, a mobile phone and laptop, executive insurance/pension insurance, severance pay pursuant to the provisions of Section 14 of the Severance Pay Law, contributions to a advanced education fund up to the ceiling that is exempted from tax, and reimbursement of reasonable expenses incurred in relationship with his position. In addition, Mr. Akselrod is entitled to an annual bonus subject to our Company’s exclusive discretion. The employment agreement is for an unlimited term, and each party is entitled to terminate it with 30 days’ prior written notice.

Furthermore, during his tenure, Mr. Akselrod was granted 92,226 options to purchase 92,226 Ordinary Shares.

Following the completion of this offering, Mr. Akselrod shall receive a monthly salary of NIS 39,000, a bonus of NIS 236,000, an annual leave quota in accordance with Israeli law and a notice period of thirty days.

Employment Agreement with Mr. Elihay Cohen, Vice President of Marketing and International Sales

In August 2021, SOS entered into an employment agreement with Mr. Elihay Cohen, pursuant to which Mr. Cohen serves as the VP Marketing and International Sales of our Company in a full-time position. In respect of his tenure, Mr. Cohen is entitled to a monthly salary (gross) of NIS 35 thousand (approximately 10 thousand). Mr. Cohen is entitled to accompanying benefits, including 18 annual vacation days that may be accumulated up to an allotment of 36 days, recreation days and sick days pursuant to the law, a company car, fuel expenses and reimbursement for vehicle-related expenses, a mobile phone and laptop, executive insurance/pension insurance, severance pay pursuant to Section 14 of the Severance Pay Law, contributions to an advanced education fund up to the ceiling that is exempted from tax, and reimbursement of reasonable expenses incurred in relationship with his position, and as approved in advance and in writing by our Company. In addition, Mr. Cohen is entitled to a commission from sales based on targets established in the agreement. The employment agreement is for an unlimited term, and each party is entitled to terminate it with 90 days’ prior written notice.

Furthermore, during his tenure, Mr. Cohen was granted 507,237 options to purchase 507,237 Ordinary Shares.

Following the completion of this offering, Mr. Cohen shall receive a monthly salary of NIS 39,000 and all other employment terms shall remain the same as his current employment agreement.

Employment Agreement with Mr. Ronen Hananis, Vice President of Operations and Development

In 2006, SOS entered into an employment agreement with Mr. Ronen Hananis (who was employed at our Company since 2003 in various positions), pursuant to which Mr. Hananis serves as the VP Operations and Development of our Company for a full-time position. Mr. Hananis is entitled to a monthly salary (gross) of NIS 30 thousand (approximately $10 thousand) and accompanying benefits, including 20 vacation days, recreation days and sick days pursuant to the law, a company car and expenses related to vehicle usage (without grossing), a mobile phone and laptop, executive insurance/pension insurance, contributions to an advanced education fund for his full salary. Mr. Hananis will bear the tax consequences for the amount in excess of the tax-exempt threshold. The Company also intends to execute Section 14 of the Severance Pay Law with Ms. Klein, and this will be valid as of the execution date. The employment agreement is for an unlimited term, and each party is entitled to terminate it with 30 days’ prior written notice. Furthermore, during his tenure, Mr. Hananis has been granted 131,936 options for the purchase of 131,936 Ordinary Shares subject to completion of this offering,

Following the completion of this offering, Mr. Hananis shall receive a monthly salary of NIS 39,000 and a discretionary annual bonus linked to our compensation policy. All other terms shall remain the same as his current employment agreement.

Ron Klein, brother of Mr. Nir Klein, serves as the Chairman of our board of directors at a position scope of at least 30%, in consideration for monthly management fees of NIS 25 thousand (approximately $7 thousand) and will receive an annual discretionary bonus subject to our compensation policy that would be the higher of the equivalent of NIS 75 thousand or 25% of certain variable components subject to adoption by our board See “Related Party Transactions” for additional information. Mr. Klein has been granted 115,830 options to purchase 115,380 Ordinary Shares, subject to completion of this offering.

The Sarbanes-Oxley Act, as well as related rules subsequently implemented by the SEC, require foreign private issuers, such as us, to comply with various corporate governance practices. In addition, following the listing of the securities on the NYSE American, we will be required to comply with the NYSE American rules. Under those rules, we may elect to follow certain corporate governance practices permitted under the Companies Law in lieu of compliance with corresponding corporate governance requirements otherwise imposed by the NYSE American rules for U.S. domestic issuers.

In accordance with Israeli law and practice and subject to the exemption set forth in NYSE American Section 110 we have elected to follow the provisions of the Companies Law, rather than the rules, with respect to the following requirements:

Our board of directors presently consists of three members. Immediately following the completion of this offering, director nominees Yossi Tisch, Yafit Keret, Adler Adrian, and Itiel Efrat shall be confirmed as directors. Based on information requested from and provided by each director concerning such director’s background, employment and affiliations, including family relationships, our board of directors determined that, four members of our directors following the completion of this offering, are “independent directors” as defined under the listing standards of the NYSE American. In addition, subject to the completion of this offering. Our articles of association provide that the number of board of directors’ members (including external directors, as applicable) shall be set by the general meeting of the shareholders provided that it will consist of not less than three and not more than twelve directors, who shall be classified with respect to the term for which they each severally hold office. Pursuant to the Companies Law, the management of our business is vested in our board of directors.

Our board of directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and have individual responsibilities established by our board of directors. Our Chief Executive Officer is appointed by, and serves at the discretion of, our board of directors, subject to the employment agreement that we have entered into with him. All other executive officers are appointed by our Chief Executive Officer. Their terms of employment are subject to the approval of the board of directors’ compensation committee and of the board of directors, and are subject to the terms of any applicable employment agreements that we may enter into with them. Our board of directors intends to establish an audit committee, financial statement examination committee, and a compensation committee prior to the completion of this offering.

Each director, except external directors (if applicable), will hold office until the next annual general meeting of our shareholders following his or her appointment, or until he or she resigns or unless he or she is removed by a majority vote of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and our articles of association. The directors are classified, with respect to the term for which they each severally hold office, into three classes, as nearly equal in number as practicable, and designated as Class I, Class II and Class III. The Board may assign members of the Board already in office to such classes at the time such classification becomes effective. If the number of directors is changed, any newly created directors or decrease in directors must be apportioned by the board among the classes to make them equal in number.

In addition, under certain circumstances, our articles of association allow our board of directors to appoint directors to fill vacancies on our board of directors or in addition to the acting directors (subject to the limitation on the number of directors), in one of the classes and until the next annual general meeting according to the appropriate class in which directors may be appointed or terminated. External directors may be elected for up to two additional three-year terms after their initial three-year term under the circumstances described below, with certain exceptions as described in “External Directors” below. External directors may be removed from office only under the limited circumstances set forth in the Companies Law. See “Management—Board Practices—External Directors” below.

Under the Companies Law, any shareholder holding at least one percent of our outstanding voting power may nominate a director. However, any such shareholder may make such a nomination only if a written notice of such shareholder’s intent to make such nomination has been given to our board of directors. Any such notice must include certain information, including the consent of the proposed director nominee to serve as our director if elected, and a declaration that the nominee signed declaring that he or she possesses the requisite skills and has the availability to carry out his or her duties. Additionally, the nominee must provide details of such skills, and demonstrate an absence of any limitation under the Companies Law that may prevent his or her election, and affirm that all of the required election-information is provided to us, pursuant to the Companies Law and our articles of association.

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

The board of directors must elect one director to serve as the chairman of the board of directors to preside at the meetings of the board of directors, and may also remove that director as chairman. Pursuant to the Companies Law, neither the chief executive officer nor any of his or her relatives is permitted to serve as the chairman of the board of directors, and a company may not vest the chairman or any of his or her relatives with the chief executive officer’s authorities. In addition, a person who reports, directly or indirectly, to the chief executive officer may not serve as the chairman of the board of directors; the chairman may not be vested with authorities of a person who reports, directly or indirectly, to the chief executive officer; and the chairman may not serve in any other position in the company or a controlled company, but he or she may serve as a director or chairman of a controlled company. However, the Companies Law permits a company’s shareholders to determine, for a period not exceeding three years from each such determination, that the chairman or his or her relative may serve as chief executive officer or be vested with the chief executive officer’s authorities, and that the chief executive officer or his or her relative may serve as chairman or be vested with the chairman’s authorities. Such determination of a company’s shareholders requires either: (1) the approval of at least a majority of the shares of those shareholders present and voting on the matter (other than controlling shareholders and those having a personal interest in the determination) (shares held by abstaining shareholders shall not be considered); or (2) that the total number of shares opposing such determination does not exceed 2% of the total voting power in the company. Currently, we have a separate chairman and chief executive officer.

The board of directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the board, and it may, from time to time, revoke such delegation or alter the composition of any such committees, subject to certain limitations. Unless otherwise expressly provided by the board of directors, the committees shall not be empowered to further delegate such powers. The composition and duties of our audit committee, financial statement examination committee and compensation committee are described below.

The board of directors oversees how management monitors compliance with our risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by us. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to our audit committee.

Under the Companies Law, an Israeli company whose shares have been offered to the public or whose shares are listed for trading on a stock exchange in or outside of Israel is required to appoint at least two external directors to serve on its board of directors. External directors must meet stringent standards of independence.

According to regulations promulgated under the Companies law, at least one of the external directors is required to have “financial and accounting expertise,” unless another member of the audit committee, who is an independent director under the NYSE American rules, has “financial and accounting expertise,” and the other external director or directors are required to have “professional expertise.” An external director may not be appointed to an additional term unless: (1) such director has “accounting and financial expertise;” or (2) he or she has “professional expertise,” and on the date of appointment for another term there is another external director who has “accounting and financial expertise” and the number of “accounting and financial experts” on the board of directors is at least equal to the minimum number determined appropriate by the board of directors.

A director with accounting and financial expertise is a director who, due to his or her education, experience and skills, possesses a high degree of proficiency in, and an understanding of, business – accounting matters and financial statements, such that he or she is able to understand the financial statements of the company in depth and initiate a discussion about the manner in which financial data is presented. A director is deemed to have “professional expertise” if he or she holds an academic degree in certain fields or has at least five years of experience in certain senior positions.

External directors are elected by a majority vote at a shareholders’ meeting, as long as either:

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

The Companies Law provides for an initial three-year term for an external director. Thereafter, an external director may be reelected by shareholders to serve in that capacity for up to two additional three-year terms, provided that:

The term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including the NYSE American, 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 reelection for such additional period(s) is beneficial to the company, and provided that the external director is reelected subject to the same shareholder vote requirements as if elected for the first time (as described above). Prior to the approval of the reelection of the external director at a general shareholders meeting, 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.

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

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

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

The term “office holder” is defined under the 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 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 a director or if the person is an employee of the Israel Securities Authority or of an Israeli stock exchange. A person may furthermore not continue to serve as an external director if he or she received direct or indirect compensation from the company including amounts paid pursuant to indemnification and/or exculpation contracts or commitments and insurance coverage, other than for his or her service as an external director as permitted by the Companies Law and the regulations promulgated thereunder.

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

External directors may be removed only by a special general meeting of shareholders called by the board of directors after the board has determined the occurrence of circumstances allow such dismissal, at the same special majority of shareholders required for their election or by a court, and in both cases only if the external directors cease to meet the statutory qualifications for their appointment or if they violate their duty of loyalty to our company. In the event of a vacancy created by an external director which causes the company to have fewer than two external directors, the board of directors is required under the Companies Law to call a shareholder meeting as soon as possible to appoint such number of new external directors in order that the company thereafter has two external directors.

External directors may be compensated only in accordance with regulations adopted under the Companies Law.

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 a company may not be appointed as an external director of another company if at the same time a director of such other company is acting as an external director of the first company.

Under regulations promulgated pursuant to the Companies Law, a company with no controlling shareholder (as defined under the Companies Law) whose shares are listed for trading on specified exchanges outside of Israel, including the NYSE American, may adopt exemptions from various corporate governance requirements of the Companies Law, so long as such company satisfies the requirements of applicable foreign country laws and regulations, including applicable stock exchange rules, that apply to companies organized in that country and relating to the appointment of independent directors and the composition of audit and compensation committees. Such exemptions include an exemption from the requirement to appoint external directors and the requirement that an external director be a member of certain committees, as well as exemption from limitations on directors’ compensation. Following the closing of this offering, we expect that we will continue to be a “controlled company” as defined under the Companies Law, and, as such, subject to closing of this offering, we will not use this exemption from the requirement described herein. Notwithstanding the above, if following the offering the Board of Directors will decide that we are not a controlled company, then, it may use the described exemption.

An “independent director” is either an external director or a director who meets the same non-affiliation criteria as an external director (except for (i) the requirement 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 outside of Israel) and (ii) the requirement for accounting and financial expertise or professional qualifications), as determined by the audit committee, and who has not served as a director of the company for more than nine consecutive years. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature of such director’s service.

Regulations promulgated pursuant to the Companies Law provide that a director in a public company whose shares are listed for trading on specified exchanges outside of Israel, including the NYSE American, who qualifies as an independent director under the relevant non-Israeli rules and who meets certain non-affiliation criteria, which are less stringent than those applicable to independent directors as set forth above, would be deemed an “independent” director pursuant to the Companies Law provided: (i) he or she has not served as a director for more than nine consecutive years; (ii) he or she has been approved as such by the audit committee; and (iii) his or her remuneration shall be in accordance with the Companies Law and the regulations promulgated thereunder. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature of such director’s service.

Furthermore, pursuant to these regulations, such company may reappoint a person as an independent director for additional terms, beyond nine years, which do not exceed three years each, if each of the audit committee and the board of directors determine, in that order, that in light of the independent director’s expertise and special contribution to the board of directors and its committees, the reappointment for an additional term is in the company’s best interest.

Our articles of association provides, as allowed by the Companies Law, that any director may, subject to the conditions set thereto including approval of the nominee by our board of directors, appoint a person as an alternate to act in his place, to remove the alternate and appoint another in his place and to appoint an alternate in place of an alternate whose office is vacated for any reason whatsoever. Under the Companies Law, a person who is not qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving as an alternate director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is not already serving as a member of such committee, and if the alternate director is to replace an external director, he or she is required to be an external director and to have either “financial and accounting expertise” or “professional expertise,” depending on the qualifications of the external director he or she is replacing. A person who does not have the requisite “financial and accounting experience” or the “professional expertise,” depending on the qualifications of the external director he or she is replacing, may not be appointed as an alternate director for an external director. A person who is not qualified to be appointed as an independent director, pursuant to the Companies Law, may not be appointed as an alternate director of an independent director qualified as such under the Companies Law. Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes until the appointing director ceases to be a director or terminates the appointment.

We plan to list our Ordinary Shares on the NYSE American. Because our existing controlling shareholders, Mr. Nir Klein and Mr. Ron Klein, will own 52.11% of the total voting power of our issued and outstanding Ordinary Shares immediately after the consummation of this offering, assuming the sale of all of the Ordinary Shares we are offering, Mr. Nir Klein and Mr. Ron Klein will be able to exercise a significant level of control over all matters requiring shareholder approval, including the election of directors, amendment of our amended and restated articles of association and approval of significant corporate transactions. Since Mr. Ron Klein and Mr. Nir Klein will continue to control a majority of our outstanding voting power upon the completion of this offering, we will be a “controlled company” under the applicable rules of the NYSE American. As a controlled company, we will be eligible for exemptions from some of the requirements of these rules, including the requirements that:

Our board of directors will establish three standing committees, the audit committee, the compensation committee and the Financial Statement Examination Committee.

Upon the completion of this offering, our board of directors will establish three standing committees, the audit committee, the compensation committee and the Financial Statement Examination Committee.

Under the Companies Law, we are required to appoint an audit committee. The audit committee must be comprised of at least three directors, including all of the external directors (one of whom must serve as chair of the committee). The audit committee may not include the chairman of the board; a controlling shareholder of the company or a relative of a controlling shareholder; a director employed by or providing services on a regular basis to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder; or a director who derives most of his or her income from a controlling shareholder.

In addition, a majority of the members of the audit committee of a publicly traded company must be independent directors under the Companies Law. Our audit committee will be comprised of Yossi Tisch, Itiel Efrat, and Yafit Keret.

Our audit committee may not conduct any discussions or approve any actions requiring its approval (see “Management—Board Practices—Approval of Related Party Transactions under Israeli law”), unless at the time of the approval a majority of the committee’s members are present, which majority consists of independent directors under the Companies Law, including at least one external director.

Our board of directors intends to adopt an audit committee charter to be effective upon the closing of this offering and the registration of our securities on the NYSE American setting forth, among others, the responsibilities of the audit committee consistent with the rules of the SEC and NYSE American (in addition to the requirements for such committee under the Companies Law), including, among others, the following:

As noted above, the members of our audit committee will include Yossi Tisch and Itiel Efrat, who are both nominated for the position of external director, and Yafit Keret, who is an independent director, each of whom is “independent,” as such term is defined in under the NYSE American rules and Rule 10A-3 of the Exchange, or will serve as the chairman of our audit committee. All members of our audit committee meet the requirements for financial literacy under the NYSE American rules. Our board of directors has determined that each member of our audit committee is an audit committee ‘financial expert’ as defined by Item 407(d) of Regulation S-K under the Securities Act and has the requisite financial experience as defined by the NYSE American rules.

Under the Companies Law, the board of directors of a public company in Israel must appoint a financial statement examination committee, which consists of members with accounting and financial expertise or the ability to read and understand financial statements.

Our financial statement examination committee will be comprised of Yossi Tisch, Itiel Efrat, and Yafit Keret.

The function of a financial statements examination committee is to discuss and provide recommendations to its board of directors (including the report of any deficiency found) with respect to the following issues: (1) estimations and assessments made in connection with the preparation of financial statements; (2) internal controls related to the financial statements; (3) completeness and propriety of the disclosure in the financial statements; (4) the accounting policies adopted and the accounting treatments implemented in material matters of the company; and (5) value evaluations, including the assumptions and assessments on which evaluations are based and the supporting data in the financial statements. Our independent registered public accounting firm and our internal auditor are invited to attend all meetings of our financial statements examination committee.

Under the Companies Law, the board of directors of any public company must establish a compensation committee. The compensation committee 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. Each compensation committee member that 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 Companies Law restrictions as the audit committee as to: (a) who may not be a member of the committee; and (b) who may not be present during committee deliberations as described above.

Our compensation committee will be acting pursuant to a written charter, and will consist of Yossi Tisch, Itiel Efrat, and Adler Adrian.

Our compensation committee will comply with the provisions of the Companies Law, the regulations promulgated thereunder, and our articles of association, on all aspects referring to its independence, authorities and practice. Our compensation committee follows home country practice as opposed to complying with the compensation committee membership and charter requirements prescribed under the NYSE American rules.

Our compensation committee will review and recommend to our board of directors: with respect to our executive officers’ and directors’: (1) annual base compensation (2) annual incentive bonus, including the specific goals and amounts; (3) equity compensation; (4) employment agreements, severance arrangements, and change in control agreements and provisions; (5) retirement grants and/or retirement bonuses; and (6) any other benefits, compensation, compensation policies or arrangements.

The duties of the compensation committee will include the recommendation to the company’s board of directors of a policy regarding the terms of engagement of office holders, to which we refer as a compensation policy. Under the Companies Law, we are required to adopt an office holder compensation policy no later than nine (9) months from the consummation of this offering. Such policy will be adopted by our board of directors and approved by a special majority of our shareholders at the general meeting, for a period five (5) years following the completion of the offering (see “Management—Board Practices—Approval of Related Party Transactions under Israeli law”). Under the Companies Law, the board of directors may adopt the compensation policy if it is not approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and the board of directors revisit the matter and determine that adopting the compensation policy would be in the best interests of the company.

The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of executive officers and directors, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation policy must relate to certain factors, including advancement of the company’s objectives, the company’s business and its long-term strategy, and creation of appropriate incentives for executives. 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:

The compensation policy must also consider appropriate incentives from a long-term perspective.

The compensation committee is responsible for: (1) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by the shareholders); and (2) duties related to the compensation policy and to the compensation of a company’s office holders, including:

Our compensation policy will be designed to promote our long-term goals, work plan and policy, retain, motivate and incentivize our directors and executive officers, while considering the risks that our activities involve, our size, the nature and scope of our activities and the contribution of an officer to the achievement of our goals and maximization of profits, and align the interests of our directors and executive officers with our long-term performance. 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, our compensation policy will include 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.

Our compensation policy will also address our executive officer’s individual characteristics (such as his or her respective position, education, scope of responsibilities and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers, and considers the internal ratios between compensation of our executive officers and directors and other employees. For example, the compensation that may be granted to an executive officer may include: base salary, annual bonuses, equity-based compensation, benefits and retirement and termination of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive officer’s base salary. In addition, our compensation policy will provide for maximum permitted ratios between the total variable (cash bonuses and equity-based compensation) and non-variable (base salary) compensation components, in accordance with an officer’s respective position with the company.

An annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may be granted to executive officers other than our chairman or Chief Executive Officer may be based entirely on a discretionary evaluation. Our Chief Executive Officer will be entitled to recommend performance objectives to such executive officers, and such performance objectives will be approved by our compensation committee (and, if required by law, by our board of directors).

The performance measurable objectives of our chairman and Chief Executive Officer will be determined annually by our compensation committee and board of directors. A less significant portion of the chairman’s and/or the Chief Executive Officer’s annual cash bonus may be based on a discretionary evaluation of the chairman’s or the Chief Executive Officer’s respective overall performance by the compensation committee and the board of directors based on quantitative and qualitative criteria.

The equity-based compensation under our compensation policy for our executive officers (including members of our board of directors) will be designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the alignment between the executive officers’ interests with our long-term interests and those of our shareholders and to strengthen the retention and the motivation of executive officers in the long term. Our compensation policy will provide for executive officer compensation in the form of share options or other equity-based awards, such as restricted shares, options, in accordance with our stock option plan then in place. Share options granted to executive officers shall be subject to vesting periods in order to promote long-term retention of the awarded executive officers. The 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, our compensation policy will contain compensation recovery provisions which allows us under certain conditions to recover bonuses paid in excess, will enable our Chief Executive Officer to approve an immaterial change 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 our executive officers and directors subject to certain limitations set forth thereto.

Our compensation policy will also provide 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 in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time; or (ii) in accordance with the amounts determined in our compensation policy.

As noted above, the members of our compensation committee will include Yossi Tisch, Itiel Efrat, and Adler Adrian each of whom is “independent,” as such term is defined in under the NYSE American rules.

Under the Companies Law, the board of directors of an Israeli public company must appoint an internal auditor nominated by the audit committee. We intend to appoint our internal auditor within 90 days following the consummation of this offering. The role of the internal auditor is to examine, among other things, whether a company’s actions comply with the law and proper business procedure. The audit committee is required to oversee the activities, and to assess the performance of the internal auditor as well as to review the internal auditor’s work plan. An internal auditor may not be an interested party or office holder, or a relative of any interested party or office holder, and may not be a member of the company’s independent accounting firm or its representative. The Companies Law defines an interested party as a holder of 5% or more of the outstanding shares or voting rights of a company, any person or entity that has the right to appoint at least one director or the general manager of the company or any person who serves as a director or as the general manager of a company. Our internal auditor will not be our employee, but partner of a firm which specializes in internal auditing.

Under the Companies Law, remuneration of directors is subject to the approval of the compensation committee, thereafter by the board of directors and thereafter, unless exempted under the regulations promulgated under the Companies Law, by the general meeting of the shareholders. In case the remuneration of the directors is in accordance with regulations applicable to remuneration of the external directors then such remuneration shall be exempt from the approval of the general meeting. Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply.

The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company.

The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care of an office holder includes a duty to use reasonable means to obtain:

The duty of loyalty of an office holder requires an office holder to act in good faith and for the benefit of the company, and includes a duty to:

Under the Companies Law, a company may obtain insurance for any of its office holders against the following liabilities incurred due to acts he or she performed as an office holder, if and to the extent provided for in the company’s articles of association:

We are currently in the process of obtaining directors’ and officers’ liability insurance, which will be in place upon completion of this offering.

The Companies Law and the Israeli Securities Law, 5728-1968, or the Securities Law, provide that a company may indemnify an office holder against the following liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:

The Companies Law also permits a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount or criterion:

We have entered into indemnification agreements with all of our directors and with all members of our senior management. Each such indemnification agreement provides the office holder with indemnification permitted under applicable law and up to a certain amount, and to the extent that these liabilities are not covered by directors and officers insurance.

Under the Companies Law, an Israeli company may not exculpate an office holder from liability for a breach of his or her duty of loyalty, but may exculpate in advance an office holder from his or her liability to the company, in whole or in part, for damages caused to the company as a result of a breach of his or her duty of care (other than in relation to distributions), but only if a provision authorizing such exculpation is included in its articles of association. Our articles of association provides that we may exculpate, in whole or in part, any office holder from liability to us for damages caused to the company as a result of a breach of his or her duty of care, but prohibit an exculpation from liability arising from a company’s transaction in which our controlling shareholder or officer has a personal interest. Subject to the aforesaid limitations, under the indemnification agreements, we exculpate and release our office holders from any and all liability to us related to any breach by them of their duty of care to us to the fullest extent permitted by law.

The Companies Law provides that we may not exculpate or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity or insurance only, but not exculpation) the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) any act or omission committed with the intent to derive an illegal personal benefit; or (4) any fine, monetary sanction, penalty or forfeit levied against the office holder.

Under the Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders.

Our articles of association permits us to exculpate (subject to the aforesaid limitation), indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Companies Law.

The foregoing descriptions summarize the material aspects and practices of our board of directors. For additional details, we also refer you to the full text of the Companies Law as well as of our articles of association, which is an exhibit to this registration statement of which this prospectus forms a part and is incorporated herein by reference.

There are no service contracts between us or our Subsidiary, on the one hand, and our directors in their capacity as directors, on the other hand, providing for benefits upon termination of service.

Under the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if:

The Companies Law requires that an office holder disclose to the company, promptly, and, in any event, not later than the board meeting at which the transaction is first discussed, any direct or indirect personal interest that he or she may have and all related material information known to him or her relating to any existing or proposed transaction by the company. If the transaction is an extraordinary transaction, the office holder must also disclose any personal interest held by:

An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction is a transaction:

The Companies Law does not specify to whom within us nor the manner in which required disclosures are to be made. We require our office holders to make such disclosures to our board of directors.

Under the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association provide otherwise and provided that the transaction is in the company’s interest. If the transaction is an extraordinary transaction in which an office holder has a personal interest, first the audit committee and then the board of directors, in that order, must approve the transaction. Under specific circumstances, shareholder approval may also be required. Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting unless the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present in order to present the transaction that is subject to approval. A director who has a personal interest in a transaction, which is considered at a meeting of the board of directors or the audit committee, may not be present at this meeting or vote on this matter, unless a majority of members of the board of directors or the audit committee, as the case may be, has a personal interest. If a majority of the board of directors has a personal interest, then shareholder approval is generally also required.

Under the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directly or indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, and transactions concerning the terms of engagement and compensation of a controlling shareholder or a controlling shareholder’s relative, whether as an office holder or an employee, require the approval of the audit committee or the compensation committee, as the case may be, the board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders’ meeting. In addition, the shareholder approval must fulfill one of the following requirements:

In addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with a term of more than three years requires the abovementioned approval every three years; however, such transactions not involving the receipt of services or compensation can be approved for a longer term, provided that the audit committee determines that such longer term is reasonable under the circumstances.

The Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the vote in question. Failure to so indicate will result in the invalidation of that shareholder’s vote.

The term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint 50% or more of the directors of the company or its general manager. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includes a shareholder who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company. For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated.

The compensation of, or an undertaking to indemnify, insure or exculpate, an office holder who is not a director requires the approval of the company’s compensation committee, followed by the approval of the company’s board of directors, and, if such compensation arrangement or an undertaking to indemnify, insure or exculpate is inconsistent with the company’s stated compensation policy, or if the said office holder is the chief executive officer of the company (subject to a number of specific exceptions), then such arrangement is subject to the approval of our shareholders, subject to a special majority requirement.

Directors. Under the Companies Law, the compensation of our directors requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the general meeting of our shareholders. If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and board of directors, shareholder approval by a special majority will be required.

Executive officers other than the chief executive officer. The Companies Law requires the approval of the compensation of a public company’s executive officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and (iii) only if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders by a special majority. However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision.

Chief executive officer. Under the 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 majority. 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 override the shareholders’ decision if each of the compensation committee and the board of directors provides detailed reasons for their decision. In addition, the compensation committee may exempt the engagement terms of a candidate to serve as the chief executive officer from shareholders’ approval, if the compensation committee determines that the compensation arrangement is consistent with the company’s stated compensation policy, that the chief executive officer did not have a prior business relationship with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would impede the company’s ability to attain the candidate to serve as the company’s chief executive officer (and provide detailed reasons for the latter).

The approval of each of the compensation committee and the board of directors, with regard to the office holders and directors above, must be in accordance with the company’s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors may approve compensation terms of a chief executive officer that are inconsistent with the company’s compensation policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained by a special majority requirement.

Under the Companies Law, a shareholder has a duty to refrain from abusing his power in the company and to act in good faith and in an acceptable manner in exercising his rights and performing his obligations toward the company and other shareholders, including, among other things, in voting at general meetings of shareholders (and at shareholder class meetings) on the following matters:

A shareholder also has a general duty to refrain from oppressing other shareholders. The remedies generally available upon a breach of contract will also apply to a breach of the above mentioned duties, and in the event of oppression of other shareholders, additional remedies are available to the injured shareholder.

In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or has another power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty 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 to act with fairness, taking the shareholder’s position in the company into account.

Our ESOP was adopted by our board of directors, or the board, on January 9, 2023. The ESOP provides for the grant of options to our directors, officers, employees and/or non-employees or of any affiliate thereof (collectively, “optionees”). As of June 30, 2023, the total number of Ordinary Shares reserved for the exercise of options granted under our ESOP was 696,171.

Our ESOP is administered by our board, which may grant its authority to a committee, consisting of at least two of our directors. If so granted, such committee has the responsibility of construing and interpreting the ESOP. The committee has the power to recommend to the board and the board has the full power and authority to: (i) designate optionees; (ii) determine the terms and provisions of the respective option agreements (including the number of options granted, the number of Ordinary Shares to be covered by each option, provisions regarding exercise of the options, and the nature and duration of restrictions as to the transferability); (iii) determine the fair market value of the Ordinary Shares covered by each option; (iv) designate the type of options; and (v) cancel or suspend options, as necessary.

Eligible employees, officers and directors would qualify for provisions of Section 102 of the Tax Ordinance. Section 102 of the Tax Ordinance 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. 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.” However, under this track we are not allowed to deduct an expense with respect to the issuance of the options or shares. Non-employees may only be granted options under section 3(i) of the Tax Ordinance, which does not provide for similar tax benefits.

As a default, our ESOP provides that upon termination of a an optionee’s employment or service with us or any of our affiliates, other than in the event of death, disability or cause, all unvested options will terminate and the underlying Ordinary Shares will revert to our ESOP, and all vested options will generally be exercisable for 90 days following such termination, subject to the terms of the ESOP and the governing option agreement. Notwithstanding the foregoing, in the event the engagement is terminated for cause (including, inter alia, due to conviction of any felony involving moral turpitude, failure to carry out (as a result of gross negligence or willful misconduct) a reasonable directive, embezzlement or theft of fund from us or our affiliates, breach of the optionee’s fiduciary duties to us, and conduct determined to be materially detrimental to us) all options granted to such optionee, whether vested or unvested, will not be exercisable and will terminate on the date of the termination. Upon termination of a service agreement due to death or disability, all the options vested at the time of termination will generally be exercisable for 12 months.

In the event of a merger or consolidation with or into another corporation resulting in such other corporation being the surviving entity, an acquisition of all or substantially all of our outstanding capital stock, or the sale of substantially all of our assets, each outstanding option shall be assumed for an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation, and appropriate adjustments shall be made in the number of options in order to reflect such an action. In the event that the successor corporation refuses to assume or substitute for the option, the vesting periods defined in the option agreement may be fully accelerated.

In the event of any variation in our share capital, including a share dividend, share split, combination or exchange of shares, recapitalization, or any other like event, the number, class and kind of shares subject to the ESOP and outstanding options, and the exercise prices of the options, will be appropriately and equitably adjusted so as to maintain the proportionate number of shares without changing the aggregate exercise price of the options.

All awards granted under the ESOP are subject to lapse, forfeiture and/or recoupment under any clawback policy that we may adopt pursuant to the listing standards of the NYSE American or as is otherwise required by applicable law. Any recoupment under this policy may be conducted in conjunction with any other remedies or rights of recoupment available to the Company pursuant to the terms of any similar policy or under applicable law.

The following table sets forth information regarding beneficial ownership of our Ordinary Shares as of December 19, 2023 by:

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to Ordinary Shares. Ordinary Shares issuable under share options that are exercisable within 60 days after December 19, 2023, are deemed outstanding for the purpose of computing the percentage ownership of the person holding the options but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The percentage of shares beneficially owned before this offering is based on 3,161,779 shares outstanding on December 19, 2023. The number of Ordinary Shares deemed outstanding after this offering is based on 5,075,000 Ordinary Shares, which assumes the sale of 1,075,000 Ordinary Shares in this offering and no exercise of the over-allotment option or the Representative Warrants.

As of December 5, 2023, there were five holders of record of our Ordinary Shares. As of December 19, 2023, we had no record holders of our Ordinary Shares in the United States.

State of Israel		3651		Not Applicable
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

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

Assumed public offering price per Ordinary Share	$	5.00
Net tangible book value per share as of June 30, 2023	$	0.40
Increase in net tangible book value per Ordinary Share attributable to new investors	$	0.69
As adjusted net tangible book value per Ordinary Share after this offering	$	1.1
Dilution per Ordinary Share to new investors	$	3.9
Percentage of dilution in net tangible book value per Ordinary Share for new investors		78.05	%

	Shares					Total Consideration					Average Price Per Ordinary
	Number		Percent			Amount		Percent			Share
Existing shareholders		4,000,000		78.82	%	$	1,824		32.75	%	$	0.46
New investors		1,075,000		21.18	%	$	3,745		67.25	%	$	5.00
Total		5,075,000		100.0	%	$	5,569		100	%	$	1.10

	Year Ended December 31,				Six Months Ended June 30,
	2022		2021		2023		2022
					Unaudited
Product group	Amount (in USD thousands)
In-Ear Headset systems		6,038		8,697		2,143		1,395
SST Headset systems		749		840		678		267
Other revenues		477		44		275		318

	Page
Prospectus Summary	1
Risk Factors	8
Cautionary Note Regarding Forward-Looking Statements	30
Listing Details	31
Use of Proceeds	31
Dividend Policy	32
Capitalization	33
Dilution	34
Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Business	43
Management	61
Beneficial Ownership of Principal Shareholders and Management	82
Related Party Transactions	83
Description of Share Capital	84
Shares Eligible for Future Sale	88
Taxation	89
Underwriting	95
Expenses	102
Legal Matters	103
Experts	104
Enforceability of Civil Liabilities	105
Where You Can Find Additional Information	106
Index of Consolidated Financial Statements	F-1

	●	the timing of receiving purchase orders may result in revenue recognition shift due to delivery schedule;
	●	availability of electronic components to build our products;

	●	the timing and cancellation of customer orders

	●	cancellation of government contracts; and
	●	our ability to secure agreements from our direct and indirect distributers for the purchase of our products.

	●	the productivity and availability of labor;
	●	the complexity of the work to be performed;
	●	the cost and availability of materials and components; and
	●	schedule requirements.

	●	termination of contracts;
	●	forfeiture of profits;
	●	cost associated with triggering of price reduction clauses;
	●	suspension of payments;
	●	fines; and
	●	suspension or debarment from doing business with federal government agencies.

	●	significant management time;

	●	cause us to enter into unfavorable royalty or license agreements;

	●	overall performance of the equity markets and/or publicly-listed companies;

	●	actual or anticipated fluctuations in our net revenue or other operating metrics;

	●	changes in the financial projections we provide to the public or our failure to meet these projections;

	●	failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors;

	●	the economy as a whole and market conditions in our industry;

	●	our ability to maintain our business models;

	●	our ability to correctly predict the market growth;

	●	our ability to secure government tenders and maintain relationships with government contractors;

	●	the acceptance of our technology and headset devices in the industry as opposed to communications devices currently on the market;

	●	our ability to retain our key employees;

	●	our ability to maintain, protect, and enhance our intellectual property;

	●	our ability to raise capital through the issuance of additional securities;

	●	a resurgence of COVID-19 or spread of other infectious disease and resulting government actions on us;

	●	the impact of competition and new technologies;

	●	general market, political and economic conditions in the countries in which we operate, including as a result of Israel’s war with Hamas;

	●	projected capital expenditures and liquidity;

	●	our ability to maintain our relationships with suppliers, manufacturers and other partners;

	●	changes in our strategy; and

	●	litigation.

	●	approximately $1.5 million for marketing and business development;

	●	approximately $1.0 million for research and development; and

	●	the remainder for working capital and general corporate purposes.

	Year Ended December 31,				Six Months Ended June 30,
U.S. dollars in thousands	2022		2021		2023		2022
					Unaudited
Salaries and related expenses		311		381		527		130
Purchases		6		7		3		3
Professional consulting		91		32		15		39
Depreciation and amortization		9		0		10		5
Other		22		28		14		23
Total		439		448		569		200

	Year Ended December 31,					Six Months Ended June 30,
*U.S. dollars in thousands, except share and per share data*	2022		2021			2023			2022
						*Unaudited*
Revenues		7,264		9,581			3,096			1,980
Cost of revenue		4,836		6,379			1,901			1,318
Gross profit		2,428		3,202			1,195			662
Research and development expenses		439		448			569			200
Selling and marketing expenses		672		852			1,989			348
General and administrative expenses		837		1,255			965			392
Other income		-		166			-			-
Operating profit (loss)		480		813			(2,328	)		(278	)
Finance income (expense), net		1,320		(964	)		2			1,287
Income (Loss) before income tax		1,800		(151	)		(2,326	)		1,009
Income tax expenses		2		2			-			-
Net income (loss)		1,798		(153	)		(2,326	)		1,009
Other comprehensive income (loss)
Gain (loss) from remeasurement of defined benefit plans		16		(5	)		-			-
Total comprehensive income (loss) attributed to the shareholders of the Company		1,814		(158	)		(2,236	)		1,009

	●	Innovative In-Ear hearing protection and “talking from the ear” technology;

	●	Rapid prototyping of new devices and broad radio interface knowledge;

	●	Ability to be flexible, tailor-design and manufacture for each customer’s needs;

	●	Ability to produce in small batches and with short lead times;

	●	Many years of experience and first-mover advantage in the growing in-ear headset market segment;

Active Sound Protection Headsets Type	2018		2019		2020		2021		2027 (Estimated)		CAGR (2021-2027)
In-Ear Sound Protection Headsets	$	40.95	$	55.08	$	70.71	$	87.84	$	726.34		42.0	%
Over-the-Ear Sound Protection Headsets	$	896.15	$	944.71	$	992.80	$	1,040.10	$	1,008.82		-0.51	%
Total	$	937.10	$	999.79	$	1,063.51	$	1,127.93	$	1,735.16		7.44	%



Fortis Radio Controller/Push-to-Talk	Clarus Radio Controller/Push-to-Talk

Europe			34
Asia			16
Central and South America			5
Middle East			3
Africa			1
Oceania			3

	2022 - Audited					2021 - Audited					2020 - Unaudited
Major customers	Amount (in USD thousands)		% of our Company’s total revenue			Amount (in USD thousands)		% of our Company’s total revenue			Amount (in USD thousands)		% of our Company’s total revenue
Customer A		3		-		$	6,315		65.9	%		-		-
Customer B	$	4,016		55.3	%	$	334		3.5	%	$	773		22.3	%
Customer C	$	517		7.2	%	$	448		4.7	%	$	403		11.6	%
Customer D	$	477		6.6	%		-		-			-		-
Customer E	$	417		5.8	%	$	13		0.14	%		-		-

Name	Age	Position	Class
*Executive Officers*
Nir Klein	55	Chief Executive Officer and Director	N/A
Ilan Akselrod	45	Chief Financial Officer	N/A
Gal Nir Klein	53	Vice President of Marketing and Israel Sales and Director	N/A
Elihay Cohen	61	Vice President of Marketing and International Sales Officer	N/A
Ronen Hananis	42	Vice President of Operations and Development	N/A
*Directors and Director Nominees*
Ron Klein	56	Chairman of the Board of Directors
Yossi Tisch (1)(2)(3)(4)(5)	56	Director Nominee
Yafit Keret (2)(3)(4)	51	Director Nominee
Adler Adrian (1)(3)(4)	58	Director Nominee
Itiel Efrat (1)(2)(3)(4)(5)	59	Director Nominee

		Salary, bonuses and Related Benefits				Pension, Retirement and Other Similar Benefits				Share- Based Compensation				Total
All directors and senior management as a group, consisting of 6 persons		$	769,365			$	144,070			$	0			$	913,435

	●	an employment relationship;

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

	●	control; and

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

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

	●	recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting;

	●	recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and

	●	reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities’ findings, receive reports regarding irregularities and legal compliance, acting according to “whistleblower policy” and recommend to our board of directors if so required.

	●	the education, skills, expertise and accomplishments of the relevant director or executive;

	●	the director’s or executive’s roles and responsibilities and prior compensation agreements with him or her;

	●	the relationship between the cost of the terms of service of an office holder and the average median compensation of the other employees of the company (including those employed through manpower companies), including the impact of disparities in salary upon work relationships in the company;

	●	the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and

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

	●	with the exception of office holders who report directly to the chief executive officer, the link between variable compensation and long-term performance and measurable criteria;

	●	the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation at the time of its grant;

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

	●	the minimum holding or vesting period for variable, equity-based compensation; and

	●	maximum limits for severance compensation.

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

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

	●	assessing implementation of the compensation policy;

	●	determining whether the terms of compensation of certain office holders of the company need not be brought to approval of the shareholders; and

	●	determining whether to approve the terms of compensation of office holders that require the committee’s approval.

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

	●	all other important information pertaining to these actions.

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

	●	refrain from any action that is competitive with the company’s business;

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

	●	disclose to the company any information or documents relating to the company’s affairs which the office holder has received due to his position as an office holder.

	●	breach of his or her duty of care to the company or to another person, to the extent such a breach arises out of the negligent conduct of the office holder;

	●	a breach of his or her duty of loyalty to the company, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice the company’s interests; and

	●	a financial liability imposed upon him or her in favor of another person.

	●	a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder, including a settlement or arbitrator’s award approved by a court;

	●	reasonable litigation expenses, including attorneys’ fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction;

	●	reasonable litigation expenses, including attorneys’ fees, expended by the office holder or imposed on him or her by a court; (1) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent; and

	●	expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees. An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.