F-1 1 zk2228789.htm F-1


As filed with the Securities and Exchange Commission on November 23, 2022

Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

STEAKHOLDER FOODS LTD.
(Exact Name of Registrant as Specified in its Charter)

State of Israel
 
2000
 
Not Applicable
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer
Identification No.)

5 David Fikes St.
Rehovot, Israel 7638205
Tel: (+972) 73-332-2853
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 Steakholder Foods USA, Inc.
1007 North Orange Street, 10th Floor
Wilmington, Delaware 19801
(302) 485-5218
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Gary Emmanuel, Esq.
David Huberman, Esq.
Greenberg Traurig, P.A.
One Azrieli Center
Round Tower, 30th floor
132 Menachem Begin Rd
Tel Aviv  6701101
Tel: +972 3-636-6000
 
 
Shachar Hadar, Adv.
Matthew Rudolph, Adv.
Meitar | Law Offices
16 Abba Hillel Silver Rd.
Ramat Gan 5250608, Israel
Tel: +972-3-610-3100
 
 
Ron Ben-Bassat, Esq.
Eric Victorson, Esq.
Sullivan & Worcester LLP
1633 Broadway
New York, NY 10019
Tel: 212-660-3000
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after effectiveness of this registration statement.

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 of 1933, 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.

Emerging growth company

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 term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or 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 in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION
DATED NOVEMBER 23, 2022

Up to                         American Depositary Shares, each representing ten (10) Ordinary Shares

Warrants to Purchase         American Depositary Shares, each representing ten (10) Ordinary Shares

Pre-Funded Warrants to Purchase American Depositary Shares, each representing ten (10) Ordinary Shares



Steakholder Foods Ltd.

We are offering up to      American Depositary Shares, or ADSs, of Steakholder Foods Ltd. Each ADS represents ten (10) ordinary shares, no par value, or the Ordinary Shares. We are offering all of the ADSs offered by this prospectus. We are also offering to each purchaser the opportunity to purchase        warrants, or Warrants, to purchase        of our Ordinary Shares. Each Warrant will be immediately exercisable and will have a term of 5 years.

We are also offering to each purchaser, if any, whose purchase of ADSs in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 9.99% of our outstanding Ordinary Shares immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded warrants, or the Pre-Funded Warrants, in lieu of ADSs that would otherwise result in the purchaser's beneficial ownership exceeding 9.99% of our outstanding Ordinary Shares. Each Pre-Funded Warrant will be immediately exercisable for one ADS and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. The purchase price of each Pre-Funded Warrant will equal the price per share at which the ADSs are being sold to the public in this offering, minus $0.001, the exercise price of each Pre-Funded Warrant. For each Pre-Funded Warrant we sell, the number of ADSs we are offering will be decreased on a one-for-one basis. This offering also relates to the ADSs issuable upon exercise of any Pre-Funded Warrants sold in this offering. See “Description of the Offered Securities” for more information.

We refer to the ADSs, and the underlying Ordinary Shares being offered hereby, as well as the Warrants and Pre-Funded Warrants, if any, collectively, as the Securities.

Our ADSs are listed on the Nasdaq Capital Market, or Nasdaq, under the symbol “STKH.” On November 22, 2022, the last reported sale price of our ADSs on Nasdaq was $2.13 per ADS.

We have assumed a public offering price of $     per ADS, the last reported sale price on Nasdaq on        , 2022. The actual offering price per ADS, including the price of any Warrant and Pre-Funded Warrant, will be negotiated between us and the underwriters based on, among other things, the trading of our ADSs prior to the offering and may be at a discount to the current market price. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the final offering price. In addition, there is no established public trading market for our Warrants and Pre-Funded Warrants and we do not expect a market to develop. We do not intend to apply for a listing of the Warrants and Pre-Funded Warrants on any national securities exchange.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and are subject to reduced public company reporting requirements.

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

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

 
 
Per ADS(1)
   
Per Pre-Funded Warrant(1)
   
Total
 
Public offering price
 
$

     
   
$

 
Underwriting discounts and commissions (2)
 
$

     
   
$

 
Proceeds to us (before expenses)
 
$

     
   
$

 


(1)
The public offering price and underwriting discounts and commissions correspond to a public offering price per ADS of  $    , a public offering price per warrant of  $0.01 and a public offering price per pre-funded warrant of  $    .

(2)
For a description of the additional compensation to be received by the underwriters, see “Underwriting” beginning on page 122 for additional information regarding the underwriters’ compensation.

The underwriters have an option exercisable within 45 days from the date of this prospectus to purchase up to        additional ADSs  and/or    Warrants from us at the public offering price, less the underwriting discounts and commissions. If the underwriters exercise this option in full, the total underwriting discounts and commissions payable by us will be $      , and the total proceeds to us, before expenses, will be $      . In addition, we will issue to the underwriter warrants, or the Underwriter’s Warrants, to purchase a number of ADSs equal to an aggregate of 2.5% of the ADSs and/or Pre-Funded Warrants sold in the offering. The exercise price of the Underwriter’s Warrants is equal to 125% of the offering price of the ADSs and/or Pre-Funded Warrants offered hereby. The Underwriter’s Warrants are exercisable beginning six months from the effective date of the offering, from time to time, in whole or in part, within five and a half years commencing from the effective date of the offering.

Delivery of the Securities offered hereby is expected to be made on or about                , 2022.

Sole Book-Running Manager
 
A.G.P.
 
Lead Manager
Maxim Group LLC

The date of this prospectus is                , 2022.



TABLE OF CONTENTS

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F - 1


i


ABOUT THIS PROSPECTUS

Unless the context suggests otherwise, all references to “Steakholder Foods,” “we,” “us,” “our,” the “Company,” the “Registrant” and all similar designations refer to Steakholder Foods Ltd., an Israeli company, and its consolidated subsidiaries.

You should rely only on the information contained in this prospectus or in any related free-writing prospectus. We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any information that others may give you. This prospectus is an offer to sell only the Securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these Securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. The information contained in this prospectus is current only as of the date of the front cover of the prospectus. Our business, financial condition, operating results and prospects may have changed since that date.

For investors outside of the United States: neither we nor any of the underwriters have taken any action to 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.

The term “NIS” refers to New Israeli Shekels, the lawful currency of the State of Israel. The terms “dollar,” “U.S. dollar” and “$” refer to the United States dollar, the lawful currency of the United States of America. The terms “Euro”, “EUR” and “€” refer to the Euro, the lawful currency of the European Union, or EU.

We are incorporated under Israeli law and under the rules of the SEC, we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

INDUSTRY AND MARKET DATA
 
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 are responsible for all of the disclosures contained in this prospectus, including such statistical, market and industry data, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. In addition, while we believe the market opportunity information included in this prospectus is generally reliable and is based on reasonable assumptions, such data involves risks and uncertainties, including those discussed under the heading “Risk Factors.”

PRESENTATION OF FINANCIAL INFORMATION
 
Unless derived from our consolidated financial statements or otherwise indicated, U.S. dollar translations of NIS amounts presented in this prospectus are translated using the rate of NIS 3.475 to $1.00, based on the representative exchange rate reported by the Bank of Israel on November 22, 2022. We report under International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. None of the financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
 
On January 26, 2020, Steakholder Foods (then called Ophectra Real Estate and Investment Ltd., or Ophectra), a company incorporated under the laws of the State of Israel whose shares were traded on the Tel Aviv Stock Exchange, or TASE, merged with MeaTech Ltd., or MeaTech, a privately-held Israeli company developing cultivated meat technologies, whereupon the name Ophectra was changed to Meat-Tech 3D Ltd., and later changed to MeaTech 3D Ltd., or MeaTech 3D, and then to Steakholder Foods Ltd. in July 2022. In connection with the merger, MeaTech's shareholders transferred 100% of MeaTech’s share capital to Steakholder Foods, and in return Steakholder Foods allotted such shareholders 60% of the Company’s issued and paid-up share capital, as well as milestone-based warrants at no exercise price. At the closing of the merger, MeaTech’s directors and officers were appointed to equivalent positions at Steakholder Foods.
 
ii



Although Steakholder Foods is the legal acquirer of MeaTech’s shares as described above, because (i) the shareholders of MeaTech received the majority of the voting rights in Steakholder Foods and the ability to determine the Company’s financial and operational policies, (ii) the management of MeaTech continued to serve as the management of Steakholder Foods, and (iii) at the time of the completion of the merger, Steakholder Foods was a company without significant business operations, the merger is not considered a business acquisition as defined in IFRS 3, it was determined that MeaTech is the acquirer of the business for accounting purposes and the transaction was treated as a reverse acquisition that does not constitute a business combination.
 
Therefore, our consolidated financial statements and financial data included herein for all periods through and including December 31, 2019 were adjusted retroactively to reflect the financial statements of MeaTech (now called Steakholder Foods Ltd.), other than the information concerning earnings per share, which is presented according to the equity information of Steakholder Foods and our consolidated financial statements and financial data included herein from January 1, 2020 onward relate to Steakholder Foods.
 
Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

TRADEMARKS AND TRADENAMES
 
We own or have rights to trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. Solely for convenience, some of the trademarks, service marks and trade names referred to in this prospectus are listed without the ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

iii

 
PROSPECTUS SUMMARY

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 this summary together with the more detailed information appearing in this prospectus, including “Summary Financial Data,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the related notes included at the end of this prospectus, before making an investment in our Securities.

Our Company
 
Overview
 
We are an international deep-tech food company that initiated activities in 2019 and are listed on the Nasdaq Capital Market under the ticker “STKH”. We maintain facilities in Rehovot, Israel and Antwerp, Belgium and recently commenced activities in the United States. We believe that cultivated meat technologies hold significant potential to improve meat production, develop a sustainable livestock system, simplify the meat supply chain, and offer consumers a range of new product offerings.  

We aim to provide an alternative to industrialized animal farming that reduces carbon footprint, minimizes water and land usage, and prevents the slaughtering of animals. By adopting a modular factory design, we expect to be able to offer a sustainable solution for producing a variety of beef, chicken, pork and seafood products, both as raw materials and whole cuts.

We are developing cultivated meat technologies, including three-dimensional printing technology, together with biotechnology processes and customizable manufacturing processes in order to manufacture cultivated meat that does not require animal slaughter. We are developing a novel, proprietary three-dimensional bioprinter to deposit layers of differentiated stem cells, scaffolding, and cell nutrients in a three-dimensional form of structured cultivated meat. We believe that the cultivated meat production processes we are developing, which are designed to offer our eventual customers an alternative to industrial slaughter, have the potential to improve the quality of the environment, shorten global food supply chains, and reduce the likelihood of health hazards such as zoonotic diseases transferred from animals to humans (including viruses, such as virulent avian influenza and COVID-19, and drug-resistant bacterial pathogens, such as some strains of salmonella).

In December 2021, we announced that we had successfully three-dimensionally printed a 3.67 oz cultivated steak, primarily composed of cultivated fat and muscle tissues. While cultivated meat companies have made some progress developing unstructured, or even undifferentiated, alternative meat products, such as minced meat and sausage, to the best of our knowledge, the industry has struggled in developing high-margin, high-value structured and cultivated meat products such as steak. Unlike minced meat, a cultivated meat steak product has to grow in fibers and contain connective tissues and fat. To be adopted by diners, we believe that cultivated steaks will need to be meticulously engineered to look and smell like conventional meat, both before and after cooking, and to taste and feel like meat to the diner. We believe that we are the first company to be developing both a proprietary bioprinter and the related processes for growing cultivated meat to focus on what we believe is a high value sector of the alternative protein market.
 
In May 2022, we joined the United Nations, or UN, Global Compact initiative, committing to ten universally accepted principles in the areas of human rights, labor, environment, and anti-corruption and to act in support of the issues embodied in the UN’s Sustainable Development Goals.
 
We are led by our Chief Executive Officer, Arik Kaufman, who has founded various Nasdaq- and TASE - traded foodtech companies, and currently serves as director of Wilk Technologies Ltd. He is also a founding partner of BlueOcean Sustainability Fund, LLC, or BlueSoundWaves, led by Ashton Kutcher, Guy Oseary and Effie Epstein, which has partnered with Steakholder to assist in attempting to accelerate the Company’s growth. Mr. Kaufman holds extensive personal experience in the fields of food-tech and bio-tech law, and has led and managed numerous complex commercial negotiations, as part of local and international fundraising, mergers and acquisitions, or M&A, transactions and licensing agreements. We have carefully selected personnel for the rest of our executive management team who possess substantial industry experience and share our core values, from fields as diverse as tissue engineering, industrial stem cell growth, and printer and print materials development.
 

1


 
Our Strategy
 
Our vision is to be a global leader in the production of meat through advanced biotechnology and engineering solutions for a more sustainable world. We are committed to making the right choice of meat for end consumers simple by developing high-quality meat that is slaughter-free, delicious, nutritious, and safer than farm-raised meat, We accomplish this by adopting a factory design intended to offer a sustainable solution for producing a variety of beef, chicken, sea-food and pork products, whether as raw materials or final consumer products.
 
Our technologies and processes have the potential to be sustainable. We are developing a meat production process that is designed to provide sustainability in an industry that, due to inefficiencies inherent in conventional meat farming, is not otherwise expected to be able to meet the growing demand for protein caused by rising population numbers and global affluence. These include the large amounts of land and water use that are needed for raising livestock, which causes precious natural resources to be squandered and the release of methane and other greenhouse gases by livestock.
 
We are designing our cellular agriculture and bioprinting processes to be modular so that customers can initiate their cultivated meat activities at scales suitable for their specific needs and to grow their activities as their needs evolve. Whether a customer wishes to manufacture a hybrid product that includes cultivated and plant-based ingredients, cultivated fat as a raw material, or even 3D-printed steak, each facility can be adapted to scale-out product capabilities and production volumes.
 
We are developing a fully automated, clean and proprietary process for cultivated meat manufacturing in a controlled, sterile environment, which is expected to significantly increase food safety. Our production facilities will not house a single animal and will contain robust integrated monitoring systems and minimal human interaction, which will greatly reduce the risk of pathogen contamination of the type claimed to have caused the COVID-19 pandemic and numerous other human health crises.
 
We have carefully selected personnel for our management team who possess substantial industry experience, from diverse fields including the food industry, bioprinting, tissue engineering, industrial stem cell growth, software engineering, electronic and mechanic engineering and print materials development. We believe that this blend of talent and experience in managers who share our core values gives us the requisite insights and capabilities to execute our plan to develop technologies designed to meet demand in a scalable, profitable and sustainable way.
 
To achieve our mission, we intend to:
 

Perfect the development of our cultivated meat manufacturing technology and processes.  We intend to continue developing and refining our processes, procedures and equipment until we are in a position to commercialize our technologies, whether by manufacturing final products for consumers (B2C and B2B2C models) or ingredients for industrial use, as well as in outlicensing (B2B models). We are continuing to tackle the technological challenges involved in scaling up both our biological and printing processes to industrial-scale levels.
 

Commercialize our technologies for use in consumer and business markets. We intend to provide ingredients to business customers for use in consumer products in order to help meet the growing demand for sustainable, slaughter-free cultivated meat products. For example, manufacturers of meat alternatives, such as vegetarian sausages, may choose to include our cultivated fat biomass in their products in order to deliver the signature meaty flavors, aromas and textures of the meat that is otherwise provided by the conventional meat of species such as chicken, beef and pork. We believe that this combination has the potential to unlock a new level of meat experience.
 
 
2


In addition, we intend to license our production technology as well as provide associated products, such as cell lines, printheads, bioreactors and incubators, and services, such as technology implementation, training, and engineering support, whether directly or through contractors, to food processing and food retail companies.  We intend to charge our customers a production license fee, based upon the amount of meat printed. We expect that each production facility will periodically require us to provide them with our proprietary materials, such as fresh sets of starter cells, for a fee. In addition, other materials used in the production process, such as cell-culture media and additives in our bio-inks may be sourced from third parties. Whether these materials are customized for the specifics of our production processes, “white-labelled” generic materials or proprietary materials that we have developed, we may charge a fee for restocking such materials; however, we have not yet reached the stage where it would be possible to estimate to what extent this would contribute to any future revenue stream. Finally, we intend to provide paid product implementation and guidance services to our customers looking to establish cultivated meat manufacturing facilities. We expect that each facility licensing our technologies will need to deal with novel challenges and, as a result, will require the assistance of our expert knowledge in order to set up and implement our licensed technologies.
 
In addition, we envisage demand for our ingredients in industrial applications other than human consumption, including cosmetics, which involve the extensive use of fat, and pet food. However, our current focus remains the development of cultivated meat and its ingredients for human consumption.


Develop additional alternative proteins to meet growing industry demand. There are substantial technological challenges inherent in expanding our offering beyond our current cultivated beef, pork and avian technologies to additional alternative proteins and cell lines.  However, we believe that our experience, know-how and intellectual property portfolio form an excellent basis from which to surmount such challenges. Our first step in this direction was the 2021 acquisition of Peace of Meat BV, or Peace of Meat, with the aim of developing avian fat for the alternative meat industry by applying proprietary technology to mimic the cellular composition of conventional poultry. In addition, in 2022 we commenced a collaboration with Singaporean cultivated seafood developer, Umami Meats Pte Ltd., or Umami Meats, for the joint development of structured seafood products.


Acquire synergistic and complementary technologies and assets.  We intend to optimize our processes and diversify our product range to expand the cultivated meat technologies upon which marketable products can be based. We intend to accomplish this through a combination of internal development, acquisitions and collaborations, with a view to complementing our own processes and diversifying our product range along the cultivated meat production value chain in order to introduce cultivated products to the global market as quickly as possible. See also “- Additional Technologies” below.

Corporate Information

We were incorporated in May 2018 in Israel as DocoMed Ltd., and originally provided digital health services. In July 2019, we changed our name to MeaTech, and commenced our cultured meat technology development operations. In January 2020, MeaTech completed a merger with Ophectra, whereupon the name Ophectra was changed to Meat-Tech 3D Ltd., and later changed to MeaTech 3D Ltd. and then Steakholder Foods Ltd.

Our principal executive offices are located at 5 David Fikes St., P.O. Box 4061, Rehovot 7638205 Israel. The phone number at our principal executive offices is +972-73-332-2853. We maintain a corporate website at www.steakholderfoods.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.


3


 
Summary of Risks Associated with our Business
 
Our business is subject to a number of risks of which you should be aware before making a decision to invest in our Securities. You should carefully consider all the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth in the sections titled “Risk Factors” before deciding whether to invest in our Securities. Among these important risks are, but not limited to, the following:
 
RISKS RELATED TO OUR FINANCIAL CONDITION AND LIQUIDITY REQUIREMENTS
 

We expect to continue incurring significant losses for the foreseeable future.
 

We will require substantial additional funds to complete our research and development activities.
 

There is substantial doubt as to whether we can continue as a going concern.


Raising additional capital may cause dilution to our existing shareholders or restrict our operations.
 
RISKS RELATED TO OUR BUSINESS AND STRATEGY
 

We have a limited operating history to date.
 

The research and development associated with cultured meat manufacturing is a lengthy process.
 

 We intend to engage in future acquisitions, joint ventures or collaborations, which may not be successful.
 

We may not be able to successfully manage our planned growth, and if the market does not grow as we expect, we may not achieve sustainable revenues.
 

Business or economic disruptions may have an adverse impact on our business.
 
RISKS RELATED TO OUR ACQUISITION OF PEACE OF MEAT BV


We may not fully realize the anticipated benefits of the acquisition, and we may have operational challenges in managing the business and staff of Peace of Meat BV, or Peace of Meat.
 

We may have to take significant charges against earnings.
 
RISKS RELATED TO COMPETITION AND COMMERCIALIZATION OF OUR TECHNOLOGIES
 

We are an early-stage company with an unproven business model.
 

We may suffer reputational harm due to issues with products manufactured by our licensees.
 

Failure to improve our technologies may adversely affect our ability to continue to grow.
 

We may face difficulties if we expand our operations into new geographic regions.
 

Consumer preferences for alternative proteins in general are difficult to predict and may change.
 

We have no manufacturing experience or resources, and we may have issues in obtaining raw materials.


Litigation or legal proceedings, government investigations or other regulatory enforcement actions could subject us to civil and criminal penalties or otherwise expose us to significant liabilities.


4

 

 
RISKS RELATED TO OUR OPERATIONS
 

We expect that a small number of customers will account for a significant portion of our revenues, and we may be exposed to the credit risks of our customers.
 

If we are unable to attract and retain qualified employees, our ability to implement our business plan may be adversely affected, and we may not be able to enforce covenants not to compete under applicable employment laws.
 

Insurance policies may not fully cover the risk of loss to which we are exposed.
 

Our business, reputation and operations could suffer in the event of information technology system failures or a cybersecurity incident.

Food safety and food-borne illness incidents may materially adversely affect our business.

RISKS RELATED TO GOVERNMENT REGULATION
 

Products utilizing our technologies will be subject to regulations that could adversely affect our business and results of operations.
 

Any changes in, or failure by our supplier to comply with, applicable laws, regulations or policies could adversely affect our business.
 
RISKS RELATED TO OUR INTELLECTUAL PROPERTY AND POTENTIAL LITIGATION
 

If we are unable to obtain and maintain our intellectual property rights, we may not be able to compete effectively in our markets.
 

Intellectual property rights of third parties could adversely affect our ability to successfully commercialize our products and may prevent or delay our development and commercialization.
 

Patent policy and rule changes could increase uncertainties and costs.
 

We may be involved in lawsuits to protect or enforce our or third party intellectual property rights.
 

Our articles of association provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act.
 
RISKS RELATED TO OUR OPERATIONS IN ISRAEL
 

Political, economic and military conditions in Israel could have an adverse impact on our business.
 

We are exposed to fluctuations in currency exchange rates.
 

Enforcing a U.S. judgment against us and our executive officers and directors, or asserting U.S. securities law claims in Israel, may be difficult.
 

Our articles of association provide that unless we consent otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between the Company and its shareholders under the Companies Law and the Israeli Securities Law.
 

Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations. 
 

Our articles of association and Israeli law could prevent a takeover that shareholders consider favorable and could also reduce the market price of our ADSs.
 

 
5

 
 
RISKS RELATED TO OWNERSHIP OF THE ADSs AND THIS OFFERING


You will experience immediate and substantial dilution in the net tangible book value of the ADSs.


The ADS price may be volatile, and you may lose all or part of your investment in this offering.
 
The Pre-Funded Warrants and Warrants are speculative in nature and there is no established market for the Warrants and Pre-Funded Warrants being offered in this offering.

The Warrants and the Pre-Funded Warrants will be treated as a derivative liability, which could cause us to recognize certain adverse changes to our financial statements.


We have broad discretion as to the use of the net proceeds from this offering.
 

A lack of, inaccurate or unfavorable research coverage could cause the price of the ADSs and trading volume to decline.
 

The market price of the ADSs could be negatively affected by future sales of the ADSs. 
 

We have never paid, and do not intend to pay for the foreseeable future, dividends on our Securities.
 

ADS holders may not receive the same distributions or dividends as those we make to the holders of our Ordinary Shares.
 

ADS holders do not have the same rights as holders of our Ordinary Shares.
 

ADS holders may be subject to limitations on the transfer of their ADSs. 


As a foreign private issuer whose ADSs are listed on Nasdaq, we follow certain home country corporate governance practices instead of certain Nasdaq requirements. We are not subject to U.S. proxy rules and are exempt from certain Exchange Act reporting requirements. If we were to lose our foreign private issuer status, our costs to modify our practices and maintain compliance under U.S. securities laws and Nasdaq rules would be significantly higher.
 

If we are a “passive foreign investment company,” or PFIC, or a controlled foreign corporation for U.S. federal income tax purposes, there may be adverse U.S. federal income tax consequences to U.S. investors.
 
Implications of Being an Emerging Growth Company and a Foreign Private Issuer
 
We qualify as an “emerging growth company” as defined in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
 
 
a requirement to present only two years of audited financial statements in addition to any required interim financial statements and correspondingly reduced Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure;
 
 
to the extent that we no longer qualify as a foreign private issuer, (i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirement to hold a non-binding advisory vote on executive compensation, including golden parachute compensation;
 
 
an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; and
 
 
an exemption from compliance with the requirement that the Public Company Accounting Oversight Board has adopted regarding a supplement to the auditor’s report providing additional information about the audit and the financial statements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Emerging Growth Company Status.”
 
 
6


 
We may take advantage of these exemptions for up to five years or until such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest to occur of: (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; (iii) the date on which we are deemed to be a large accelerated filer under the rules of the SEC; or (iv) the last day of the fiscal year following the fifth anniversary of our initial public offering. We may choose to take advantage of some but not all of these exemptions.
 
We are also considered a “foreign private issuer.” Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:
 
 
the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange Act;
 
 
the requirement to comply with Regulation FD, which restricts selective disclosure of material information;
 
 
the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
 
 
the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events.
 
We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States.
 
Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer. As a result, we do not know if some investors will find our ADSs less attractive, which may result in a less active trading market for our ADSs or more volatility in the price of our ADSs.
 

7

 
 
THE OFFERING
 
ADSs offered by us in the offering
 
Up to                         ADSs, each representing ten (10) Ordinary Shares.
 
Pre-Funded Warrants offered by us
 
We are also offering to each purchaser, if any, whose purchase of ADSs in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 9.99% of our outstanding Ordinary Shares immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, Pre-Funded Warrants in lieu of ADSs that would otherwise result in the purchaser's beneficial ownership exceeding 9.99% of our outstanding Ordinary Shares. Each Pre-Funded Warrant will be immediately exercisable for one ADS and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. The purchase price of each Pre-Funded Warrant will equal the price per share at which the ADSs are being sold to the public in this offering, minus $0.001, the exercise price of each Pre-Funded Warrant. For each Pre-Funded Warrant we sell, the number of ADSs we are offering will be decreased on a one-for-one basis.
     
Warrants
 
Each warrant will have an exercise price of $           per ADS, will be immediately exercisable and will expire five years from the date of issuance. To better understand the terms of the warrants, you should carefully read the “Description of the Offered Securities” section of this prospectus. You should also read the form of warrant, which is filed as an exhibit to the registration statement that includes this prospectus.
     
Total number of Ordinary Shares outstanding immediately before this offering
 
                  Ordinary Shares.
     
Total number of Ordinary Shares outstanding immediately after this offering
 
Up to                 Ordinary Shares, assuming no exercise of the Pre-Funded Warrants, or                      Ordinary Shares if the underwriters exercise in full the over-allotment option to purchase additional ADSs, assuming no exercise of the Pre-Funded Warrants.
     
The ADSs
 
Each ADS represents ten (10) Ordinary Shares.
 
The depositary will hold Ordinary Shares underlying our ADSs. You will have rights as provided in the deposit agreement among us, the depositary and owners and beneficial owners of ADSs from time to time.
 
To better understand the terms of our ADSs, you should carefully read the “Description of the Offered Securities” section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.
     
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 additional ADSs and/or              Warrants, less underwriting discounts and commissions, to cover over-allotments, if any.
 
Use of proceeds
 
We expect to receive approximately $       million in net proceeds from the sale of ADSs and/or Pre-Funded Warrants offered by us in this offering (approximately $       million if the underwriters exercise their over-allotment option in full), based upon an assumed public offering price of $      per ADS, the last reported sale price of our ADSs on Nasdaq on              , 2022. The actual offering price per share in this offering will be determined between us and the underwriters at the time of pricing, and may be at a discount to the current market price.
We will use the net proceeds that we receive from the sale of the Securities offered by this prospectus for general corporate purposes, which may include operating expenses, working capital, future acquisitions or share repurchases, general capital expenditures and satisfaction of debt obligations. We have not determined the amount of net proceeds to be used specifically for such purposes. See “Use of Proceeds” for additional information.
 
Risk factors
 
Investing in our Securities involves a high degree of risk. You should read the “Risk Factors” section starting on page 11 of this prospectus for a discussion of factors to consider carefully before deciding to invest in our Securities.
     
Listing
 
Our ADSs are traded on Nasdaq under the symbol “STKH.” We do not intend to apply for a listing of the Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system.
     
Depositary
 
The Bank of New York Mellon.


8


 
The information above is based on ordinary shares representable by 14,038,441 ADSs outstanding as of November 22, 2022, and excludes the following:

 
 
1,156,835 ADSs issuable upon the exercise of options and restricted share units to purchase ADSs outstanding as of such date, at a weighted average exercise price of $7.46 per ADS;

 
a total of 1,021,537 of our ADSs reserved for future issuance under our 2022 Share Incentive Plan, as of such date;

 
704,454 ADSs issuable upon exercise of options and restricted share units outstanding as of such date at an exercise price to be determined at the time of exercise using a pre-determined formula;

 
4,486,562 ADSs issuable upon the exercise of investor warrants to purchase ADSs outstanding as of such date at a weighted average exercise price of $7.00 per ADS, which warrants are expected to remain outstanding at the consummation of this offering; and

 
140,747 ADSs issuable upon exercise of milestone-based rights to investors that had been granted and remained outstanding as of such date with no exercise price.

Unless otherwise indicated, all information contained in this prospectus assumes or gives effect to:
 
 
no exercise or forfeiture of the outstanding options or warrants or settlement of restricted share units after November 22, 2022;
 
 
no sale of Pre-Funded Warrants in this offering;
 
 
no exercise by the underwriters of their over-allotment option; and
 
 
no exercise of Underwriter Warrants.
 

9


 
SUMMARY FINANCIAL DATA

The following consolidated statement of operations data for the years ended December 31, 2021 and 2020 is derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data for the period of six months ended June 30, 2022 and 2021 is derived from our unaudited interim condensed consolidated financial statements as of June 30, 2022 also included elsewhere in this prospectus. The consolidated statement of operations data for the period of nine months ended September 30, 2022 and 2021 is derived from our unaudited interim condensed consolidated financial information as of September 30, 2022 also included elsewhere in this prospectus. The consolidated balance sheet data as of September 30, 2022 is derived from our unaudited interim condensed consolidated financial information as of September 30, 2022 also included elsewhere in this prospectus. These consolidated financial statements have been prepared in accordance with IFRS as set forth by the IASB. The summary consolidated financial data set forth below should be read in conjunction with and are qualified by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto and other financial information included elsewhere in this prospectus.

   
Year Ended December 31,
   
Six Months Ended
June 30,
   
Nine Months Ended
September 30,
 
   
2021
   
2020
   
2022
   
2021
   
2022
   
2021
 
   
(U.S. Dollars, in thousands, except per share and weighted
average shares data)
 
Consolidated Statements of Loss and Other Comprehensive Loss
                                   
    Research and development expenses
   
7,594
     
2,491
     
4,427
     
2,910
     
7,219
     
4,928
 
    Marketing expenses
   
1,628
     
506
     
1,959
     
605
     
2,426
     
872
 
    General and administrative expenses
   
8,010
     
5,380
     
3,687
     
4,159
     
4,982
     
5,961
 
    Public listing expenses
   
-
     
10,164
     
-
     
-
     
-
     
-
 
Operating loss
   
17,232
     
18,541
     
10,073
     
7,674
     
14,627
     
11,761
 
    Financing income
   
(509
)    
(110
)
   
(1,062
)
   
(401
)
   
(3,258
)
   
(457
)
    Financing expenses
   
1,299
     
93
     
145
     
493
     
262
     
434
 
    Total financing (income) expenses
   
790
     
(17
)
   
(917
)
   
92
     
(2,996
)
   
(23
)
Loss for the period
 
$
18,022
   
$
18,524
   
$
9,156
     
7,766
   
$
11,631
     
11,738
 
Capital reserve for financial assets at fair value that will not be transferred to profit or loss
   
-
     
334
     
-
     
-
     
-
     
-
 
Currency translation differences loss (income) that will not be transferred to profit or loss over NIS
   
(1,942
)    
(758
)
   
2,326
     
(293
)
   
2,301
     
(456
)
Currency translation differences loss (income) that might be transferred to profit or loss over EUR
   
1,447
     
-
     
847
     
216
     
1,745
     
717
 
Total comprehensive loss for the period
 
$
17,527
   
$
18,100
   
$
12,329
     
7,689
   
$
15,677
     
11,999
 
Basic and diluted loss per ordinary share
 
$
0.155
   
$
0.308
   
$
0.072
     
0.072
   
$
0.088
     
0.104
 
Weighted average number of Ordinary Shares outstanding used to compute-basic and diluted:
   
115,954,501
     
60,112,197
     
126,385,924
     
107,189,837
     
132,652,822
     
112,891,686
 
 
   
As of September 30, 2022
 
   
Actual
   
As
Adjusted(1)
 
   
(U.S. Dollars in thousands)
 
Consolidated Balance Sheet Data:
           
Cash and cash equivalents
 
$
11,203
   
$
   
Total assets
   
33,226
         
Total non-current liabilities
   
(3,195
)
       
Accumulated deficit
   
48,602
         
Total shareholders’ equity
   
(24,439
)
       

 
(1)
As adjusted gives further effect to the assumed issuance and sale in this offering of      ADSs and/or Pre-Funded Warrants representing       Ordinary Shares (assuming the full exercise of the Pre-Funded Warrants) at the assumed public offering price of $      per ADS, which was the last reported sale price of our ADSs on Nasdaq on        , 2022 , after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
 

10


RISK FACTORS

Our business is subject to various risks, including those described below. You should carefully consider the risks and uncertainties described below and in our future filings with the SEC. If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. Additionally, risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations and/or prospects.
 
RISKS RELATED TO OUR FINANCIAL CONDITION AND LIQUIDITY REQUIREMENTS
 
We expect to continue incurring significant losses for the foreseeable future and may never become profitable.
 
We have experienced net losses in every period since the inception of Steakholder Foods. We anticipate that we will continue to incur significant losses for the foreseeable future as our operating expenses and capital expenditures increase substantially due to our continued investment in our research and development activities and as we hire additional employees over the coming years. These activities may prove more expensive than we anticipate. We incur significant expenses in developing our technologies. Accordingly, we may not be able to achieve or sustain profitability, and we expect to incur significant losses for the foreseeable future.
 
Our predecessor entity, MeaTech Ltd., commenced cultured meat development operations in September 2019, and we continue to be in the early stages of development of our technologies. As a result, we have not generated any revenues since inception of our cultured meat operations, and we do not expect to generate any revenue from operations for the foreseeable future. We may not be able to develop the technology for manufacturing cultured meat at all, or meet the additional technological challenges to scaling such technology up to an industrial scale from our research and development efforts or successfully market and license our technologies, once approved. In addition, there is no certainty that there will be sufficient demand to justify the production and marketing of cultured meat products. The market for alternative proteins in general, and cultured meats specifically, may be small or may not develop.
 
 If cultured meats produced using our industrial-scale cultured meat manufacturing processes do not gain wide market acceptance, we will not be able to achieve our anticipated growth, revenues or profitability and we may not be able to continue our business operations.
 
We will require substantial additional funds to complete our research and development activities and, if additional funds are not available on acceptable terms or at all, we may need to significantly scale back or cease our operations.
 
A significant portion of our research and development activities has been financed by the issuance of equity securities. We believe that we will continue to expend substantial resources for the foreseeable future as we work to develop our technologies. These expenditures are expected to include costs associated with research and development, manufacturing and supply, as well as general operating expenses. In addition, other unanticipated costs may arise.
 
There is no certainty that we will be able to obtain funding for our research and development activities when we need it, on acceptable terms or at all. A lack of adequate funding may force us to reduce or cease all or part of our research and development activities and business operations. Our operating plan may change because of factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such financing may result in dilution to shareholders, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

11

 
Our future capital requirements depend on many factors, including:
 

our progress with current research and development activities;


the number and characteristics of any products or manufacturing processes we develop or acquire;


the expenses associated with our marketing initiatives;


the timing, receipt and amount of milestone, royalty and other payments from future customers and collaborators, if any;


the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes;


any lawsuits related to our products or commenced against us;


the expenses needed to attract, hire and retain skilled personnel;


the costs associated with being a public company in the United States; and


the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing intellectual property claims, including litigation costs and the outcome of such litigation.

If our estimates and predictions relating to any of these factors are incorrect, we may need to modify our operating plan. Additional funds may not be available to us when needed on acceptable terms, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate our manufacturing, research and development activities or other activities that may be necessary to generate revenue and achieve profitability.
 
There is substantial doubt as to whether we can continue as a going concern.
 
Our consolidated financial statements as of December 31, 2021 and June 30, 2022 contain an explanatory paragraph that states that our recurring losses from operations raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any measurement or presentation adjustment for assets or liabilities that might result if we would be unable to continue as a going concern. We have incurred operating losses since inception, have not generated any revenues and have not achieved profitable operations. Our net loss, accumulated during the development stage through September 30, 2022, totaled approximately $48.6 million, and we expect to continue to incur substantial losses in future periods while we continue our research and development activities.
 
Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our technologies.
 
Until such time, if ever, we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, debt financings, government contracts, government and/or other third-party grants or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. We will require substantial funding to fund our anticipated commercialization efforts and fund our operating expenses and other activities. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail our research or development program, or a part thereof, which would adversely impact our potential revenues, results of operations and financial condition.
 
12


RISKS RELATED TO OUR BUSINESS AND STRATEGY
 
We have a limited operating history to date and our business prospects will be dependent on our ability to meet a number of challenges.
 
Our business prospects are difficult to predict due to a lack of operational history, and our success will be dependent on our ability to meet a number of challenges. Because we have a limited operating history and we are in the early stages of development, you may not be able to evaluate our future prospects accurately. Our prospects will be primarily dependent on our ability to successfully develop industrial-scale cultured meat manufacturing technologies and processes, and market these to our customers. If we are not able to successfully meet these challenges, our prospects, business, financial condition and results of operations could be adversely impacted.
 
We are wholly dependent on the success of our cultured meat manufacturing technologies, including our cultured steak technologies, and we have limited data on the performance of our technologies to date.
 
We do not currently have any products or technologies approved for sale and we are still in the early stages of development. To date, we have limited data on the ability of our technologies to successfully manufacture cultured meat, towards which we have devoted substantial resources. We may not be successful in developing our technologies in a manner sufficient to support our expected scale-ups and future growth, or at all.  We expect that a substantial portion of our efforts and expenditures over the next few years will be devoted to the development of technologies designed to enable us to market industrial-scale cultured meat manufacturing processes.  We cannot guarantee that we will be successful in developing these technologies on the timeline we expect or at all. If we are able to successfully develop our cultured meat technologies, we cannot ensure that we will obtain regulatory approval or that, following approval, upon commercialization our technologies will achieve market acceptance.  Any such delay or failure would materially and adversely affect our financial condition, results of operations and prospects.
 
The research and development associated with technologies for cultured meat manufacturing, including three-dimensional meat production, is a lengthy and complex process.
 
We are focused on developing commercial technologies that companies can license to manufacture alternative foods without the need for animal butchery. To develop our cultured meat steak technology, we are developing cellular agriculture technology, such as cell lines and approaches to working with plant-based cell-growth media in a scalable process. We are currently planning to scale up the printing process to provide us with industrial-scale capabilities. If we are unable to successfully develop our cultured meat manufacturing technologies, we may not be able to achieve our anticipated growth, revenues or profitability and we may not be able to continue our business operations.
 
 We intend to engage in future acquisitions, joint ventures or collaborations, similar to our acquisition of Peace of Meat, which may increase our capital requirements, dilute our shareholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks. We may not realize the benefits of these acquisitions, joint ventures or collaborations.
 
We may evaluate various acquisitions and collaborations, including licensing or acquiring complementary technologies, intellectual property rights, or businesses. Any potential acquisition, joint venture or collaboration will entail numerous potential risks, including:


increased operating expenses and cash requirements;


the assumption of additional indebtedness or contingent liabilities;

13



assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel;


the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic merger or acquisition;


retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships;


risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing technologies; and


our inability to generate revenue from acquired technologies or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.

In addition, if we undertake acquisitions, we may utilize our cash, issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.
 
Moreover, we may not be able to locate suitable acquisition or collaboration opportunities and this inability could impair our ability to grow or obtain access to technologies that may be important to the development of our business.
 
Our existing potential collaborations, or any future collaboration arrangements that we may enter into, may not be successful, which could significantly limit the likelihood of receiving the potential economic benefits of the collaboration and adversely affect our ability to develop and commercialize our product candidates.

We have entered into a potential collaboration with Tiv Ta’am Holdings Group, or Tiv Ta’am, which is reflected in a non-binding letter of intent. Tiv Ta’am has no obligation to collaborate with us and may withdraw from the proposed collaboration at any time without any liability.
 
Additionally, we may enter into future collaborations under which our collaborators have provided, and may in the future provide, funding and other resources for developing and commercializing our cultured meat manufacturing technologies. We expect to enter into additional collaborations to access additional funding, capabilities and expertise in the future. Our existing collaborations, and any future collaborations we enter into, may pose a number of risks, including the following:
 

 collaborators may not perform or prioritize their obligations as expected;


collaborators may not pursue development and commercialization of any of our cultured meat manufacturing technologies or may elect not to continue or renew development or commercialization, changes in the collaborators’ focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;


collaborators may provide insufficient funding for the successful development or commercialization of our cultured meat manufacturing technologies;


collaborators could independently develop, or develop with third parties, products or technologies that compete directly or indirectly with our products or cultured meat manufacturing technologies if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

14



cultured meat manufacturing technologies developed in collaborations with us may be viewed by our collaborators as competitive with their own products or technologies, which may cause collaborators to cease to devote resources to the development or commercialization of our products;


a collaborator with marketing and distribution rights to one or more of our products or technologies that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of any such product;


disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development of cultured meat manufacturing technologies, may cause delays or termination of the research, development or commercialization of such technologies, may lead to additional responsibilities for us with respect to such technologies, or may result in litigation or arbitration, any of which would be time-consuming and expensive;


collaborators may not properly maintain, protect, defend or enforce our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;


disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations;


collaborators may infringe, misappropriate or otherwise violate the intellectual property rights of third parties, which may expose us to litigation and potential liability;


collaborations may be terminated for the convenience of the collaborator and, if terminated, the development of our cultured meat manufacturing technologies may be delayed, and we could be required to raise additional capital to pursue further development or commercialization of the cultured meat manufacturing technologies;


future relationships may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing shareholders, or disrupt our management and business; and


we could face significant competition in seeking appropriate collaborators, and the negotiation process is time-consuming and complex.

If our collaborations do not result in the successful development of our products, or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone, earn-out, royalty or other contingent payments under the collaborations. If we do not receive the funding we expect under these agreements, our development of our cultured meat manufacturing technologies could be delayed and we may need additional resources to develop our technologies. If one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and the perception of us in the business and financial communities could be adversely affected. All of the risks relating to product development, regulatory approval and commercialization described in this report apply to the activities of our collaborators.
 
We may not be able to successfully manage our planned growth.
 
We expect to continue to make investments in our cultured meat manufacturing technologies. We expect that our annual operating expenses will continue to increase as we invest in further research and development activities and, ultimately, sales and marketing efforts and customer service and support resources for future customers. Our failure to expand operational and financial systems in a timely or efficient manner could result in operating inefficiencies, which could increase our costs and expenses more than we had planned and prevent us from successfully executing our business plan. We may not be able to offset the costs of operation expansion by leveraging the economies of scale from our growth in negotiations with our suppliers and contract manufacturers. Additionally, if we increase our operating expenses in anticipation of the growth of our business and this growth does not meet our expectations, our financial results will be negatively impacted.
 
15


If our business grows, we will have to manage additional product design projects, materials procurement processes, and sales efforts and marketing for an increasing number of products, as well as expand the number and scope of our relationships with suppliers, distributors and end customers. If we fail to manage these additional responsibilities and relationships successfully, we may incur significant costs, which may negatively impact our operating results. Additionally, in our efforts to be first to market with new products with innovative functionality and features, we may devote significant research and development resources to products and product features for which a market does not develop quickly, or at all. If we are not able to predict market trends accurately, we may not benefit from such research and development activities, and our results of operations may suffer.
 
As our future development and commercialization plans and strategies develop, we expect to need additional managerial, operational, sales, marketing, financial and legal personnel. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, failure to deliver and timely deliver our products to customers, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional new products. If our management is unable to manage our growth effectively, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced, and we may not be able to implement our business strategy.
 
If the market does not grow as we expect, we may not achieve sustainable revenues.
 
 The marketplace for alternative protein manufacturing plants, which we expect to be our primary market, is dominated by methods that do not involve three-dimensional printing technology. If the market does not broadly accept three-dimensional printing of cultured meats as an alternative for conventional meat harvesting, or if it adopts three-dimensional printing based on a technology other than our proprietary bio-ink technology, we may not be able to achieve a sustainable level of revenues, and our results of operations would be adversely affected as a result. Additionally, cultivated meat is significantly more expensive than conventional meat. If the price of cultivated meat remains high, this may limit the consumer demand for, and market acceptance of, products manufactured using our technologies, and we may never be able to compete successfully or generate sufficient revenue or sustained profitability.

Business or economic disruptions or global health concerns, including COVID-19, may have an adverse impact on our business and results of operations.
 
The COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets. Many countries around the world, including in Israel, have significant governmental measures being implemented to control the spread of the virus, including temporary closure of businesses, restrictions on travel and the movement of people, and other material limitations on the conduct of business. To date, the impact of the pandemic on our operations has been mainly limited to a temporary closure of our facility earlier in 2020, in the context of a government-mandated general lockdown, which temporary delayed certain of our development activities, while we implemented remote working and workplace protocols for our employees in accordance with government requirements. While government restrictions have recently been eased in Israel following a successful vaccination campaign, the extent of the impact of the COVID-19 pandemic on our business and financial performance, including our ability to execute our near-term and long-term business strategies and initiatives in the expected time frame, will depend on future developments, including the duration and severity of the pandemic and the impacts of reopening, including possible additional waves, which are uncertain and cannot be predicted.
 
As a result of the COVID-19 pandemic, including related governmental guidance or requirements, we may need to close our facilities, at least temporarily, or implement more restrictive policies to comply with social distancing rules and other requirements. As much of our research and development work requires on-site performance, such steps may negatively impact productivity and cause other disruptions to our business.
 
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The full extent of the COVID-19 pandemic’s impact on our business and results of operations depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, its lasting impact on capital and financial markets, including any economic recession, and any new information that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others. At this point in time, we cannot reasonably estimate the full extent of the COVID-19 pandemic’s impact on our business, financial condition, results of operations and cash flow.
 
RISKS RELATED TO OUR ACQUISITION OF PEACE OF MEAT
 
We may not fully realize the anticipated benefits of the acquisition or realize such benefits within the timing anticipated.
 
In March 2021, we completed our acquisition of Peace of Meat. We acquired Peace of Meat because we believe that the acquisition will be beneficial to us and to our shareholders. However, we may not be able to achieve the anticipated long-term strategic benefits of the acquisition within the timing anticipated or at all. For example, the benefits from the acquisition will be partially offset by the significant costs incurred in completing the transaction. Any delays and challenges that may be encountered in the post-acquisition process of consolidation could have an adverse effect on our business and results of operations, and may affect the value of the ADSs and our Ordinary Shares after the completion of the acquisition.
 
We may have operational challenges in managing Peace of Meat’s business and staff following the acquisition.
 
Acquisitions inherently have risks including misjudging key elements of an acquisition or failing to integrate the acquiree in an efficient and timely manner that would disrupt operations. In addition, Peace of Meat is located in a different country (i.e., Belgium), which brings inherent management challenges. Our agreement to acquire Peace of Meat provides that Peace of Meat will continue to be managed independently within our business for approximately two years from the time of purchase, adding to the operational complexity of the integration. We may further face operational challenges in managing Peace of Meat’s business following the acquisition, which could have an adverse effect on our business and results of our operations, and may affect the value of the ADSs and Ordinary Shares.
 
If intangible assets that we recorded in connection with the Peace of Meat acquisition become impaired, we may have to take significant charges against earnings.
 
In connection with the accounting for the Peace of Meat acquisition, we have recorded intangible assets. Under IFRS, we must assess, at least annually and potentially more frequently, whether the value of indefinite-lived intangible assets has been impaired. Amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of intangible assets will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods.
 
RISKS RELATED TO COMPETITION AND COMMERCIALIZATION OF OUR TECHNOLOGIES
 
We are an early-stage company with an unproven business model, which makes it difficult to evaluate our current business and future prospects.
 
We have no established basis to assure investors that our business strategies will be successful. We are dependent on unproven technologies and we have no basis to predict acceptance of our technologies by potential licensees and their customers. The market for cultured meat is new and untested. As a result, the revenue and income potential of our business and our market are unproven. Further, because of our limited operating history and early stage of development, and because the market for cultured meat is relatively new and rapidly evolving, we have limited insight into trends that may emerge and affect our business. We may make errors in predicting and reacting to relevant business trends, which could harm our business.
 
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 Before investing, you should consider an investment in the ADSs in light of the risks, uncertainties and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets such as ours. We may not be able to successfully address any or all of these risks. Failure to adequately do so could cause our business, results of operations and financial condition to suffer.

 We may not be able to compete successfully in our highly competitive market.
 
The alternative protein market is expected to be highly competitive, with numerous brands and products competing for limited retailer shelf space, foodservice and restaurant customers and consumers. For us to compete successfully, we expect that the cultured meats printed using our technologies will need to be competitive in taste, ingredients, texture, ease of integration into the consumer diet, nutritional claims, convenience, brand recognition and loyalty, product variety, product packaging and package design, shelf space, reputation, price, advertising and access to restaurant and foodservice customers.
 
Generally, the food industry is dominated by multinational corporations with substantially greater resources and operations than us. We cannot be certain that we will successfully compete with larger competitors that have greater financial, marketing, sales, manufacturing, distributing and technical resources than we do. Conventional food companies may acquire our competitors or launch their own competing products, and they may be able to use their resources and scale to respond to competitive pressures and changes in consumer preferences by introducing new products, reducing prices or increasing promotional activities, among other things. Competitive pressures or other factors could prevent us from acquiring market share or cause us to lose market share, which may require us to lower prices, or increase marketing and advertising expenditures, either of which would adversely affect our margins and could result in a decrease in our operating results and profitability. We cannot assure you that we will be able to maintain a competitive position or compete successfully against such sources of competition.
 
We may suffer reputational harm due to real or perceived quality or health issues with products manufactured by our licensees using our technology.
 
Any real or perceived quality or food safety concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving us, or even merely involving unrelated manufacturers, could cause negative publicity and reduced confidence in our company, or the industry as a whole, which could in turn harm our reputation and sales, and could adversely impact our business, financial condition and operating results. There can be no assurance that products manufactured by our licensees will always comply with regulatory standards. Although we expect that our licensees will strive to manufacture products free of pathogenic organisms, these may not be easily detected and cross-contamination can occur. We cannot assure you that this health risk will always be preempted by quality control processes.
 
We will have no control over the products manufactured by our licensees, especially once they are purchased by consumers, who may prepare these products in a manner that is inconsistent with directions or store them for excessive periods of time, which may adversely affect their quality and safety. If the products manufactured by our licensees are not perceived as safe or of high quality, then our business, results of operations and financial condition could be adversely affected.
 
The growing use of social and digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative publicity about cultured meats produced using our technologies could seriously damage our reputation.
 
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Failure to improve our technologies may adversely affect our ability to continue to grow.
 
In order to continue to grow, we expect we will need to continue to innovate by developing new technologies or improving existing ones, in ways that meet our standards for quality and will enable our eventual licensees to manufacture products that appeal to consumer preferences. Such innovation will depend on the technical capability of our staff in developing and testing product prototypes, including complying with applicable governmental regulations, and the success of our management and sales and marketing teams in introducing and marketing new technologies. Failure to develop and market new technologies may cause a negative impact on our business and results of operations.
 
Additionally, the development and introduction of new technologies requires substantial research, development and marketing expenditures, which we may be unable to recoup if the new technologies do not lead to products that gain widespread market acceptance. If we are unsuccessful in meeting our objectives with respect to new or improved technologies, our business could be harmed.
 
We may face difficulties if we expand our operations into new geographic regions, in which we have no prior operating experience.
 
We intend to license our technologies in numerous geographical markets. International operations involve a number of risks, including foreign regulatory compliance, tariffs, taxes and exchange controls, economic downturns, inflation, foreign currency fluctuations and political and social instability in the countries in which we will operate. Expansion may involve expanding into less developed countries, which may have less political, social or economic stability and less developed infrastructure and legal systems. It is costly to establish, develop and maintain international operations and develop and promote our brands in international markets. As we expand our business into other countries, we may encounter regulatory, legal, personnel, technological and other difficulties that increase our expenses and/or delay our ability to become profitable in such countries, which may have an adverse impact on our business and brand.
 
Consumer preferences for alternative proteins in general, and more specifically cultured meats, are difficult to predict and may change, and, if we are unable to respond quickly to new trends, our business may be adversely affected.
 
Our business is focused on the development and marketing of licensable cultured meat manufacturing technologies. Consumer demand for the cultured meats manufactured using these technologies could change based on a number of possible factors, including dietary habits and nutritional values, concerns regarding the health effects of ingredients and shifts in preference for various product attributes. If consumer demand for our products decreases, our business and financial condition would suffer. Consumer trends that we believe favor sales of products manufactured using our licensed technologies could change based on a number of possible factors, including a shift in preference from animal-based protein products, economic factors and social trends. A significant shift in consumer demand away from products manufactured using our technologies could reduce our sales or our market share and the prestige of our brand, which would harm our business and financial condition.
 
We have no manufacturing experience or resources and we expect we will incur significant costs to develop this expertise or need to rely on third parties for manufacturing.
 
We have no manufacturing experience. In order to develop and license our technologies, we will need to develop, contract for or otherwise arrange for the necessary manufacturing capabilities. We may experience difficulty in obtaining adequate and timely manufacturing capacity for our proprietary cultured meat printers and bio-inks. We intend to begin manufacturing certain of our cultured meat products in a pilot facility but we do not own or lease facilities currently that could be used to manufacture any products that we might develop on an industrial scale, nor do we have the resources at this time to acquire or lease suitable facilities. If we are unable to build the necessary internal manufacturing capability or obtain this capability through third parties we will not be able to commercialize our technologies.  Even if we develop or obtain the necessary manufacturing capacity, if we fail to comply with regulations, to obtain the necessary licenses and knowhow or to obtain the requisite financing in order to comply with all applicable regulations and to own or lease the required facilities in order to manufacture products, we could be forced to cease operations, which would cause you to lose all of your investment.
 
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Our limited manufacturing capabilities are nascent, and if we fail to effectively develop manufacturing and production capabilities, our business and operating results and our brand reputation could be harmed.
 
We intend to begin manufacturing certain of our cultured meat products in a pilot facility. If we are unable to develop manufacturing capacity to commence cultured chicken fat production, we may not be able to expedite our market entry or develop an industrial process for cultivating and producing real meat cuts. Additionally, there is risk in our ability to effectively scale production processes, if developed, to optimize manufacturing capacity for specific products and effectively manage our supply chain requirements, which involves accurately forecasting demand for each of our products and inventory needs in order to ensure we have adequate available manufacturing capacity for each such product and to ensure we are effectively managing our inventory. Our forecasts may be based on multiple assumptions that may cause our estimates to be inaccurate and affect our ability to obtain adequate manufacturing capacity (whether our own manufacturing capacity or co-manufacturing capacity) and adequate inventory supply in order to meet the demand for our products, which could prevent us from developing our industrial process and harm our business and prospects.
 
However, if we overestimate our demand and overbuild our capacity or inventory, we may have significantly underutilized assets, experience reduced margins, and have excess inventory which we may be required to write-down or write-off. If we do not accurately align our manufacturing capabilities and inventory supply with demand, if we experience disruptions or delays in our supply chain, or if we cannot obtain raw materials of sufficient quantity and quality at reasonable prices and in a timely manner, our business, financial condition and results of operations may be adversely affected.
 
If developed, our manufacturing and production operations will be subject to additional risks and uncertainties.
 
The interruption in, or the loss of operations at, our pilot facility, which may be caused by work stoppages, labor shortages, strikes or other labor unrest, production disruptions, product quality issues, local economic and political conditions, restrictive governmental actions, border closures, disease outbreaks or pandemics (such as COVID-19), the outbreak of hostilities, acts of war, terrorism, fire, earthquakes, severe weather, flooding or other natural disasters at one or more of these facilities, could delay, postpone or reduce production of some of our products, could impede our ability to develop an industrial process for cultivating and producing real meat cuts or could otherwise have an adverse effect on our business, results of operations and financial condition until such time as such interruption is resolved or an alternate source of production is secured.
 
Because we rely on a limited number of third-party suppliers, we may not be able to obtain raw materials on a timely basis or in sufficient quantities at competitive prices to produce our products or meet the demand for our products.
 
We rely on a limited number of vendors, a portion of which are located internationally, to supply us with raw materials. Our financial performance depends in large part on our ability to arrange for the purchase of raw materials in sufficient quantities at competitive prices. We are not assured a continued supply or pricing of raw materials. Any of our other suppliers could discontinue or seek to alter their relationship with us. We could experience similar delays in the future from any of our suppliers. Any disruption in the supply of embryonic stem cells or other raw materials would have a material adverse effect on our business if we cannot replace these suppliers in a timely manner, on commercially reasonable terms, or at all.
 
In addition, our suppliers manufacture their products at a limited number of facilities. A natural disaster, severe weather, fire, power interruption, work stoppage or other calamity affecting any of these facilities, or any interruption in their operations, could negatively impact our ability to obtain required quantities of raw materials in a timely manner, or at all, which could materially increase our cost and delay our timeline, and have a material effect on our business and financial condition.
 
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Events that adversely affect our suppliers of raw materials could impair our ability to obtain raw material inventory in the quantities at competitive prices that we desire. Such events include problems with our suppliers’ businesses, finances, labor relations and/or shortages, strikes or other labor unrest, ability to import raw materials, product quality issues, costs, production, insurance and reputation, as well as local economic and political conditions, restrictive U.S. and foreign governmental actions, such as restrictions on transfers of funds and trade protection measures, including export/import duties and quotas and customs duties and tariffs, adverse fluctuations in foreign currency exchange rates, changes in legal or regulatory requirements, border closures, disease outbreaks or pandemics (such as COVID-19), acts of war, terrorism, natural disasters, fires, earthquakes, flooding, severe weather, agricultural diseases or other catastrophic occurrences. We continuously seek alternative sources of raw materials to use in our products, but we may not be successful in diversifying the raw materials we use in our products.
 
If we need to replace an existing supplier, there can be no assurance that supplies of raw materials will be available when required on acceptable terms, or at all, or that a new supplier would allocate sufficient capacity to us in order to meet our requirements, fill our orders in a timely manner or meet our strict quality standards.
 
Litigation or legal proceedings, government investigations or other regulatory enforcement actions could subject us to civil and criminal penalties or otherwise expose us to significant liabilities and have a negative impact on our reputation or business.
 
We operate in a constantly evolving legal and regulatory framework. Consequently, we are subject to heightened risk of legal claims, government investigations or other regulatory enforcement actions. Although we have implemented policies and procedures designed to ensure compliance with existing laws and regulations, we cannot assure you that our employees, temporary workers, contractors or agents will not violate our policies and procedures. Moreover, a failure to maintain effective control processes could lead to violations, unintentional or otherwise, of laws and regulations. Legal claims, government investigations or regulatory enforcement actions arising out of our failure or alleged failure to comply with applicable laws and regulations could subject us to civil and criminal penalties that could materially and adversely affect our product sales, reputation, financial condition and operating results. For example, in November 2020, the Israel Securities Authority, or ISA, initiated an administrative proceeding against us claiming negligent misstatement regarding certain immediate and periodic reports published by our predecessor (Ophectra) during the years 2017 and 2018, prior to the merger with MeaTech. These reports relate to Ophectra’s activities prior to establishment of the settlement fund in connection with the merger. In April 2021, following negotiations with the ISA, we agreed to settle the matter for NIS 0.7 million ($0.2 million) . The settlement is subject to approval of the ISA’s Enforcement Committee.
 
RISKS RELATED TO OUR OPERATIONS
 
We expect that a small number of customers will account for a significant portion of our revenues, and the loss of one or more of these customers could adversely affect our financial condition and results of operations.
 
We do not expect to generate revenue in the short or medium term.  If we are able to generate revenue, we believe that we will do so through three primary streams: (i) licensing our proprietary intellectual property to customers for the purpose of commercializing our technologies, including by way of setting up and operating cultured meat production factories; (ii) brokering the supply of materials needed in the manufacturing process; and (iii) providing consulting and implementation services to customers. These streams may arise in the context of product co-development. Under this model, we initially expect to derive a significant portion of our revenues from a few customers. Our financial condition and results of operations could be adversely impacted if any one of these customers interrupt or curtail their activities, fail to pay for the services that have been performed, terminate their cultured meat operations, or if we are unable to enter into agreements with new customers on favorable terms. The loss of customers could adversely affect our financial condition and results of operations.
 
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We may be exposed to the credit risks of our customers, and nonpayment by these customers and other parties could adversely affect our financial position, results of operations and cash flows.
 
We may be subject to risks of loss resulting from nonpayment by our customers. Any material nonpayment by these entities could adversely affect our financial position, results of operations and cash flows. If customers default on their obligations to us, our financial results and condition could be adversely affected. Some of these customers may be highly leveraged and subject to their own operating and regulatory risks.
 
If we are unable to attract and retain qualified employees, our ability to implement our business plan may be adversely affected.
 
The loss of the service of our employees, such as Mr. Arik Kaufman, our Chief Executive Officer, would likely delay our achievement of product development and other business objectives, as we may not be able to find suitable individuals to replace them on a timely basis, if at all. In addition, any such departure could be viewed in a negative light by investors and analysts, which may cause the price of our Ordinary Shares to decline. Although we have employment agreements with our key employees, these employees could terminate their employment with us at any time on relatively short notice. We do not carry key man life insurance on any of our executive officers.
 
Recruiting and retaining qualified scientific, manufacturing and sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among high technology and life sciences companies for similar personnel. We also experience competition from universities and research institutions in attracting and retaining scientific personnel. In addition, we rely on consultants and advisors, including scientific advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.
 
Under applicable employment laws, we may not be able to enforce covenants not to compete.
 
Our employment agreements generally include covenants not to compete. These agreements prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work. For example, Israeli courts have required employers seeking to enforce covenants not to compete to demonstrate that the competitive activities of a former employee will harm one of a limited number of material interests of the employer, such as the secrecy of a company’s confidential commercial information or the protection of its intellectual property. If we cannot demonstrate that such an interest will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former employees or consultants and our competitiveness may be diminished.
 
We are exposed to a risk of substantial loss due to claims that may be filed against us in the future because our insurance policies may not fully cover the risk of loss to which we are exposed.
 
We are exposed to the risk of having claims seeking monetary damages being filed against us, for example with regard to securities-related claims. In the event that we are required to pay damages for any such claim, we may be forced to seek bankruptcy or to liquidate because our asset base and revenue base may be insufficient to satisfy the payment of damages and any insurance that we have obtained may not provide sufficient coverage against potential liabilities.
 
Our business and operations would suffer in the event of information technology system failures, including security breaches.
 
Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, causing our business to suffer. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our product could be delayed.
 
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A cybersecurity incident, other technology disruptions or failure to comply with laws and regulations relating to privacy and the protection of data relating to individuals could negatively impact our business, our reputation and our relationships with customers.
 
We use computers in substantially all aspects of our business operations. We also use mobile devices, social networking and other online activities to connect with our employees, suppliers and co-manufacturers. Such uses give rise to cybersecurity risks, including security breaches, espionage, system disruption, theft and inadvertent release of information. Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including suppliers’ information, private information about employees and financial and strategic information about us and our business partners. Further, as we pursue new initiatives that improve our operations and cost structure, potentially including acquisitions, we may also be expand and improve our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with new initiatives or acquisitions, we may become increasingly vulnerable to such risks. Additionally, while we have implemented measures to prevent security breaches and cyber incidents, our preventative measures and incident response efforts may not be entirely effective. The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage all of which could have a material adverse effect on our business, financial condition or results of operations.
 
In addition, we are subject to laws, rules and regulations in the United States, the European Union and other jurisdictions relating to the collection, use and security of personal information and data. Such data privacy laws, regulations and other obligations may require us to change our business practices and may negatively impact our ability to expand our business and pursue business opportunities. We may incur significant expenses to comply with the laws, regulations and other obligations that apply to us. Additionally, the privacy- and data protection-related laws, rules and regulations applicable to us are subject to significant change. Several jurisdictions have passed new laws and regulations in this area, and other jurisdictions are considering imposing additional restrictions. Privacy- and data protection-related laws and regulations also may be interpreted and enforced inconsistently over time and from jurisdiction to jurisdiction. Any actual or perceived inability to comply with applicable privacy or data protection laws, regulations, or other obligations could result in significant cost and liability, litigation or governmental investigations, damage our reputation, and adversely affect our business.

Disruptions in the worldwide economy may adversely affect our business, results of operations and financial condition.
 
The global economy can be negatively impacted by a variety of factors such as the spread or fear of spread of contagious diseases (such as the COVID-19 pandemic), man-made or natural disasters, actual or threatened war, terrorist activity, political unrest, civil strife and other geopolitical uncertainty. Such adverse and uncertain economic conditions may impact consumer demand for alternative proteins in general, and clean meats specifically, which may in turn impact manufacturer and retailer demand for our technologies. In addition, our ability to manage normal commercial relationships with suppliers may suffer. Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns as a result of various factors, including job losses, inflation, higher taxes, reduced access to credit, change in government economic policy and international trade disputes. In particular, consumers may reduce the amount of cultured meat that they purchase in favor of conventional meat or other alternative proteins, which may have lower retail prices, which could indirectly affect our results of operations. Manufacturer and retailers may become more conservative in response to these conditions and seek to delay commencing cultured market manufacturing operations or reduce existing operations. Our results of operations will depend upon, among other things, the financial condition of our business customers and our ability to supply them with the means to manufacture products that appeal to consumers at the right price. Decreases in demand for the products manufactured by our customers would put downward pressure on margins and would negatively impact our financial results. Prolonged unfavorable economic conditions or uncertainty may result in end consumers making long-lasting changes to their discretionary spending behavior on a more permanent basis, which may likewise have an indirect adverse effect on our sales and profitability.

Food safety and food-borne illness incidents may materially adversely affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings.
 
Selling food for human consumption involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury or death related to allergens, food-borne illnesses or other food safety incidents caused by products we sell, or involving our suppliers or co-manufacturers, could result in the discontinuance of sales of these products or our relationships with such suppliers or co-manufacturers, or otherwise result in increased operating costs, regulatory enforcement actions or harm to our reputation. Shipment of adulterated or misbranded products, even if inadvertent, can result in criminal or civil liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against us that is more than our policy limits or not covered by our policies or not subject to insurance would have to be paid from our cash reserves, which would reduce our capital resources.
 
The occurrence of food-borne illnesses or other food safety incidents could also adversely affect the price and availability of affected ingredients, resulting in higher costs, disruptions in supply and a reduction in our sales. Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by our actions, could compel us, our suppliers, our distributors or our customers, depending on the circumstances, to conduct a recall in accordance with FDA regulations, comparable state laws or foreign laws such as those of the European Union and the United Kingdom. Food recalls could result in significant losses due to their costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing distributors or customers and a potential negative impact on our ability to attract new customers due to negative consumer experiences or because of an adverse impact on our brand and reputation. The costs of a recall could exceed or be outside the scope of our existing or future insurance policy coverage or limits.
 
In addition, food companies have been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering, and we, like any food company, could be a target for product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and pathological organisms into consumer products as well as product substitution. FDA regulations require companies like us to analyze, prepare and implement mitigation strategies specifically to address tampering (i.e., intentional adulteration) designed to inflict widespread public health harm. If we do not adequately address the possibility, or any actual instance, of intentional adulteration, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could materially adversely affect our business, financial condition and operating results.

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RISKS RELATED TO GOVERNMENT REGULATION
 
We expect that products utilizing our technologies will be subject to regulations that could adversely affect our business and results of operations.
 
The manufacture and marketing of food products is highly regulated. We, our suppliers and licensees, may be subject to a variety of laws and regulations. These laws and regulations apply to many aspects of our business, including the manufacture, composition and ingredients, packaging, labeling, distribution, advertising, sale, quality and safety of food products, as well as the health and safety of our employees and the protection of the environment.
 
We are focused on developing a novel, proprietary three-dimensional bioprinter to deposit layers of cells (including stem cells and differentiated stem cells), scaffolding, and cell nutrients in a three-dimensional form of structured cultured meat. The cultured meat, in turn, will be produced by our customers.  Peace of Meat intends to produce cultured avian fat that is anticipated to be used as an ingredient, inter alia, in the production of finished cultured poultry. Neither we nor Peace of Meat intend to manufacture, distribute and sell branded cultured-meat end products for consumer consumption.
 
Peace of Meat is a Business-To-Business, or B2B, ingredient producer and will be subject to regulation by the U.S. Food and Drug Administration, or FDA, to the extent its products are introduced to the United States for use by a manufacturer to produce cultured meat or other food in the United States, and analogous foreign regulatory bodies elsewhere. In the United States, the FDA and the U.S. Department of Agriculture, or USDA, Food Safety and Inspection Service, or FSIS, share an ingredient approval process. The FDA determines the safety of substances and prescribes safe conditions of use.  The USDA-FSIS determines the efficacy and suitability of food ingredients in meat, poultry, and egg products. Thus, the USDA’s efficacy and suitability requirements will also apply to the extent the ingredients are destined for use in USDA-regulated meat and poultry products.
 
For the reasons discussed below, we ourselves do not expect to be directly regulated by the FDA for United States compliance purposes but will apply FDA’s food contact substance standards or analogous foreign regulations when developing our three-dimensional bioprinter. Specifically, we intend to license our production technology, as well as provide associated products and services to food processing and food retail companies through a B2B model. From a regulatory perspective, in the United States, we expect companies manufacturing finished cultured meat products to be subject to regulation by various government agencies, including the FDA, the USDA, the U.S. Federal Trade Commission, or FTC, Occupational Safety and Health Administration and the Environmental Protection Agency, as well as the requirements of various state and local agencies and laws, such as the California Safe Drinking Water and Toxic Enforcement Act of 1986. We likewise expect these products to be regulated by equivalent agencies outside the United States by various international regulatory bodies.

As the manufacturer of technology used to produce cultured meat, and consistent with the Federal Food, Drug and Cosmetic Act, Federal Meat Inspection Act, and Poultry Products Inspection Act, we believe we will not be directly regulated by the FDA or USDA. Rather, we believe the regulatory obligation falls on our customers — cultured meat producers — to ensure that all food produced using our technology is wholesome and not adulterated. Consistent with food industry norms, we expect that our customers will therefore request assurances from us that our products are suitable for their intended use from an FDA regulatory perspective. Therefore, we plan to apply FDA food safety standards when developing our three-dimensional bioprinter as a means of assuring our customers that our bioprinter is safe for its intended use and will not result in the production of adulterated food. In particular, we plan to apply applicable food contact substance requirements, such as those of the FDA, when developing its three-dimensional bioprinter as a means of assuring customers using the Company's technology that our bioprinter is safe for its intended use and will not result in the production of adulterated food. If we are unable to provide regulatory compliance assurance to our customers, we expect that our ability to license our production technology would be adversely impacted.

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The manufacturing of cultured meat is expected to be subject to extensive regulations internationally, with products subject to numerous food safety and other laws and regulations relating to the sourcing, manufacturing, composition and ingredients, storing, labeling, marketing, advertising and distribution of these products. In addition, enforcement of existing laws and regulations, changes in legal requirements and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results. In addition, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, or FCPA, and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to officials or other third parties for the purpose of obtaining or retaining business. While our policies mandate compliance with anti-bribery laws, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees, contractors or agents. Violations of these laws, or allegations of such violations, could disrupt our business and adversely impact our results of operations, cash flows and financial condition.
 
Any changes in, or changes in the interpretation of, applicable laws, regulations or policies of the USDA, state regulators or similar foreign regulatory authorities that relate to the use of the word “meat” or other similar words in connection with cultured meat products could adversely affect our business, prospects, results of operations or financial condition.
 
The USDA, state regulators or similar foreign regulatory authorities, such as Health Canada or the Canadian Food Inspection Agency, or CFIA, or authorities of the EU or the EU member states (e.g., European Food Safety Authority, or EFSA), could take action to impact our ability to use the term “meat” or similar words, such as “beef”, to describe the product our bioprinters will produce. In addition, a food may be deemed misbranded if its labeling is false or misleading in any particular way, and the USDA, CFIA, EFSA or other regulators could interpret the use of the term “meat” or any similar phrase(s) to describe our cultured meat products as false or misleading or likely to create an erroneous impression regarding their composition. In the U.S., USDA will be developing new labeling requirements for foods under its jurisdiction produced through cell culture technology as noted in an Advance Notice of Proposed Rulemaking, or ANPR, published in September 2021.  
 
Failure by our raw materials suppliers to comply with food safety, environmental or other laws and regulations, or with the specifications and requirements of our products, may disrupt our supply of products and adversely affect our business.
 
If our suppliers fail to comply with food safety, environmental or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted. In the event of actual or even alleged non-compliance, we might be forced to find an alternative supplier and we may be subject to lawsuits related to such non-compliance by our suppliers. As a result, our supply of raw materials could be disrupted or our costs could increase, which would adversely affect our business, results of operations and financial condition. The failure of any supplier to produce products that conform to our standards could adversely affect our reputation in the marketplace and result in economic loss. Additionally, actions we may take to mitigate the impact of any disruption or potential disruption in our supply of raw materials, including increasing inventory in anticipation of a potential supply or production interruption, may adversely affect our business, results of operations and financial condition.

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RISKS RELATED TO OUR INTELLECTUAL PROPERTY AND POTENTIAL LITIGATION
 
If we are unable to obtain and maintain effective patent rights for our products, we may not be able to compete effectively in our markets. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us.
 
Since September 2019, we have sought patent protection for certain of our products, systems, processes, designs and applications. Our success depends in large part on our ability to obtain, maintain, monitor and enforce patent and other intellectual property protection in the United States and in other countries with respect to our proprietary technology and new products.
 
We seek to protect our proprietary position and sustain our competitive advantage by filing patent applications in the United States and in other countries. Patent prosecution in the United States and the rest of the world is uncertain, expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner in all the necessary locations. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.
 
We have a growing portfolio of 14 provisional and non-provisional pending patent applications, with a robust pipeline. These are filed with the U.S. Patent and Trademark Office, or USPTO, the World Intellectual Property Organization, or WIPO, and when the time comes, in various patent offices around the world, such as Israel, China, Japan, Europe, Canada, and South Korea. Three of the pending patent applications were filed through the Paris Convention Treaty, or PCT. We cannot offer any assurances about which, if any of the pending patent applications will issue, the scope of protection of any such patent or whether any issued patents will be found invalid and/or unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of any new products that we may develop.
 
Further, there is no assurance that all potentially relevant prior art relating to our patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover our products, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, our patent applications and any future patents may not adequately protect our intellectual property, provide exclusivity for our new products, or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
 
If we cannot obtain and maintain effective patent rights for our products, we may not be able to compete effectively, and our business and results of operations would potentially be harmed.
 
If we are unable to maintain effective proprietary rights for our products, we may not be able to compete effectively in our markets.
 
In addition to the protection afforded by any patents currently owned and that may be granted, historically, we have relied on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes and helpful devices that are not easily known, knowable or easily ascertainable, and for which patent infringement is difficult to monitor and enforce and any other elements of our product development processes, that involve proprietary know-how, as well as information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data, trade secrets and intellectual property by maintaining physical security of our premises and physical and electronic security of our information technology systems, as well as implementing various standard operating procedures designed to maintain that integrity. Agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets and intellectual property may otherwise become known or be independently discovered by competitors.

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We cannot provide any assurances that our trade secrets and other confidential proprietary information will not be disclosed in violation of our confidentiality agreements or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Also, misappropriation or unauthorized and unavoidable disclosure of our trade secrets and intellectual property could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets and intellectual property are deemed inadequate, we may have insufficient recourse against third parties for misappropriating any trade secret.
 
Intellectual property rights of third parties could adversely affect our ability to successfully commercialize our products, and we might be required to litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.
 
At this stage, and in the future it is inherently difficult to conclusively assess our freedom to operate without infringing on third party rights. Our competitive position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or other third-party intellectual property rights are held to cover our products, systems and processes or elements thereof, or our manufacturing or uses relevant to our development plans. In such cases, we may be limited, or not be in a position to develop or commercialize products or our product candidates unless we successfully pursue litigation to nullify or invalidate the third party intellectual property right concerned, or enter into a license agreement with the intellectual property rights’ holder, if available on commercially reasonable terms. There may also be pending patent applications that should they result in issued patents, could be alleged to be infringed by our new products. If such an infringement claim should be brought and be successful, we may be required to pay substantial damages, royalties, be forced to abandon our new products or seek a license from any patent holders. No assurances can be given that a license will be available on commercially reasonable terms, if at all.
 
It is also possible that we have failed to identify relevant third party patents or applications. For example, U.S. patent applications filed before July 8, 2019 and certain U.S. patent applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Patent applications in the United States and elsewhere are published 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our new products or platform technology could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our platform technologies, our new products or the use of our new products. Third party intellectual property right holders may also actively bring infringement claims against us. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or marketing our new products. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing our new products that are held to be infringing. We might, if possible, also be forced to redesign our new products so that we no longer infringe the third party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.
 
Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.
 
Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing new products. As our industries expand and more patents are issued, the risk increases that our products may be subject to claims of infringement of the patent rights of third parties.

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Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, designs or methods of manufacture related to the use or manufacture of our products. There may be currently pending patent applications that may later result in issued patents that our products may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.
 
If any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for designs, or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.
 
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our products. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents.
 
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of any patents that may issue from our patent applications, or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. We therefore cannot be certain that we were the first to file the invention claimed in our owned and licensed patent or pending applications, or that we or our licensor were the first to file for patent protection of such inventions. Assuming all other requirements for patentability are met, in the United States prior to March 15, 2013, the first to make the claimed invention without undue delay in filing, is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act, or the Leahy-Smith Act, enacted on September 16, 2011, the United States has moved to a first to file system. The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and may also affect patent litigation. In general, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business and financial condition.
 
We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful.
 
Competitors may infringe our intellectual property. If we were to initiate legal proceedings against a third party to enforce a patent covering one of our new products, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Under the Leahy-Smith Act, the validity of U.S. patents may also be challenged in post-grant proceedings before the USPTO. The outcome following legal assertions of invalidity and unenforceability is unpredictable.

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Derivation proceedings initiated by third parties or brought by us may be necessary to determine the priority of inventions and/or their scope with respect to our patent or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our new products to market.
 
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our traded securities.
 
We may, in the future, be subject to claims that our employees, consultants, or independent contractors have wrongfully or unavoidably used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
 
We continue to employ individuals who were previously employed at our competitors or potential competitors. We have established standard operating procedures to try and ensure that our employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their work for us, but we may nevertheless be subject to claims that we or our employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employees’ former employers or other third parties. Litigation may result and be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
 
We may be subject to claims challenging the inventorship of our intellectual property.
 
We may be subject to claims that former employees, collaborators or other third parties have an interest in, or right to compensation, with respect to our current patent and patent applications, future patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our products. Litigation may be necessary to defend against these and other claims challenging inventorship or claiming the right to compensation. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
 
We may not be able to protect our intellectual property rights throughout the world.
 
Filing, prosecuting, and defending patents on products, as well as monitoring their infringement in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. 
 
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Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products. Future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
 
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our future patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to monitor and enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Our articles of association provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act.
 
Our articles of association 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 sole and exclusive forum for any claim asserting a cause of action arising under the Securities Act (for the avoidance of any doubt, such provision does not apply to any claim asserting a cause of action arising under the Exchange Act). Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both U.S. state and federal courts have jurisdiction to entertain such claims. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may increase the costs associated with such lawsuits, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of the articles of association inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. Any person or entity purchasing or otherwise acquiring any interest in our share capital shall be deemed to have notice of and to have consented to the choice of forum provisions of the articles of association described above. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.

RISKS RELATED TO OUR OPERATIONS IN ISRAEL
 
If there are significant shifts in the political, economic and military conditions in Israel, it could have an adverse impact on our operations.
 
Our corporate headquarters and research and development facilities are located in Israel. In addition, most 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 its neighboring countries. In recent years, these have included hostilities from Hezbollah in Lebanon and between Israel and Hamas in the Gaza Strip, which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities. In addition, Israel faces threats from the civil war in Syria and from Iran. Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although we expect that the Israeli government will cover the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that such government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred. Several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies, whether as a result of hostilities in the region or otherwise. Any such matters could adversely affect our operations and results of operations, and any losses or damages incurred by us as the result of such a conflict could have an adverse impact on our business.

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Furthermore, our operations could be disrupted by the obligations of our personnel to perform military service. Some of our employees based in Israel may be called upon to perform military reserve duty and, in emergency circumstances, may be called to immediate and unlimited active duty. Our operations could be disrupted by the absence of a significant number of employees due to military service, which could adversely impact our business and results of operations.
 
Because a substantial portion of our revenues is expected to be generated in currencies other than our functional currency, we will be exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition.
 
In the future, we expect that a substantial portion of our revenues will be generated in currencies other than our functional currency. Our functional currency, in which we currently maintain our financial records, is NIS, and our presentation currency, in which we report our financial results, is USD. The functional currency of Peace of Meat, in which it currently maintains its financial records, is Euros. As a result, our revenues for financial statement purposes might be negatively affected by fluctuations in the exchange rates of currencies in the countries in which our technologies may be licensed, and supplementary services provided and products sold.
 
Currency exchange controls may restrict our ability to utilize our cash flows.1
 
We are incorporated in Israel. Most of our executive officers and directors reside in Israel and most of our assets and the assets of these persons are located outside of the United States. It may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain, a judgment based on the civil liability provisions of the U.S. federal securities laws. Israeli courts may refuse hear a claim based on a violation of U.S. securities laws against us or any of our non-U.S. executive officers and directors because Israel may not be the most appropriate forum to bring such a claim.
 
Enforcing a U.S. judgment against us and our executive officers and directors, or asserting U.S. securities law claims in Israel, may be difficult.
 
We are incorporated in Israel. Most of our executive officers and directors reside in Israel and most of our assets and the assets of these persons are located outside of the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain, a judgment based on the civil liability provisions of the U.S. federal securities laws. Israeli courts may refuse hear a claim based on a violation of U.S. securities laws against us or any of our non-U.S. executive officers and directors because Israel may not be the most appropriate forum to bring such a claim.
 
In addition, even if an Israeli court agrees to hear such a claim, it may determine that Israeli, and not U.S., law is applicable to the claim. Under Israeli law, if U.S. law is found to be applicable to such a claim, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would be governed by Israeli law. There is little binding case law in Israel addressing these matters. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or any of our non-U.S. executive officers and directors.

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Moreover, an Israeli court will not enforce a non-Israeli judgment if (among other things) it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), or if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, or if it was obtained by fraud or in absence of due process, or if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel, at the time the foreign action was brought.

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.
 
If a foreign judgment is enforced by an Israeli court, it generally will be payable in Israeli currency, which can be converted into non-Israeli currency and transferred out of Israel. The usual practice in an action before an Israeli court to recover an amount in a non-Israeli currency is for the Israeli court to issue a judgment for the equivalent amount in Israeli currency at the rate of exchange in force on the date of the judgment, but the judgment debtor may make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily will be linked to the Israeli consumer price index, or Israeli CPI, plus interest at the annual statutory rate set by Israeli regulations prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rate fluctuations.
 
Our articles of association provide that unless we consent otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between the Company and its shareholders under the Companies Law and the Israeli Securities Law.
 
The competent courts of Tel Aviv, Israel shall, unless we consent otherwise in writing, be the exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law, 1968, or the Israeli Securities Law. This exclusive forum provision is intended to apply to claims arising under Israeli law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction. Such exclusive forum provision in the articles of association will not relieve us of our duties to comply with federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these laws, rules and regulations. This exclusive forum provision may limit a shareholders ability to bring a claim in a judicial forum of its choosing for disputes us Company or our directors or other employees which may discourage lawsuits against us, our directors, officers and employees.
 
Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.
 
Since we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our articles of association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders of U.S. corporations. In particular, each of our shareholders has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations toward us and other shareholders and to refrain from abusing its power in, among other things, voting at shareholder meetings on certain matters, such as an amendment to our articles of association, an increase of our authorized share capital, a merger and approval of related party transactions that require shareholder approval. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine the outcome of a shareholders vote or to appoint or prevent the appointment of an office holder has a duty to act in fairness toward us. Israeli law does not clearly define the substance of these duties. There is limited case law available to assist in understanding the implications of these provisions that govern shareholder behavior.

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Provisions of Israeli corporate and tax law may deter acquisition transactions.
 
Israeli corporate 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 full tender offer, which as a result would result in the acquirer to hold over 90% of the target company’s voting rights or the target company’s issued and outstanding share capital (or of a class thereof), requires the acquirer by the Israeli Companies Law, 1999, or the Companies Law, to make a tender offer to all of the company’s shareholders for the purchase of all of the issued and outstanding shares of the company (or the applicable class). The full tender offer can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital (or the applicable class) and if a majority of the offerees that do not have a personal interest in the tender offer; unless, the shareholders who did not accept the tender offer hold less than 2% of the issued and outstanding share capital of the company (or of the applicable class), all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following date of acceptance of the tender offer, , and petition an Israeli court to determine whether the tender offer was for less than fair value and whether the fair value should be paid as determined by the court. However, an offeror may provide in the offer that a shareholder who accepted the offer will not be entitled to petition the court for appraisal rights as described in the preceding sentence, as long as the offeror and the company disclosed the information required by law in connection with the full tender offer. If the full tender offer was not accepted in accordance with any of the above alternatives, the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company’s voting rights or the company’s issued and outstanding share capital (or of the applicable class) from shareholders who accepted the tender offer. Shares purchased in contradiction to the full tender offer rules under the Companies Law will have no rights and will become dormant shares.
 
Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. These provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.2

Our articles of association and Israeli law could prevent a takeover that shareholders consider favorable and could also reduce the market price of our ADSs.
 
Certain provisions of Israeli law and our articles of association could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or for our shareholders to elect different individuals to its board of directors, even if doing so would be beneficial to its shareholders, and may limit the price that investors may be willing to pay in the future for the our ADSs. Among other things:
 
 
Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;

 
Israeli corporate law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions;

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Israeli corporate law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;

 
our articles of association divide our directors into three classes, each of which is elected once every three years;

 
our articles of association generally require a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting on the matter at a general meeting of shareholders (referred to as simple majority), and solely the amendment of the provision relating to the removal of members of our board of directors, require a vote of the holders of 65% of our outstanding ordinary shares entitled to vote at a general meeting;

 
our articles of association provide that director vacancies may be filled by our board of directors.

RISKS RELATED TO OWNERSHIP OF THE ADSs AND THIS OFFERING
 
You will experience immediate dilution in book value of any ADSs you purchase. 
 
Because the price per share being offered is substantially higher than our net tangible book value per ADS, you will suffer substantial dilution in the net tangible book value of any ADSs you purchase in this offering. After giving effect to the sale by us of ADSs in this offering, based on an assumed public offering price of $       per share, which is the last reported sale price of our ADSs on Nasdaq on         2022, and after deducting underwriting discount and commission and offering expenses payable by us, our as adjusted net tangible book value of our ADSs would be approximately $       , or approximately $      per ADS, as of June 30, 2022. If you purchase shares in this offering, you will suffer immediate and substantial dilution of our as adjusted net tangible book value of approximately $       per ADS. To the extent outstanding options, warrants or offered Pre-Funded Warrants are exercised, you will incur further dilution. See “Dilution” on page 44 for a more detailed discussion of the dilution you will incur in connection with this offering.
 
The ADS price may be volatile, and you may lose all or part of your investment.
 
The market price of the ADSs could be highly volatile and may fluctuate substantially, including downward, as a result of many factors, including:


changes in the prices of our raw materials or the products manufactured in factories using our technologies;


the trading volume of the ADSs;


the effects of the COVID-19 pandemic;


general economic, market and political conditions, including negative effects on consumer confidence and spending levels that could indirectly affect our results of operations;


actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results;


announcements by us or our competitors of innovations, other significant business developments, changes in distributor relationships, acquisitions or expansion plans;


announcement by competitors or new market entrants of their entry into or exit from the alternative protein market;


overall conditions in our industry and the markets in which we intend to operate;

34



market conditions or trends in the packaged food sales industry that could indirectly affect our results of operations;


addition or loss of significant customers or other developments with respect to significant customers;


adverse developments concerning our manufacturers and suppliers;


changes in laws or regulations applicable to our products or business;


our ability to effectively manage our growth and market expectations with respect to our growth, including relative to our competitors;


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


announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;


additions or departures of key personnel;


competition from existing products or new products that may emerge;


issuance of new or updated research or reports about us or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;


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


our failure to meet or exceed the estimates and projections of the investment community or that we may otherwise provide to the public;


fluctuations in the valuation of companies perceived by investors to be comparable to us;


disputes or other developments related to proprietary rights, including patents, and our ability to obtain intellectual property protection for our products;


litigation or regulatory matters;


announcement or expectation of additional financing efforts;


our cash position;


sales and short-selling of the ADSs;


our issuance of equity or debt;


changes in accounting practices;


ineffectiveness of our internal controls;


negative media or marketing campaigns undertaken by our competitors or lobbyists supporting the conventional meat industry;


the public’s response to publicity relating to the health aspects or nutritional value of products to be manufactured in factories using our technologies; and


other events or factors, many of which are beyond our control.

35


In addition, the stock markets have experienced extreme price and volume fluctuations. Broad market and industry factors may materially harm the market price of the ADSs, regardless of our operating performance. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes, tariffs, international currency fluctuations, or the effects of disease outbreaks or pandemics (such as the COVID-19 pandemic), may negatively impact the market price of the ADSs. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company. If we were involved in any similar litigation, we could incur substantial costs and our management’s attention and resources could be diverted.

The Pre-Funded Warrants and Warrants are speculative in nature.
 
Except as otherwise set forth therein, the pre-funded warrants and warrants offered in this offering do not confer any rights of ADS ownership on their holders, such as voting rights, but rather merely represent the right to acquire ADSs at a fixed price. Specifically with respect to the warrants, commencing on the date of issuance, holders of the warrants may exercise their right to acquire ordinary shares and pay an exercise price of $          per ADS, prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value. There can be no assurance that the market price of our ADSs will continue to equal or exceed the exercise price of the warrants offered by this prospectus. In the event that our ADS price does not exceed the exercise price of such warrants during the period when such warrants are exercisable, the warrants may not have any value. In addition, the warrants contain a beneficial ownership limitation such that a holder of a warrant with a 4.99% beneficial ownership limitation would not be able to exercise the warrant for an amount in excess of the beneficial ownership limitation unless such holder delivers a notice to us increasing the beneficial ownership limitation to up to 9.99%, which notice shall only take effect following 61 days after such notice is delivered, and a holder of a warrant subject to a 9.99% beneficial limitation may not increase the beneficial ownership limitation at all.
 
Specifically with respect to the Pre-Funded Warrants, commencing on the date of issuance, holders of the Pre-Funded Warrants may exercise their right to acquire ADSs at any time until exercised in full and pay an exercise price per ADS of $0.001, subject to adjustment upon certain events. If a purchaser of Pre-Funded Warrants does not exercise the Pre-Funded Warrants then such purchaser would have pre-paid the aggregate exercise price less the nominal exercise price without having received the underlying ADSs and under the terms of the Pre-Funded Warrants, a holder of Pre-Funded Warrants shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any reason whatsoever. In addition, although the Pre-Funded Warrants are designed to allow a purchaser to acquire more than 4.99%. (or, at the election of the purchaser, 9.99%) of our outstanding ADSs immediately following consummation of the offering notwithstanding the beneficial ownership limitation, if a purchaser purchases Pre-Funded Warrants that would cause the purchaser to exceed the beneficial ownership limitation, then (i) a holder of Pre-Funded Warrants subject to a 4.99% beneficial ownership limitation would not be able to exercise the Pre-Funded Warrants for an amount in excess of the beneficial ownership limitation unless such purchaser delivers a notice to us increasing the beneficial ownership limitation to up to 9.99%, which notice shall only take effect following 61 days after such notice is delivered, and (ii) a holder of Pre-Funded Warrants subject to a 9.99% beneficial limitation may not increase the beneficial ownership limitation at all.
 
There is no established market for the Warrants and Pre-Funded Warrants being offered in this offering.
 
There is no established trading market for the Warrants and Pre-Funded Warrants offered in this offering. We do not intend to apply for listing of the Warrants and Pre-Funded Warrants on any securities exchange or other nationally recognized trading system.
 
Due to certain provisions contained in our Warrants, the Warrants and the Pre-Funded Warrants will be treated as a derivative liability, which could cause us to recognize certain adverse changes to our financial statements. Such accounting treatment may also affect the trading price of our Securities.
 
Due to certain provisions contained in our Warrants and Pre-Funded Warrants offered in this offering, our Warrants and Pre-Funded Warrants will be treated as a derivative liability and we will be required to record the fair value of each Warrant as a liability. As a result, for each reporting period, we will be required to determine the fair value of each Warrant and record the change in the value of the Warrants from the prior reporting period as a gain or a loss on our income statement, which will change the value of the liability for the Warrants on our balance sheet. The fair value of our Warrants will be determined by us based, in part, upon a valuation report obtained from an independent third party valuation firm. This accounting treatment could cause the market to react negatively to our financial performance, adversely affect the trading prices of our Securities and adversely affect our shareholders’ equity necessary to maintain our listing on the Nasdaq.

We have broad discretion as to the use of the net proceeds from this offering and may not use such proceeds effectively.
 
We currently intend to use the net proceeds from this offering to develop commercial technologies to manufacture alternative foods, including potential acquisitions of other companies whose technologies are complementary or synergistic to our own, such as our purchase of Peace of Meat, as described herein in “Business”, and for general corporate purposes, including working capital requirements. For more information, see “Use of Proceeds.” However, our management will have broad discretion in the application of the net proceeds. Our shareholders may not agree with the manner in which our management chooses to allocate the net proceeds from this offering. The failure by our management to apply these funds effectively could have an adverse impact on our business, financial condition and results of operation. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income.

If equity research analysts do not publish research or reports about our business or if they issue inaccurate or unfavorable commentary or downgrade the ADSs, the price of the ADSs and trading volume could decline.
 
The trading market for the ADSs depends in part on the research and reports that industry or securities analysts publish about us or our business. If one or more of the analysts who cover us ceases coverage of our company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the price of the ADSs or their trading volume to decline. Moreover, if any of the analysts who cover us downgrade the ADSs or issue an adverse or misleading opinion regarding us, our business model or our stock performance, or if our operating results fail to meet the expectations of the investor community, the price of the ADSs could decline.

This offering may cause the trading price of our ADSs to decrease.
 
The price per ADS, together with the number of ADSs we propose to issue and ultimately will issue if this offering is completed, may result in an immediate decrease in the market price of our ADSs. This decrease may continue after the completion of this offering.

We have never paid dividends on our share capital and we do not intend to pay dividends for the foreseeable future.
 
We have never declared or paid any dividends on our share capital and do not intend to pay any dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development and growth of our business and for general corporate purposes. Accordingly, any gains from an investment in the ADSs will depend on price appreciation of the ADSs, which may never occur. In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to certain Israeli withholding taxes.

36

 
ADS holders may not receive the same distributions or dividends as those we make to the holders of our Ordinary Shares, and, in some limited circumstances, they may not receive dividends or other distributions on our Ordinary Shares and may not receive any value for them, if it is illegal or impractical to make them available.
 
The depositary for the ADSs has agreed to pay to ADS holders the cash dividends or other distributions it or the custodian receives on Ordinary Shares or other deposited securities underlying the ADSs, after deducting its fees and expenses. ADS holders will receive these distributions in proportion to the number of Ordinary Shares their ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act, but that are not properly registered or distributed under an applicable exemption from registration. In addition, conversion into U.S. dollars from foreign currency that was part of a dividend made in respect of deposited ordinary shares may require the approval or license of, or a filing with, any government or agency thereof, which may be unobtainable. In these cases, the depositary may determine not to distribute such property and hold it as “deposited securities” or may seek to affect a substitute dividend or distribution, including net cash proceeds from the sale of the dividends that the depositary deems an equitable and practicable substitute. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. In addition, the depositary may deduct from such dividends or distributions its fees and may withhold an amount on account of taxes or other governmental charges to the extent the depositary believes it is required to make such withholding. These restrictions may cause a material decline in the value of the ADSs.
 
ADS holders do not have the same rights as holders of our Ordinary Shares.
 
ADS holders do not have the same rights as holders of our Ordinary Shares.  For example, ADS holders may not attend shareholders’ meetings or directly exercise the voting rights attaching to the ordinary shares underlying their ADSs. ADS holders may vote only by instructing the depositary to vote on their behalf.  If we request the depositary to solicit voting instructions from ADS holders (which we are not required to do), the depositary will notify ADS holders of a shareholders’ meeting and send or make voting materials available to them. Those materials will describe the matters to be voted on and explain how ADS holders may instruct the depositary how to vote.  For instructions to be valid, they must reach the depositary by a date set by the depositary. The depositary will try, as far as practical, subject to the laws of Israel and the provisions of our articles of association or similar documents, to vote or to have its agents vote the deposited ordinary shares as instructed by ADS holders.  If we do not request the depositary to solicit voting instructions from ADS holders, they can still send voting instructions, and, in that case, the depositary may try to vote as they instruct, but it is not required to do so.  Except by instructing the depositary as described above, ADS holders won’t be able to exercise voting rights unless they surrender their ADSs and withdraw the ordinary shares.  However, they may not know about the meeting enough in advance to withdraw the ordinary shares.  We cannot assure ADS holders that they will receive the voting materials in time to ensure that they can instruct the depositary to vote their ordinary shares.  In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions.  This means that ADS holders may not be able to exercise voting rights and there may be nothing they can do if their ordinary shares are not voted as they requested.  In addition, ADS holders have no right to call a shareholders’ meeting.
 
ADS holders may be subject to limitations on transfer of their ADSs.
 
ADSs will be transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, under any provision of the deposit agreement, or for any other reason in accordance with the terms of the deposit agreement.

37

 
As a foreign private issuer whose ADSs are listed on Nasdaq, we follow certain home country corporate governance practices instead of certain Nasdaq requirements. We are not subject to U.S. proxy rules and are exempt from certain Exchange Act reporting requirements. If we were to lose our foreign private issuer status, our costs to modify our practices and maintain compliance under U.S. securities laws and Nasdaq rules would be significantly higher.
 
We are a foreign private issuer and are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. We are permitted to follow certain home country corporate governance practices instead of certain requirements of the rules of Nasdaq. As permitted under the Companies Law, pursuant to our articles of association, for as so long as we qualify to use the forms of a foreign private issuer, the quorum for an ordinary meeting of shareholders shall be the presence of at least two shareholders present in person, by proxy or by a voting instrument, who hold at least 25% of the voting power of our shares (and in an adjourned meeting, with some exceptions, a minimum of one shareholder) instead of 33 1⁄3% of our issued share capital as otherwise required under the Nasdaq corporate governance rules. We may also adopt and approve material changes to equity incentive plans in accordance with the Companies Law, which does not impose a requirement of shareholder approval for such actions. In addition, we follow Israeli corporate governance practice instead of the Nasdaq requirements to obtain shareholder approval for certain dilutive events (such as issuances that will result in a change of control, certain transactions other than a public offering involving issuances of a 20% or greater interest in us and certain acquisitions of the stock or assets of another company). Additionally, while the Nasdaq rules require that “independent directors,” as defined in the Nasdaq rules, must have regularly scheduled meetings at which only “independent directors” are present, Israeli law does not require, nor do our independent directors necessarily conduct, regularly scheduled meetings at which only they are present. Accordingly, our shareholders may be afforded less protection than what is provided under the Nasdaq corporate governance rules to investors in U.S. domestic issuers. See “Corporate Governance.”
 
Additionally, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. Furthermore, although under regulations promulgated under the Companies Law, as an Israeli public company listed on Nasdaq, we are required to disclose the compensation of our five most highly compensated officers on an individual basis, this disclosure may not be as extensive as that required of U.S. domestic reporting companies. In addition, we are not required under the Exchange Act to file current reports and quarterly reports, including financial statements, with the SEC as frequently or as promptly as U.S. domestic reporting companies whose securities are registered under the Exchange Act. Moreover, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information. These exemptions and leniencies reduce the frequency and scope of information and protections available to ADS holders in comparison to those applicable to U.S. domestic reporting companies.
 
If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers. We would lose our foreign private issuer status if a majority of our shares are owned by U.S. residents and a majority of our directors or executive officers are U.S. citizens or residents or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may also be required to modify certain of our policies to comply with accepted governance practices associated with U.S. domestic issuers and we would lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers. Such modifications and subsequent compliance would cause us to incur significant legal, accounting and other expenses that we would not incur as a foreign private issuer.

38

 
If we are a “passive foreign investment company” for U.S. federal income tax purposes, there may be adverse U.S. federal income tax consequences to U.S. investors
 
Based on our income and assets, we believe that we should be treated as a PFIC for the preceding taxable year. However, the determination of our PFIC status is made annually based on the factual tests described below. Consequently, while we may be a PFIC in future years, we cannot estimate with certainty at this stage whether or not we are likely to be treated as a PFIC in the current taxable year or any future taxable years. Generally, if, for any taxable year, at least 75 percent of our gross income is “passive income” or at least 50 percent of our gross assets during the taxable year (based on the average of the fair market values of the assets determined at the end of each quarterly period) are assets that produce or are held for the production of passive income, we will be characterized as a PFIC for U.S. federal income tax purposes. Passive income for this purpose generally includes, among other things, dividends, interest, rents, royalties, gains from commodities and securities transactions, and gains from assets that produce passive income. However, rents and royalties received from unrelated parties in connection with the active conduct of a trade or business should not be considered passive income for purposes of the PFIC test. For example, if we were to be characterized as a PFIC for U.S. federal income tax purposes in any taxable year during which a U.S. Holder (as defined in “Taxation — Material United States federal income tax considerations”) holds ordinary shares or ADSs, such U.S. Holder could be subject to additional taxes and interest charges upon certain distributions by us and any gain recognized on a sale, exchange or other disposition of our shares, whether or not we continue to be characterized as a PFIC. Certain adverse consequences of PFIC status can be mitigated if a U.S. Holder makes a “mark to market” election or an election to treat us as a qualified electing fund, or QEF. Upon request, we expect to provide the information necessary for U.S. Holders to make “qualified electing fund elections” if we are classified as a PFIC. See “Taxation—Passive foreign investment company considerations.”
 
Whether we are a PFIC for any taxable year will depend on the composition of our income and the composition and value of our assets from time to time. Each U.S. Holder is strongly urged to consult its tax advisor regarding these issues and any available elections to mitigate such tax consequences.
 
If we are a controlled foreign corporation, there could be adverse U.S. federal income tax consequences to certain U.S. Holders.
 
Each “Ten Percent Shareholder” (as defined below) in a non-U.S. corporation that is classified as a “controlled foreign corporation,” or a CFC, for U.S. federal income tax purposes generally is required to include in income for U.S. federal tax purposes such Ten Percent Shareholder’s pro rata share of the CFC’s “Subpart F income,” “tested income” and investment of earnings in U.S. property, even if the CFC has made no distributions to its shareholders. Subpart F income generally includes dividends, interest, rents, royalties, gains from the sale of securities and income from certain transactions with related parties. In addition, a Ten Percent Shareholder that realizes gain from the sale or exchange of shares in a CFC may be required to classify a portion of such gain as dividend income rather than capital gain. A non-U.S. corporation generally will be classified as a CFC for U.S. federal income tax purposes if Ten Percent Shareholders own, directly or indirectly, more than 50% of either the total combined voting power of all classes of stock of such corporation entitled to vote or of the total value of the stock of such corporation. A “Ten Percent Shareholder” is a United States person (as defined by the Internal Revenue Code of 1986, as amended, or the Code) who owns or is considered to own 10% or more of the value or total combined voting power of all classes of stock entitled to vote of such corporation.
 
The determination of CFC status is complex and includes complex attribution rules. A non-corporate Ten Percent Shareholder with respect to a CFC generally will not be allowed certain tax deductions or foreign tax credits generally available to a corporate Ten Percent Shareholder. Failure to comply with CFC reporting obligations may subject a Ten Percent Shareholder to significant monetary penalties. We cannot provide any assurances that we will furnish to any Ten Percent Shareholder information that may be necessary to comply with the reporting and tax paying obligations applicable under the CFC rules of the Code. U.S. Holders should consult their own tax advisors with respect to the potential adverse U.S. tax consequences of becoming a Ten Percent Shareholder in a CFC.

39


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This prospectus contains statements that are forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies, plans and prospects. Forward-looking statements can be identified based on our use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should,” “anticipate,” “could,” “might,” “seek,” “target,” “will,” “project,” “forecast,” “continue” or their negatives or variations of these words or other comparable words, or by the fact that these statements do not relate strictly to historical matters. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, any of the following:


our estimates regarding our expenses, future revenue, capital requirements and needs for additional financing;

our expectations regarding the success of our cultured meat manufacturing technologies we are developing, which will require significant additional work before we can potentially launch commercial sales;

our research and development activities associated with technologies for cultured meat manufacturing, including three-dimensional meat production, which involves a lengthy and complex process;

our expectations regarding the timing for the potential commercial launch of our cultured meat technologies;

our ability to successfully manage our planned growth, including with respect to our recent acquisition of Peace of Meat, and any future acquisitions, joint ventures, collaborations or similar transactions;

the potential business or economic disruptions caused by the COVID-19 pandemic;

the competitiveness of the market for our cultured meat technologies;

our ability to enforce our intellectual property rights and to operate our business without infringing, misappropriating, or otherwise violating the intellectual property rights and proprietary technology of third parties;

our ability to predict and timely respond to preferences for alternative proteins and cultured meats and new trends;

our ability to predict and timely respond to preferences for alternative proteins and cultured meats and new trends; and

other risks and uncertainties, including those listed under the heading “Risk Factors” in this prospectus and our Annual Report on Form 20-F for the year ended December 31, 2021, filed with the SEC on March 24, 2022.

We believe that our forward-looking statements are reasonable; however, these statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors (including those identified above) 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 describe and/or refer to many of these risks in greater detail under the heading “Risk Factors” in this prospectus. Given these uncertainties, you should not rely upon forward-looking statements as guarantees of future outcomes.

          All forward-looking statements contained herein and in any of the foregoing documents speak only as of the date hereof or of such documents, respectively, and are expressly qualified in their entirety by the cautionary statements contained within the “Risk Factors” section of those documents. We do not undertake to update or revise forward-looking statements to reflect events or circumstances that arise after the date on which such statements are made or to reflect the occurrence of unanticipated events, except as required by law.

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USE OF PROCEEDS

We estimate that the net proceeds from this offering will be approximately $       million (approximately $      million if the underwriters exercise their over-allotment option in full), assuming the sale of         ADSs and no sale of any Pre-Funded Warrants, based upon an assumed public offering price of $        per ADS, the last reported sale price of our ADSs on Nasdaq on       , 2022, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $0.10 increase (decrease) in the assumed public offering price would increase (decrease) the net proceeds we receive from this offering by $       , assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses. Each increase (decrease) of 100,000 in the number of shares we are offering would increase (decrease) the net proceeds to us from this offering by approximately $       , assuming no change in the assumed public offering price per ADS.

We currently intend to use the net proceeds from this offering for general corporate purposes, which may include operating expenses, working capital, future acquisitions or share repurchases, general capital expenditures and satisfaction of debt obligations. We have not determined the amount of net proceeds to be used specifically for such purposes. As a result, our management will retain broad discretion in the allocation and use of the net proceeds of this offering, and investors will be relying on the judgment of our management with regard to the use of these net proceeds. The precise amount use and timing of the application of such proceeds will depend upon our funding requirements and the availability and cost of other capital. We have no current agreements, commitments or understandings for any material acquisitions or licenses of any products, businesses or technologies that are definitive or probable to close. Pending application of the net proceeds for the purposes as described above, we expect to invest the net proceeds in short-term, interest-bearing securities, investment grade securities, certificates of deposit or direct or guaranteed obligations of the U.S. government.

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our ADSs and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements and other factors that our board of directors considers to be relevant.

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2022:

 
on an actual basis; and

 
on an as adjusted basis, to give effect to the assumed issuance and sale in this offering of          ADSs representing         Ordinary Shares at the assumed public offering price of $       per ADS, the last reported sales price of our ADSs on Nasdaq on       , 2022, and assuming no sale of any Pre-Funded Warrants, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The information set forth in the following table should be read in conjunction with, and is qualified in its entirety by, reference to our audited and unaudited financial statements and the notes thereto included elsewhere in this prospectus.

   
As of September 30, 2022
 
   
Actual
   
As adjusted
 
   
(U.S. Dollars, in thousands)
 
Cash and cash equivalents
   
11,203
         
Shareholders’ equity:
               
Equity:
               
Ordinary Shares, no per share: 1,000,000,000 ordinary shares authorized (actual and as adjusted); 135,767,137 Ordinary Shares issued and outstanding (actual);  Ordinary Shares outstanding (as adjusted)
               
Share capital and premium on shares
   
(72,231
)
       
Capital reserves
   
(3,581
)
       
Currency translation differences reserve
   
2,771
         
Accumulated deficit
   
48,602
         
Total shareholders’ capital equity
   
(24,439
)
       

   
Each $0.10 increase (decrease) in the assumed public offering price of $       per share, which is the last reported sale price of our ADSs on Nasdaq on        , 2022, would increase (decrease) cash and cash equivalents and short term bank deposits by $       , and our total shareholders’ equity on an as adjusted basis by approximately $        , assuming the number of 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.
 
   
Each ​,000 increase (decrease) in the number of ADSs offered in this offering would increase or decrease cash and cash equivalents and short term bank deposits by approximately $        , and our total shareholders’ equity on an as adjusted basis by approximately $       , assuming that the price per ADS for the offering remains at $       , which is the last reported sales price of our ADSs on Nasdaq on        , 2022, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The outstanding share information in the table above is based on Ordinary Shares representable by 13,576,714 ADSs outstanding as of September 30, 2022 and excludes:


The outstanding share information in the table above is based on ordinary shares representable by 13,576,714 ADSs outstanding as of September 30, 2022 and excludes:

 
1,156,835 ADSs issuable upon the exercise of options and restricted share units to purchase ADSs outstanding as of November 22, 2022, at a weighted average exercise price of $7.46 per ADS;

 
a total of 1,021,537 of our ADSs reserved for future issuance under our 2022 Share Incentive Plan, as of November 22, 2022;

 
704,454 ADSs issuable upon exercise of options and restricted share units outstanding as of November 22, 2022, at an exercise price to be determined at the time of exercise using a pre-determined formula;

 
4,486,562 ADSs issuable upon the exercise of investor warrants to purchase ADSs outstanding as of November 22, 2022, at a weighted average exercise price of $7.00 per ADS, which warrants are expected to remain outstanding at the consummation of this offering;

 
140,747 ADSs issuable upon exercise of milestone-based rights to investors that had been granted and remained outstanding as of November 22, 2022, with no exercise price;

 
no sale of Pre-Funded Warrants in this offering;

 
no exercise by the underwriters of their over-allotment option; and

 
no exercise of Underwriter Warrants.

43


DILUTION

If you invest in our Securities in this offering, your ownership interest will be immediately diluted to the extent of the difference between the public offering price per ADS and/or Pre-Funded Warrant and the as adjusted net tangible book value per ADS after this offering.

Our net tangible book value as of September 30, 2022, was approximately $12.7 million, or approximately $0.94 per ADS. Our net tangible book value per ADS represents the amount of our total tangible assets less total liabilities divided by the total number of our Ordinary Shares outstanding as of September 30, 2022, and multiplying such amount by 10 (one ADS represents 10 Ordinary Shares).

After giving effect to the issuance and sale of the ADSs offered by us in this offering at an assumed public offering price of $      per ADS, the last reported sale price of our ADSs on Nasdaq on       , 2022, and assuming no exercise of the underwriters’ option to purchase additional ADSs (and no sale of any Pre-Funded Warrants in this offering), and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value on September 30, 2022, would have been approximately $      million, or $      per ADS. This represents an immediate dilution in the as adjusted net tangible book value of $      per ADS to investors purchasing our ADSs in this offering.

The following table illustrates this calculation on a per share basis:

Assumed offering price per ADS
         
$
   
                 
Net tangible book value per ADS as of September 30, 2022
 
$
           
Increase in net tangible book value per ADS attributable to the offering
 
$
           
                 
As-adjusted net tangible book value per ADS after giving effect to the offering
         
$
   
                 
Dilution in net tangible book value per ADS to new investors
         
$
   

The outstanding share information in the table above is based on ordinary shares representable by 13,576,714 ADSs outstanding as of September 30, 2022 and excludes:

 
1,156,835 ADSs issuable upon the exercise of options and restricted share units to purchase ADSs outstanding as of November 22, 2022, at a weighted average exercise price of $7.46 per ADS;

 
a total of 1,021,537 of our ADSs reserved for future issuance under our 2022 Share Incentive Plan, as of November  22, 2022;

 
704,454 ADSs issuable upon exercise of options and restricted share units outstanding as of November  22, 2022, at an exercise price to be determined at the time of exercise using a pre-determined formula;

 
4,486,562 ADSs issuable upon the exercise of investor warrants to purchase ADSs outstanding as of November 22, 2022, at a weighted average exercise price of $7.00 per ADS, which warrants are expected to remain outstanding at the consummation of this offering;

 
140,747 ADSs issuable upon exercise of milestone-based rights to investors that had been granted and remained outstanding as of November 22, 2022, with no exercise price;

 
no sale of Pre-Funded Warrants in this offering;

   
no exercise by the underwriters of their over-allotment option; and

 
no exercise of Underwriter Warrants.

The above illustration of dilution per share to investors participating in this offering assumes no exercise of outstanding options to purchase our Ordinary Shares or outstanding warrants to purchase our ADSs or Ordinary Shares. To the extent outstanding options or warrants are exercised, you may incur further dilution.

A $0.10 increase (decrease) in the assumed public offering price of $       per ADS, which is the last reported sale price of our ADSs on Nasdaq on       , 2022, would increase (decrease) our net tangible book value per ADS after this offering by $       and the dilution per ADS to new investors by $       , assuming the number of ADSs 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. We may also increase or decrease the number of ADSs we are offering.

An increase (decrease) of 100,000 ADS offered by us, would increase (decrease) our net tangible book value after this offering by approximately $       and would decrease (increase) the net tangible book value per ADS after this offering by $      per ADS and would increase (decrease) the dilution per ADS to new investors by $        , after deducting estimated placement agent fees and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual public offering price and other terms of the offering determined at pricing.

44


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

 You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this prospectus. The following discussion is based on our financial information prepared in accordance with IFRS as issued by IASB, which may differ in material respects from generally accepted accounting principles in other jurisdictions, including U.S. generally accepted accounting principles, or GAAP. Some of the information contained in this discussion and analysis, particularly with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.  You should read “Risk Factors” above for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For a discussion of our results of operations for the year ended December 31, 2020, including a comparison between 2020 and 2019, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Year Ended December 31, 2020 Compared to Year Ended December 31, 2019” in our annual report on Form 20-F filed on April 21, 2021.

Operating Results
 
Revenues

To date, we have not generated any revenue since we commenced our cultured meat operations.  We do not expect to receive any revenue unless and until we complete development of and successfully commence out-licensing our technologies, or until we receive revenue from a collaboration or other partnership such as a co-development agreement, or the acquisition of a company that generates revenues.  There can be no assurance that we will be successful in developing or ultimately commercializing our technologies, in establishing revenue-generating collaborations or acquiring revenue-generating companies.

Research and Development Expenses

Research and development activities are our primary focus. We do not believe that it is possible at this time to accurately project total expenses required for us to reach the point at which we will be ready to out-license our technologies. Development timelines, the probability of success and development costs can differ materially from expectations. In addition, we cannot forecast whether and when collaboration arrangements will be entered into, if at all, and to what degree such arrangements would affect our development plans and capital requirements. We expect our research and development expenses to increase over the next several years as our development program progresses. We would also expect to incur increased research and development expenses if we were to identify and develop additional technologies.
 
Research and development expenses include the following:


employee-related expenses, such as salaries and share-based compensation;


expenses relating to outsourced and contracted services, such as external laboratories and consulting, research and advisory services;


supply and development costs;


expenses, such as materials, incurred in operating our laboratories and equipment; and


costs associated with regulatory compliance.
 
We recognize research and development expenses as we incur them.

45


Marketing Expenses
 
Marketing expenses consist primarily of professional services, personnel costs, including share-based compensation related to employees, and business development, public relations and investor relations services.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs, including share-based compensation related to directors and employees, corporate costs (such as insurance), facility costs, patent application and maintenance expenses, and professional service costs, including legal, accounting, audit, finance and human resource services, and other consulting fees.

Public Listing Expenses

Based on the reverse acquisition method, the assets and liabilities of MeaTech (the acquirer for accounting purposes) were recognized in our financial statements at their book value at the date of closing of the merger in January 2020. The acquisition consideration, in the amount of $11.4 million, was set based on the closing price of Ophectra's shares on the TASE on the date of closing of the merger, while any surplus proceeds of the acquisition over the fair value of Ophectra’s net assets (excluding its net assets that were transferred to a settlement in connection with the merger with Ophectra) were recognized in profit or loss as public listing expenses in the amount of $10.2 million, that did not affect cash flow.
 
Finance Expenses (income), Net
 
Finance expenses (income), net, consisted primarily of a change in the fair value of financial instruments mandatorily measured at fair value through profit or loss, and exchange rate fluctuations. 
 
Income Taxes

We have yet to generate taxable income. As of September 30, 2022, our operating tax loss carryforwards were approximately $24.3 million.

Results of Operations

Our results of operations have varied in the past and can be expected to vary in the future due to numerous factors.  We believe that period-to-period comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of future performance. 
 
46



Below is a summary of our results of operations for the periods indicated (in thousands):

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

 
 
Year Ended December 31,
 
 
 
2021
 
 
2020
 
USD in thousands
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
Research and development expenses          
 
$
7,594
 
 
$
2,491
 
Marketing expenses          
 
 
1,628
 
 
 
506
 
General and administrative expenses          
 
 
8,010
 
 
 
5,380
 
Public listing expenses          
 
 
-
 
 
 
10,164
 
Loss from operations          
 
$
17,232
 
 
$
18,541
 
Finance income          
 
 
509
 
 
 
110
 
Finance expense          
 
 
1,299
 
 
 
93
 
 
 
 
 
 
 
 
 
 
Finance expense (income), net          
 
 
790
 
 
 
(17
)
Net loss          
 
$
18,022
 
 
$
18,524
 

Research and development expenses

Research and development expenses increased by approximately $5.1 million, or 205%, to approximately $7.6 million for the year ended December 31, 2021, compared to $2.5 million for year ended December 31, 2020. The increase resulted mainly from payroll expenses, materials and professional services expenditures related to our cultured meat research and development operations.  The increase reflects Steakholder Food’s growing investment in research and development as we achieve our milestones and expand our cultured meat technology capabilities.

Marketing expenses
 
Marketing expenses totaled $2.0 million in the six months ending June 30, 2022 compared to $0.6 million in the same period in 2021. The 224% increase is mainly due to our increased salary expenses and growing investment in our U.S. and global marketing activities.

General and administrative expenses
 
General and administrative expenses increased by approximately $2.7 million, or 49%, to approximately $8.0 million for the year ended December 31, 2021, compared to approximately $5.4 million for the year ended December 31, 2020. The increase resulted mainly from personnel costs, corporate expenses, professional services (such as legal and audit fees) and operating expenditures.

Net loss
 
Net loss totaled $9.2 million in the six months ending June 30, 2022 compared to $7.8 million in the same period in 2021. The 18% increase in the operating loss reflects our growing investment in research and development as well as marketing activities.

47


Six months Ended June 30, 2022 Compared to Six months Ended June 30, 2021

 
 
Six months Ended June 30,
 
 
 
2022
 
 
2021
 
USD in thousands
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
Research and development expenses          
 
$
4,427
 
 
$
2,910
 
Marketing expenses          
 
 
1,959
 
 
 
605
 
General and administrative expenses          
 
 
3,687
 
 
 
4,159
 
Loss from operations          
 
$
10,073
 
 
$
7,647
 
Finance income          
 
 
(1,062)
 
 
 
(401
 
Finance expense          
 
 
145
 
 
 
493
 
 
 
 
 
 
 
 
 
 
Finance expense (income), net          
 
 
(917)
 
 
 
92
 
Net loss          
 
$
9,156
 
 
$
7,766
 

Research and development expenses

Research and development expenses totaled $4.4 million in the six months ending June 30, 2022 compared to $2.9 million in the same period in 2021. The 52% increase reflects our growing investment in research and development as we achieve our milestones and expand our cultured meat technology capabilities.

Marketing expenses
 
Marketing expenses totaled $2.0 million in the six months ending June 30, 2022 compared to $0.6 million in the same period in 2021. The 224% increase is mainly due to our increased salary expenses and growing investment in our U.S. and global marketing activities.

General and administrative expenses
 
General and administrative expenses totaled $3.7 million in the six months ending June 30, 2022 compared to $4.2 million in the same period in 2021. The 11% increase was primarily due to increased salary expenses and increased payments for legal and professional services

Net loss
 
Net loss totaled $9.2 million in the six months ending June 30, 2022 compared to $7.8 million in the same period in 2021. The 18% increase in the operating loss reflects our growing investment in research and development as well as marketing activities.

48


Nine months Ended September 30, 2022 Compared to Nine months Ended September 30, 2021

 
 
Nine months Ended September 30,
 
 
 
2022
   
2021
 
USD in thousands
           
Operating expenses:
           
Research and development expenses          
 
$
7,219
   
$
4,928
 
Marketing expenses          
   
2,426
     
872
 
General and administrative expenses          
   
4,982
     
5,961
 
Loss from operations          
 
$
14,627
   
$
11,761
 
Finance income          
   
(3,258
)
   
(457
)
Finance expense          
   
262
     
434
 
 
               
Finance expense (income), net          
   
(2,996
)
   
(23
)
Net loss          
 
$
11,632
   
$
11,738
 

Research and development expenses

Research and development expenses in the nine months ending September 30, 2022 totaled $7.2 million compared to $4.9 million in the same period in 2021. The 46% increase reflects our growing investment in research and development as we continue to achieve our milestones and expand our cultivated meat technology capabilities.

Marketing expenses
 
Marketing expenses in the nine months ending September 30, 2022 totaled $2.4 million compared to $0.8 million in the same period in 2021, reflecting increased salary expenses and growing investment in our U.S. and global marketing activities.

General and administrative expenses
 
General and administrative expenses in the nine months ending September 30, 2022 totaled $5.0 million compared to $6.0 million in the same period in 2021. The 16% decrease was primarily due to lower insurance and share-based payment expenses in the current quarter.

Net loss
 
Net loss in the nine months ending September 30, 2022 totaled $11.6 million compared to $11.7 million in the same period in 2021. The minor change reflects continued investment in research and development as well as marketing activities, as indicated above offset by finance income.

49


Liquidity and Capital Resources
 
Since the commencement of our cultured meat operations, we have not generated any revenue and have incurred operating losses and negative cash flows from our operations. We have funded our operations primarily through the sale of equity securities. From the inception of Steakholder Foods through September 30, 2022, we raised an aggregate of $48.1 million in five rounds of private placements of our securities and our initial public offering of securities on Nasdaq, or IPO, and $6.1 million in proceeds from option exercises. As of December 31, 2021 and September 30, 2022, we had $19.2 million and $11.2 in cash and cash equivalents respectively.
 
The table below shows a summary of our cash flows for the periods indicated:

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

 
 
Year Ended December 31,
 
 
 
2021
 
 
2020
 
USD in thousands
 
 
 
 
 
 
Net cash used in operating activities          
 
$
(13,960
)
 
$
(3,832
)
Net cash used in investing activities          
 
 
(9,340
)
 
 
(1,875
)
Net cash provided by financing activities          
 
 
29,023
 
 
 
17,345
 
Net increase in cash and cash equivalents          
 
$
5,723
 
 
$
11,638
 

50

 
Net cash used in operating activities

Net cash used in operating activities increased by $10.1 million, or 264%, to approximately $14.0 million for the year ended December 31, 2021 compared to approximately $3.8 million for the year ended December 31, 2020. This increase was due to the increase in net loss.
 
Net cash used in investing activities

Net cash used in investing activities increased by $7.5 million, or 398%, to approximately $9.3 million for the year ended December 31, 2021 compared to $1.9 million for the year ended December 31, 2020.  This increase was driven mainly by our investment in Peace of Meat and our acquisition of laboratory equipment and other fixed assets.

Net cash provided by financing activities
 
Net cash provided by financing activities increased by $11.7 million, or 67%, to approximately $29.0 million for the year ended December 31, 2021 compared to $17.3 million for the year ended December 31, 2020. This increase was driven mainly from our IPO and issuance of shares and warrants, and receipt of proceeds from the exercise of share options.

Six months Ended June 30, 2022 Compared to Six months Ended June 30, 2021

 
 
Six months Ended June 30,
 
 
 
2022
 
 
2021
 
USD in thousands
 
 
 
 
 
 
Net cash used in operating activities          
 
$
(7,448
)
 
$
(5,048
)
Net cash used in investing activities          
 
 
(2,476
)
 
 
(6,381
)
Net cash provided by financing activities          
 
 
(314)
 
 
 
29,059
 
Net increase in cash and cash equivalents          
 
$
(10,238)
 
 
$
17,630
 

Net cash used in operating activities

Net cash flow used in operating activities totaled $7.4 million in the six months ending June 30, 2022, compared to $5.0 million in the same period in 2021, reflecting a 48% increase, due mainly to the increased expenditures of our growing activities, including the addition of Peace of Meat as a subsidiary as of March 2021.
 
Net cash used in investing activities

Net cash flow used in investment activities totaled $2.5 million in the six months ending June 30, 2022 compared to $6.3 million in the same period in 2021, reflecting a 61% decrease due mainly to the non-recurring acquisition of Peace of Meat in 2021.

Net cash provided by financing activities
 
Net cash flow from financing activities was $0.3 million in the six months ending June 30, 2022 compared to $29.1 million in the same period in 2021, during which our IPO took place.

51


Nine months Ended September 30, 2022 Compared to Nine months Ended September 30, 2021

 
 
Nine months Ended September 30,
 
 
 
2022
   
2021
 
USD in thousands
           
Net cash used in operating activities          
 
$
(9,845
)
 
$
(9,612
)
Net cash used in investing activities          
   
(2,711
)
   
(7,402
)
Net cash provided by financing activities          
   
5,330
     
28,965
 
Net increase in cash and cash equivalents          
 
$
(7,226
)
 
$
11,951
 

Net cash used in operating activities

Net cash flow used in operating activities totaled $9.8 million in the nine months ending September 30, 2022, compared to $9.6 million in the same period in 2021, reflecting a 2% increase. The changes were due mainly to increased expenditures as indicated above, including the addition of Peace of Meat as of March 2021, offset by lower General and Administrative expenses.
 
Net cash used in investing activities

Net cash flow used in investment activities totaled $2.7 million in the nine months ending September 30, 2022 compared to $7.4 million in the same period in 2021, reflecting a 62% decrease due mainly to the acquisition of Peace of Meat during that period.

Net cash provided by financing activities
 
Net cash flow from financing activities was $5.3 million in the nine months ending September 30, 2022 (primarily resulting from a registered direct offering in June 2022) compared to $29.0 million in the same period in 2021 (during which we completed our IPO).

We have incurred losses and cash flow deficits from operations since the inception of Steakholder Foods, resulting in an accumulated deficit as of December 31, 2021 and September 30, 2022, of approximately $37 million and $48.6 respectively. We anticipate that we will continue to incur net losses for the foreseeable future. We believe that our existing cash and cash equivalents will be sufficient to fund our projected cash needs through the end of first quarter of 2023. We do not currently have any specific commitments or plans for acquisitions; to the extent we do engage in acquisitions, we will do so after ensuring that we will have sufficient funds available to meet our capital requirements, and such acquisitions are likely to affect our projected cash needs. To meet future capital needs, we would need to raise additional capital through equity or debt financing or other strategic transactions. However, any such financing may not be on favorable terms or even available to us. Our failure to obtain sufficient funds on commercially acceptable terms when needed would have a material adverse effect on our business, results of operations and financial condition. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors. We have based our estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate.

52

 
Our future capital requirements will depend on many factors, including, but not limited to: 
 

the progress and costs of our research and development activities;


the costs of development and expansion of our operational infrastructure;


the costs and timing of developing technologies sufficient to allow food production equipment manufacturers and food manufacturers to product products compliant with applicable regulations;


our ability, or that of our collaborators, to achieve development milestones and other events or developments under potential future licensing agreements;


the amount of revenues and contributions we receive under future licensing, collaboration, development and commercialization arrangements with respect to our technologies;


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


the costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities ourselves, once our technologies are developed and ready for commercialization;


the costs of acquiring or undertaking development and commercialization efforts for any future products or technology;


the magnitude of our general and administrative expenses; and


any additional costs that we may incur under future in- and out-licensing arrangements relating to our technologies and futures products.

Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through capital raising or by out-licensing and/or co-developing applications of one or more of our product candidates. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available on favorable terms, or at all, we may be required to delay, reduce the scope of or eliminate research or development efforts or plans for commercialization with respect to our technologies and make necessary change to our operations to reduce the level of our expenditures in line with available resources.

We are a development-stage technology company and it is not possible for us to predict with any degree of accuracy the outcome of our research and development efforts. As such, it is not possible for us to predict with any degree of accuracy any significant trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net loss, liquidity or capital resources, or that would cause financial information to not necessarily be indicative of future operating results or financial condition. However, to the extent possible, certain trends, uncertainties, demands, commitments and events are described herein.
 
Since inception, we have incurred significant losses and negative cash flows from operations and have an accumulated deficit of $48.6 million as of September 30, 2022. We have financed our operations mainly through fundraising from various investors.
 
Our management expects that we will continue to generate losses and negative cash flows from operations for the foreseeable future, including as a result of material expenses such as leasing expenses. Based on the projected cash flows and cash balances as of September 30, 2022, our management is of the opinion that our existing cash will be sufficient to fund operations until the end of first quarter of 2023 . As a result, there is substantial doubt about our ability to continue as a going concern.

53

 
Management’s plans include continuing to secure sufficient financing through the sale of additional equity securities or capital inflows from strategic partnerships. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If we are unsuccessful in securing sufficient financing, we may need to cease operations.
 
Our financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should we fail to operate as a going concern.
 
Critical Accounting Policies
 
We describe our significant accounting policies and estimates in Note 3 to our annual financial statements included elsewhere in this prospectus. We believe that these accounting policies and estimates are critical in order to fully understand and evaluate our financial condition and results of operations.
 
We prepare our financial statements in accordance with IFRS as issued by the IASB.
 
In preparing these financial statements, management has made judgments, estimates and assumptions that affect the application of our accounting policies and the reported amounts recognized in the financial statements. On a periodic basis, we evaluate our estimates, including those related to share-based compensation and derivatives. We base our estimates on historical experience, authoritative pronouncements and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.
 
Recently-Issued Accounting Pronouncements
 
Certain recently-issued accounting pronouncements are discussed in Note 3, Summary of Significant Accounting Policies, to the consolidated financial statements included in elsewhere in this registration statement, regarding the impact of the IFRS standards as issued by the IASB that we will adopt in future periods in our consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

Liquidity Risk

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with our financial liabilities that are settled in cash. Cash flow forecasting is performed in our operating entities and aggregated at a consolidated level. We monitor forecasts of our liquidity requirements to ensure we have sufficient cash to meet operational needs. We may be reliant on our ability to raise additional investment capital from the issuance of both debt and equity securities to fund our business operating plans and future obligations.
 
Credit risk
 
Credit risk is the risk of financial loss to us if a debtor or counterparty to a financial instrument fails to meet its contractual obligations, and arises mainly from our receivables.
 
As part of an agreement with Therapin Ltd. from May 2020, we agreed to convert an NIS 7.25 million investment in Therapin made by Ophectra and assumed by us at the merger, into an interest-free loan, to be repaid by the latter at a rate of NIS 0.48 million per annum for ten years (NIS 4.8 million in total) plus NIS 2.45 million to be paid upon an exit event, including a public offering, or repayment of 14.74% of any distributable surplus or dividend distributed by Therapin, up to the amount of the outstanding balance, as detailed in our separation agreement with Therapin. As part of the agreement, Therapin gave us an option to convert the cash payment to equity of Therapin. Therapin has not provided any guarantees in connection with its repayment of our loan.
 
We restrict exposure to credit risk in the course of our operations by investing only in bank deposits.
 
Equity price risk
 
As we have not invested in securities riskier than short-term bank deposits, we do not believe that changes in equity prices pose a material risk to our holdings. However, decreases in the market price of our Ordinary Shares or ADSs could make it more difficult for us to raise additional funds in the future or require us to raise funds at terms unfavorable to us.
 
Foreign Currency Exchange Risk

Currency fluctuations could affect us primarily through increased or decreased foreign currency-denominated expenses. Currency fluctuations had a material effect on our results of operations during the year ended December 31, 2021, although not in the year ended December 31, 2020.
 
Critical Accounting Estimates
 
     Critical accounting estimates are those estimates made in accordance with IFRS that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. For further information, see Note 2E to our annual consolidated financial statements included elsewhere in this prospectus.
 
54


BUSINESS

This summary below highlights information contained elsewhere, or incorporated by reference, 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 this summary together with the more detailed information appearing in this prospectus, including “Summary Financial Data,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the related notes included at the end of this prospectus, before making an investment in our Securities.

Our Company
 
Overview
 
We are an international deep-tech food company that initiated activities in 2019 and are listed on the Nasdaq Capital Market under the ticker “STKH”. We maintain facilities in Rehovot, Israel and Antwerp, Belgium and recently commenced activities in the United States. We believe that cultivated meat technologies hold significant potential to improve meat production, develop a sustainable livestock system, simplify the meat supply chain, and offer consumers a range of new product offerings.  

We aim to provide an alternative to industrialized animal farming that reduces carbon footprint, minimizes water and land usage, and prevents the slaughtering of animals. By adopting a modular factory design, we expect to be able to offer a sustainable solution for producing a variety of beef, chicken, pork and seafood products, both as raw materials and whole cuts.

We are developing cultivated meat technologies, including three-dimensional printing technology, together with biotechnology processes and customizable manufacturing processes in order to manufacture cultivated meat that does not require animal slaughter. We are developing a novel, proprietary three-dimensional bioprinter to deposit layers of differentiated stem cells, scaffolding, and cell nutrients in a three-dimensional form of structured cultivated meat. We believe that the cultivated meat production processes we are developing, which are designed to offer our eventual customers an alternative to industrial slaughter, have the potential to improve the quality of the environment, shorten global food supply chains, and reduce the likelihood of health hazards such as zoonotic diseases transferred from animals to humans (including viruses, such as virulent avian influenza and COVID-19, and drug-resistant bacterial pathogens, such as some strains of salmonella).

In December 2021, we announced that we had successfully three-dimensionally printed a 3.67 oz cultivated steak, primarily composed of cultivated fat and muscle tissues. While cultivated meat companies have made some progress developing unstructured, or even undifferentiated, alternative meat products, such as minced meat and sausage, to the best of our knowledge, the industry has struggled in developing high-margin, high-value structured and cultivated meat products such as steak. Unlike minced meat, a cultivated meat steak product has to grow in fibers and contain connective tissues and fat. To be adopted by diners, we believe that cultivated steaks will need to be meticulously engineered to look and smell like conventional meat, both before and after cooking, and to taste and feel like meat to the diner. We believe that we are the first company to be developing both a proprietary bioprinter and the related processes for growing cultivated meat to focus on what we believe is a high value sector of the alternative protein market.


 
In May 2022, we joined the UN Global Compact initiative, committing to ten universally accepted principles in the areas of human rights, labor, environment, and anti-corruption and to act in support of the issues embodied in the UN’s Sustainable Development Goals.

We are led by our Chief Executive Officer, Arik Kaufman, who has founded various Nasdaq- and Tel Aviv Stock Exchange, or TASE, -traded foodtech companies, and currently serves as director of Wilk Technologies Ltd.  He is also a founding partner of BlueOcean Sustainability Fund, LLC, or BlueSoundWaves, led by Ashton Kutcher Guy Oseary and Effie Epstein, which has partnered with Steakholder to assist in attempting to accelerate the Company’s growth. Mr. Kaufman holds extensive personal experience in the fields of food-tech and bio-tech law, and has led and managed numerous complex commercial negotiations, as part of local and international fundraising, M&A transactions and licensing agreements. We have carefully selected personnel for the rest of our executive management team who possess substantial industry experience and share our core values, from fields as diverse as tissue engineering, industrial stem cell growth, and printer and print materials development.

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Cultivated Meat Industry and Market Opportunity

Protein is a necessary staple for healthy nutrition. The growth in recent years of both the human population and global wealth is driving a decades-long trend of accelerating demand for meat. The demand for protein products has consistently risen in recent decades and is expected to continue to do so. The rising growth of demand for farm animals for the food industry has created significant environmental, health, financial and ethical challenges.
 
According to Statista, the value of the global meat sector was estimated at $838 billion in 2020, and was forecast to increase to $1.157 billion by 2025. According to market research firm Fortune Business Insights, the global meat substitute market was estimated at $5.4 billion in 2021 and is expected to grow to $10.8 billion by 2028. According to Facts and Factors Market Research, the cultivated meat category alone is expected to reach $248 million by 2026, with an annual growth rate of approximately 16%. With regard to the longer term, Barclays predicted in November 2021 that by 2040, 20% of the demand for meat globally will be provided by cultivated meat – a $450 billion market opportunity.
 
The meat industry is showing strong interest in the alternative protein space, both in plant-based and cell-based proteins. There are several drivers underlying the strong engagement with alternative proteins. We believe consumers are looking for less harmful protein sources, with approaches such as flexitarianism already an established middle path between vegetarian diets and those heavy in animal proteins, such as the paleo diet. Many meat processors have experienced the worst of the COVID-19 pandemic outbreaks and are seeking to minimize human involvement in the manufacturing process. To that end, retailers such as Costco and Walmart are increasingly opening their own meat processing facilities on which they can rely exclusively without the involvement of third party manufacturers.
 
Limitations of Conventional Meat Production

In addition to questions about whether conventional meat production can adequately provide for the growing global population, conventional meat production raises serious environmental issues.  According to the United Nations, 8% of the world's freshwater is used for raising livestock for meat and leather. At least 18% of the greenhouse gases entering the atmosphere are from the livestock industry. 26% of the planet's ice-free land is used for livestock grazing and 33% of croplands are used for animal feed.  With regard to treatment of animals in conventional meat production, more than 70 billion animals are slaughtered annually with steady increases to be expected in line with increased demand for meat.
 
Another common consumer concern with industrial-scale animal rearing is the reliance on the intensive use of antibiotics. Antibiotics are used in livestock, especially pigs and poultry, to manage animal health, and to treat or prophylactically prevent diseases such as avian flu and swine flu. Their effects on human health have not been fully resolved, with concerns including the potential growth of antibiotic-resistant diseases in meat for human consumption.

Existing Alternative Proteins and their Limitations
 
Negative consumer sentiment towards the perceived ethical, health and environmental effects of the global meat industry help explain the strong focus that has developed on creating methods of protein production that are more sustainable, nutritious and conscious of animal welfare. Recent years have seen a combination of increasing consumer awareness and advanced technological development that has led to substantially increased demand for proteins that do not involve animal slaughter besides traditional plant-based proteins, such as soy, peas and chickpeas. Some of the alternative proteins being developed for human consumption for this purpose include:

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Mycoproteins: Some of the most commercially successful novel alternative protein products are currently mycoproteins, which are derived from fungi. They are high in protein and fiber, low in saturated fat, and contain no cholesterol.  However, they have been associated with allergic and gastrointestinal reactions. They are fermented to become a dough, which can develop a texture similar to that of meat.
 
Jackfruit: Jackfruit is a tropical fruit native to India, which is high in protein. Its texture is somewhat similar to shredded meat, although its taste is similar to other fruits, such as apples and mangoes. Thus, while it is a good source of protein, it is not generally viewed as an alternative to meat for consumers used to animal proteins due to the difference in taste from traditional meat products.
 
Insects: Insects are an environmentally-friendly source of protein that requires significantly less land and water, and emits significantly less greenhouse gases than large mammals raised for slaughter. In addition, they can be fed food unsuitable for livestock that would otherwise be wasted. While crickets are the most common source of edible insects, research is currently taking place on new insect species of value for food production, as well as methods to produce them economically at scale. Insects can be consumed in their natural state; however many cultures consider insect consumption to be taboo and many people are disgusted by the idea.  As a result, research is taking place into developing insect-based products in different forms not easily discernable as insect-based, including flour.

The Cultivated Meat Solution

We believe that cultivated meat grown through cellular agriculture, which aims to produce cultivated animal proteins without the need for large-scale slaughter, has the potential to satisfy consumer desire for meat while also avoiding the negative impacts of conventional meat production. Cellular agriculture is an efficient, closely-controlled indoor agricultural process that utilizes advanced technologies with conceptual similarities to hydroponics, which are used for growing meat cells rather than fruit. Cultivated meat is grown in cell culture rather than inside animals and applies tissue engineering practices for fat and muscle production for the purpose of human consumption. Instead of animal slaughter, stem cells are isolated from animal tissue, such as from an umbilical cord (following birth), an adipose or a muscle tissue, and then cultivated in vitro to form muscle fibers and fat cells. While also known as “cultured meat”, “clean meat”, “in vitro meat” or “lab-grown meat”, the term “cultivated meat” has gained the most traction as of late and is the term believed to best appeal to consumers.
 
Cultivated meat production is an advanced technology that operates as part of the wider field of cellular agriculture, which entails growing animal cells in bioreactors and is an emerging solution to the growing demand for alternative proteins. We are aware of a few dozen companies and institutions actively working to develop technologies and other products to meet this demand, some of whom are focused on producing red and white meats, while others are focused on fish and crustaceans. Some of these companies are working on culturing various types of cells, such as chicken, pork, kangaroo and foie gras. We believe this push of scaling-up cellular agriculture has the potential to offer a solution to the scale and environmental challenges confronting conventional meat production. Other alternative protein companies are already selling plant-based meat substitutes, but to our knowledge, these companies are not focused on the production of real meat products produced with animal cells without pea or soy ingredients.
 
We are engaged with experimentation to develop optimal and cost-effective cell culture media. In so doing, we are also exploring a range of types of and sources for growth factors suited to cell culture. These sources are expected to be sustainable and ethical, providing a route to enabling efficient and cost-effective processes. While many challenges remain, surveys are consistently showing consumer openness toward, and enthusiasm for, cultivated meat. According to “Consumer Acceptance of Cultured Meat: An Updated Review (2018–2020)” published by researchers at the University of Bath, “the evidence suggests that, while most people see more societal benefits than personal benefits of eating cultivated meat, there is a large potential market for cultivated meat products in many countries around the world. Cultivated meat is generally seen as more acceptable than other food technologies, and more appealing than other alternative proteins like insects. Although it is not as broadly appealing as plant-based proteins, evidence suggests it may be more uniquely positioned to appeal to meat-lovers who are resistant to other alternative proteins, and it is more appealing to certain demographic groups".

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We believe that cultivated meat could have several potential advantages over conventionally-harvested meat:

 
Environmental: At least 18% of the greenhouse gases entering the atmosphere today are from the livestock industry. Research shows that the expected environmental footprint of cultivated meat includes approximately 78% to 96% fewer greenhouse gas emissions, 99% less land use, 82% to 96% less water use and 7% to 45% less energy use than conventionally-produced beef, lamb, pork and poultry. This suggests that the environmental consequences of switching from large-scale, factory farming to lab-grown cultivated meat could have a long-term positive impact on the environment.


Cost: While the precise economic value of harvested cells has yet to be determined, the potential to harvest large numbers of cells from a small number of live donor animals gives rise to the possibility of considerably higher returns than traditional agriculture, with production cycles potentially measured in months rather than years. By comparison, raising a cow for slaughter generally takes an average of 18 months, over which period 15,400 liters of water and 7 kilograms of feed will be consumed for every kilogram of beef produced.


Animal Suffering: More and more people are grappling with the ethical question of whether humanity should continue to slaughter animals for food. There is a growing trend of opposition to the way animals are raised for slaughter, often in small, confined spaces with unnatural feeding patterns. In many cases, such animals suffer terribly throughout their lives. This consideration is likely a factor in many consumers choosing to incorporate more flexitarian, vegetarian and vegan approaches to their diets in recent years.


Controlled Growing Environment: Another potential benefit of cultivated meat is that its growth environment is designed to be less susceptible to biological risk and disease, through standardized, tailored production methods consistent with good manufacturing practices that are controls to contribute to improved nutrition, health and wellbeing.


Alternate Use of Natural Resources: Eight percent of the world’s freshwater supply and one third of croplands are currently used to provide for livestock. The development of cultivated meat is expected to free up many of these natural resources, especially in developing economies where they are most needed.


Food Waste: The conventional meat industry’s largest waste management problem relates to the disposal of partially-used carcasses, which are usually buried, incinerated, rendered or composted, with attendant problems such as land, water or air pollution. Cultivated meat offers a potential solution for this problem, with only the desired cuts of meat being produced for consumption and only minimal waste product generated with no leftover carcass.

Our Strategy

Our vision is to be a global leader in the production of meat through advanced biotechnology and engineering solutions for a more sustainable world. We are committed to making the right choice of meat for end consumers simple by developing high-quality meat that is slaughter-free, delicious, nutritious, and safer than farm-raised meat, We accomplish this by adopting a factory design intended to offer a sustainable solution for producing a variety of beef, chicken, sea-food  and pork products, whether as raw materials or final consumer products.

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Our technologies and processes have the potential to be sustainable. We are developing a meat production process that is designed to provide sustainability in an industry that, due to inefficiencies inherent in conventional meat farming, is not otherwise expected to be able to meet the growing demand for protein caused by rising population numbers and global affluence. These include the large amounts of land and water use that are needed for raising livestock, which causes precious natural resources to be squandered and the release of methane and other greenhouse gases by livestock.
 
We are designing our cellular agriculture and bioprinting processes to be modular so that customers can initiate their cultivated meat activities at scales suitable for their specific needs and to grow their activities as their needs evolve. Whether a customer wishes to manufacture a hybrid product that includes cultivated and plant-based ingredients, cultivated fat as a raw material, or even 3D-printed steak, each facility can be adapted to scale-out product capabilities and production volumes.
 
We are developing a fully automated, clean and proprietary process for cultivated meat manufacturing in a controlled, sterile environment, which is expected to significantly increase food safety. Our production facilities will not house a single animal and will contain robust integrated monitoring systems and minimal human interaction, which will greatly reduce the risk of pathogen contamination of the type claimed to have caused the COVID-19 pandemic and numerous other human health crises.
 
We have carefully selected personnel for our management team who possess substantial industry experience, from diverse fields including the food industry, bioprinting, tissue engineering, industrial stem cell growth, software engineering, electronic and mechanic engineering and print materials development. We believe that this blend of talent and experience in managers who share our core values gives us the requisite insights and capabilities to execute our plan to develop technologies designed to meet demand in a scalable, profitable and sustainable way.
 
To achieve our mission, we intend to:
 

Perfect the development of our cultivated meat manufacturing technology and processes.  We intend to continue developing and refining our processes, procedures and equipment until we are in a position to commercialize our technologies, whether by manufacturing final products for consumers (B2C and B2B2C models) or ingredients for industrial use, as well as in outlicensing (B2B models). We are continuing to tackle the technological challenges involved in scaling up both our biological and printing processes to industrial-scale levels.


Commercialize our technologies for use in consumer and business markets. We intend to provide ingredients to business customers for use in consumer products in order to help meet the growing demand for sustainable, slaughter-free cultivated meat products. For example, manufacturers of meat alternatives, such as vegetarian sausages, may choose to include our cultivated fat biomass in their products in order to deliver the signature meaty flavors, aromas and textures of the meat that is otherwise provided by the conventional meat of species such as chicken, beef and pork. We believe that this combination has the potential to unlock a new level of meat experience.

In addition, we intend to license our production technology as well as provide associated products, such as cell lines, printheads, bioreactors and incubators, and services, such as technology implementation, training, and engineering support, whether directly or through contractors, to food processing and food retail companies.  We intend to charge our customers a production license fee, based upon the amount of meat printed. We expect that each production facility will periodically require us to provide them with our proprietary materials, such as fresh sets of starter cells, for a fee. In addition, other materials used in the production process, such as cell-culture media and additives in our bio-inks may be sourced from third parties. Whether these materials are customized for the specifics of our production processes, “white-labelled” generic materials or proprietary materials that we have developed, we may charge a fee for restocking such materials; however, we have not yet reached the stage where it would be possible to estimate to what extent this would contribute to any future revenue stream. Finally, we intend to provide paid product implementation and guidance services to our customers looking to establish cultivated meat manufacturing facilities. We expect that each facility licensing our technologies will need to deal with novel challenges and, as a result, will require the assistance of our expert knowledge in order to set up and implement our licensed technologies.

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In addition, we envisage demand for our ingredients in industrial applications other than human consumption, including cosmetics, which involve the extensive use of fat, and pet food. However, our current focus remains the development of cultivated meat and its ingredients for human consumption.


Develop additional alternative proteins to meet growing industry demand. There are substantial technological challenges inherent in expanding our offering beyond our current cultivated beef, pork and avian technologies to additional alternative proteins and cell lines.  However, we believe that our experience, know-how and intellectual property portfolio form an excellent basis from which to surmount such challenges. Our first step in this direction was the 2021 acquisition of Peace of Meat BV, or Peace of Meat, with the aim of developing avian fat for the alternative meat industry by applying proprietary technology to mimic the cellular composition of conventional poultry. In addition, in 2022 we commenced a collaboration with Singaporean cultivated seafood developer, Umami Meats, for the joint development of structured seafood products.


Acquire synergistic and complementary technologies and assets.  We intend to optimize our processes and diversify our product range to expand the cultivated meat technologies upon which marketable products can be based. We intend to accomplish this through a combination of internal development, acquisitions and collaborations, with a view to complementing our own processes and diversifying our product range along the cultivated meat production value chain in order to introduce cultivated products to the global market as quickly as possible. See also “- Additional Technologies” below.
 
The Commercialization Roadmap

The following table sets forth a road map for the expected commercialization of substitutes for conventionally-farmed meat, which include:


Fully-plant-based meat-like offerings that are already commercially available but lack the organoleptic properties of meat, primarily flavor, aroma, texture and color;


Hybrid meat products of the type that we are developing, which combines real cultivated fat with plant-based protein to offer meatier products with enhanced organoleptic properties;


Unstructured meat products, such as hamburgers and minced meat; and


Fully-cultivated structured meat products, such as 3D-printed steaks.

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We are focusing on developing cultivated fat, primarily for the purpose of commercializing hybrid meat products in the short term, and developing the technologies needed for both unstructured and 3D-printed, structured, cultivated meat products.

In September 2022, we announced the development of Omakase Beef Morsels, a richly-marbled, structured meat product developed using our proprietary 3D-printing process. Inspired by the marbling standard of Wagyu beef, we believe that Omakase Beef Morsels are an innovative culinary achievement elegantly designed as a meat lover's delicacy for premium dining experiences.

The product is made up of multiple layers of muscle and fat tissue, which have been differentiated from bovine stem cells, and showcases the control, flexibility and consistency inherent in our bioprinting technology. Each layer is printed separately using two different bio-inks – one for muscle and one for fat. The layers can be printed in a variety of muscle/fat sequences to obtain differing results of juiciness and marbling of the cut.

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Omakase Beef Morsels (Photo credit: Shlomo Arbiv)
 
Meat and Poultry Ingredients for Hybrid and Unstructured Cultivated Products
 
Both we and our Belgian subsidiary, Peace of Meat, continue to develop novel, proprietary, stem-cell-based technologies to produce fat, muscle and connective tissue biomass from multiple species, such as chicken, beef and pork without harming any animals. We are leveraging this technology, including through novel hybrid food products, to expedite market entry while we develop an industrial process for cultivating and producing real meat, including through the use of three-dimensional bioprinting technology. The first expected application of the technology is in hybrid food products, which combines plant-based protein with cultivated animal fat biomass and is designed to provide meat analogues with qualities of “meatiness”, such as taste and texture, closer to that of conventional meat products than are currently available in the market today. To this end, we have conducted a number of taste tests where we demonstrated the potential that our cultivated fat biomass has to enhance the taste of plant-based protein products. We believe that a product comprised of as little as 10-25% of our cultivated fat biomass combined with plant-based protein has the potential to enhance meatiness. Our cultivated fat biomass is designed to be free of antibiotics and can be tailored to provide personalized nutritional profiles.

Our fat biomass production technology relies on the use of cells derived from proprietary cell lines. These cells grow naturally in suspension and in high densities. They also proliferate continuously, are relatively large and tend to easily accumulate lipid. This quality of the cells makes them an excellent candidate for producing cultivated fat, so we have used them to build a robust cell line that is free of genetic modifications, which we are now attempting to upscale towards industrial production volumes. Our most advanced cell line is being built with non-GMO or GMO pluripotent stem cells that can differentiate into muscle cells and fat cells and form connective tissue, which need fewer high-cost media components, such as growth factors, for their development. As a result, these cells may have higher growth potential with lower costs than alternative technologies. We have likewise developed the process for isolating, growing and differentiating bovine stem cells into muscle fibers, fat biomass and connective tissue.

In July 2021, Peace of Meat cultivated just over 700 grams of pure chicken fat biomass in a single production run. We believe that producing this quantity of pure cultivated material in one run is a breakthrough toward potentially manufacturing cultivated chicken fat at an industrial scale.

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Single production run of chicken fat biomass.
 
Some of the steps which we are taking in order to keep the growth media cost low include:


Replacing expensive, animal-derived components in cell growth media with chemical replacements, including through in-house production;


Cell line optimizations, such as through high-throughput analyses of evolved isolates;


Bioprocess optimization and media recycling;


Upscaled growth factor production, such as through hollow fiber bioreactors; and


Long-term market optimization as a result of expected increased demand.

Structured Fully-Cultivated Meat

In addition to meat ingredients for use in hybrid meats and unstructured, cultivated meat, we are developing the technology and processes to produce cultivated meat steak at an industrial scale. We are working to achieve this by creating an end-to-end technology that combines cellular agriculture with bioprinting to produce complex meat structures. We are developing cellular agriculture technology, such as cell lines, and approaches to working with growth media to support the growth of cells such as fat and muscle cells in a scalable process, and have demonstrated an ability to differentiate stem cells into fat and muscle cells. The media will be composed of food-grade ingredients and we expect their growth factors to be similar to those produced naturally in the bodies of cattle, albeit free of fetal bovine serum, traditionally a significant component of cellular growth media that is harvested from animals. We are engaged with experimentation to develop optimal and cost-effective antibiotic-free cell culture media, and are exploring a range of types of, and sources for, growth factors suited to cell culture. These sources are expected to be sustainable and ethical, providing a route to enabling effective and cost-effective processes. The processes we are developing are designed to allow cells of interest, following humane tissue extraction from the umbilical cord or biopsy, to be isolated, replicated, grown and maintained in vitro under controlled, laboratory conditions.

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We are developing proprietary bioprinting and tissue engineering technologies to enable the design and bioprinting of three-dimensional tissues. Our goal is for the meat produced using these technologies to have an authentic texture, flavor, appearance and aroma without being limited to the precise combinations of existing meat tissue, so that fat content of the meat, for example, can be adjusted to amounts other than those occurring naturally in animals in order to meet varied consumer preferences for fattier or leaner cuts of meat. We believe that the novel processes that we are developing have the potential to eventually be competitive with conventional manufacturing technologies for premium products as large-scale production of meat tissues will create new lines of meat without any unnecessary animal use.
 
In the course of developing our technologies, we intend to develop a large-scale technology demonstration model. We have set forth below an illustration of the process that we are developing that we believe will, upon completion, allow us and our customers to develop and manufacture cultivated steaks at industrial scale.

We are working on slaughter-free meat development processes, including cell proliferation and differentiation and experiments with stem cell growth media to grow high-density stem cells based solely on compounds produced in laboratory processes.
 
In these experiments, we have developed stem cells able to differentiate into fat or muscle cells which allows for the maturation of fat tissue and muscle fibers following an isolation process of specific stem cells from sources, such as bovine umbilical cords or muscle tissue. These cells are nourished with nutritional compounds that we develop as a growth medium to direct their differentiation into fat tissue or muscle tissue as needed.

In February 2022, we announced the successful development of a novel technology process in which muscle cells are fused into significant muscle fibers that better resemble those in whole cuts of meat. Bovine stem cells were isolated, proliferated in the lab and differentiated into matured muscle cells with improved muscle fiber density, thickness and length.
 
Cell source for cultivated meat products

The process of industrial scale meat printing necessitates the isolation and development of cells able to produce both animal muscle and fat tissues. Our proprietary cell lines are isolated from various sources that harbor these properties. For example, adult stem cells are isolated from various adult tissues, such as fat and muscle tissues, and stem cells are isolated from the umbilical cord immediately following birth. Each of these cells has advantages and disadvantages and their adaptation to our robust meat production process is currently being evaluated.

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Bioreactors

We are using software-controlled bioreactors to foster cell proliferation. The initial growth phase leverages exponential growth of stem cells to achieve sufficient cell volumes for food production. These stem cells undergo differentiation into multiple cell types, such as muscle and fat, as well as cell maturation.
 
We are in the process of developing cell-culturing processes and protocols for use in bioreactor systems. Such bioreactor systems will enable monitoring and control of growth parameters, as well as testing and development of efficient and economical cell-growth processes in industrial breeding containers. Separate from the bioreactor development process, we have commenced development of a cell-suspension growth process. This growth process is different from cell growth on laboratory plates. We expect that the newly-developed processes may allow cell growth on a scale needed for industrial-scale meat development. We have already developed a cell-suspension growth process using chicken, porcine and beef cells in the course of developing both structured and unstructured products.

Our Bio-Inks

Structured, three-dimensional printed products require the use of bio-inks, which are printable biological materials produced from the biomass produced in our bioreactors, as well as scaffolding materials. Bioinks produced differ in their differentiation potential into muscle, fat and connective tissue. In this step, our bio-inks are printed in thin layers in the desired combination, which provides creative control over the steak design, in a process that maintains the ongoing viability of the bio-ink cells. Since the printed layers are composed of viable cells, they are then able to coalesce and mature in an incubator with the help of bonding agents that serve as a scaffold that forms three-dimensional tissues. We are in the process of optimizing the characteristics of our proprietary bio-inks, including composition, motility, viscosity, temperature, structural stability, density and jettability, or the ability to be dispersed by a printer, as well as the factors helping the cells to connect in three-dimensional tissues.

Proprietary Bioprinting
 
Bioprinting is a process of fashioning a specific type or types of native or manipulated cells configured to form the edible tissue analog by depositing scaffolding material mixed with cells and other bio-inks. This is done through the use of an inkjet-style printer with drop-on-demand capabilities where inks are printed precisely into a three-dimensional design.
 
The image below depicts a potential laboratory model that we could use for the development and production of cultivated meat steaks.

 

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After the completion of the bioprinting process, the tissue is transferred into a special incubator, where, in addition to providing nutrients and other chemical and biological agents, the system may physically manipulate the tissue. This “training” process increases the muscle cells differentiation, a process in which a cell changes its function and phenotype, and produces a stronger, more fibrous tissue.
 
To date, we have printed several cell types, which coalesced into fat and muscle tissue grown in our laboratory. In December 2021, we announced that we had successfully three-dimensionally printed a 3.67 ounce cultivated steak that was primarily composed of cultivated fat and muscle tissues without using soy or pea protein. The cells used to make the steak were produced with an advanced proprietary process that started by isolating bovine stem cells from tissue samples and multiplying them. Upon reaching sufficient cellular mass, stem cells were formulated into bio-inks compatible with our proprietary 3D bioprinter. The bio-inks were printed from a digital design file of a steak structure. The printed product was placed in an incubator to mature, allowing the stem cells to differentiate into fat and muscle cells and develop into fat and muscle tissue to form our steak.

In May 2022, we announced the development of a novel, multi-nozzle 3D bioprinting system for industrial scale production of complex cultivated meat products without impacting cell viability. We plan to offer the technology to third parties via our wholly-owned private subsidiary, Steakholder Innovation Ltd. as a potential additional revenue stream and to accelerate commercialization.

Cultivated Steak Scaffolding
 
Growing three-dimensional meat presents a unique challenge. Typically, animal cells must remain within 200 microns of a nutrient supply in order to survive. This is little more than the width of a human hair and is known as the diffusion limit. It is the reason that cells grow along the surface of a petri dish rather than forming vertical piles.

In the next step of the process that we are developing, we intend to build a scaffold to support the growth of three-dimensional meat. A “scaffold”, or “biocompatible scaffolding”, refers to an engineered platform having a predetermined three-dimensional structure that mimics the environment of the natural extracellular material, or ECM. The ECM is a three-dimensional network of large molecules that provide structural and biochemical support to surrounding cells. Collagen is the most abundant component in the ECM that supports the development and growth of complex tissues, and specifically, also muscle tissues. Engineering of bovine muscle tissues in vitro while avoiding the use of animal derived collagen requires the development of plant based scaffolds that would imitate the properties of the ECM. Plants are an obvious candidate for scaffolding as they are sustainable, cost worthy and could be processed to have similar properties of collagen fibers. We are developing technology to allow for the formation of a composite scaffold.

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  Modularity
 
We are focused on developing a process that will allow our food technology customers to operate a high-throughput manufacturing process for high-quality, healthy meat. Our cellular agriculture and bioprinting processes are being designed to be modular, meaning that they can work using different factory sizes. We believe we could license our technology to customers with industrial plants close to urban areas seeking to provide “just in time”, logistically-efficient, local and premium cellular agriculture. In addition, we believe a licensee of our technology could build a plant in a locality that does not have the resources needed for industrial animal husbandry, which would allow places like the United Arab Emirates, Hong Kong or Singapore to potentially become more agriculturally independent by increasing food security. As costs continue to decrease, we believe licensees of our technology could also build production facilities in localities where there is high agricultural seasonality or desertification risk.
 

 
 
Illustration of a contemplated cultivated meat manufacturing plant.
 

Clean Energy
 
We are developing processes intended to achieve high-volume manufacturing capabilities in line with the needs of today’s value-added food processors and other meat and food industry players. To this end, we are working on processes to scale up production, beginning with different cell types, including induced pluripotent stem cells and embryonic stem cells. We expect high-volume stem cell production to feed into differentiation bioreactors that are dedicated to producing fat and muscle cells. These cells are the key input for our downstream productization stages.
 
The processes we are developing are advanced biotechnological processes that are intended to produce cultivated meat in a clean environment with minimal environmental impact. We envision that factories utilizing our technologies will exist in greater harmony with their environment than typical current factories by supporting sustainability, utilizing renewable energy sources and recycling or treating their own waste.
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Additional Technologies

We may incorporate novel bioreactor technologies that benefit cellular agriculture and the development of low-cost cell culture media not based on fetal bovine serum.

We also plan to add cell line types to expand the development of cultivated meat to other types of animals, as well as achieving market penetration in the shortest timeframe possible, which would allow us to realize the great potential in the market. We are developing cultivated meat, both unstructured hybrid products and structured, three-dimensional printed products, with an initial emphasis on bovine and porcine cells, and our subsidiary, Peace of Meat, is developing cultivated avian fat, initially for use in hybrid products. We estimate that the first hybrid products based on Peace of Meat technology may enter the market as early as 2025. Beyond hybrid products, cultivated fat is expected to be a component in other fat-based products, whether edible or otherwise, and an integrated component in Steakholder’s printing technology. We are working to create synergy and added value to the cultivated meat market, while also sustaining animal welfare and meeting the growing global demand for meat.
 
International Expansion

United States

    In March 2022, we announced that we intended to open a U.S. office. We expect the new space will include activities in research and development, investor relations and business development. In September 2022, we commenced development of a bovine cell line in the United States. by isolating cells sourced from cattle raised on a farm approved by the United States Department of Agriculture, or USDA.

Europe
In February 2021, we finalized our acquisition of Peace of Meat, a Belgian producer of cultivated avian products, for up to $19.9 million in cash and equity, depending on milestone achievements. We intend to leverage Peace of Meat’s cultivated avian technologies to diversify our own bovine-oriented technologies and expedite our entry into the market for plant-based meat alternatives and cultivated products. Peace of Meat was established in Belgium in 2019 and is developing cultivated avian fat directly from animal cells without the need to grow or kill animals. In 2020, Peace of Meat was awarded a subsidy of approximately $1.33 million from the Flemish government, of which $0.5 million has been received, and has received approximately $1 million in private investments. We bought Peace of Meat for approximately $20 million in a cash- and equity-based milestone deal. We believe that the innovative technology of Peace of Meat has the potential to support an industrial process for the production of cultivated avian fat. Peace of Meat has entered into a number of scientific and commercial collaborations, is in the process of positioning itself as a future B2B provider with the potential to cover the entire value chain, has accelerated research and production processes in the industry and has conducted taste tests for hybrid products that it has developed. It intends to open a pilot plant in Belgium.

In April 2021, we commenced food technology development activities through our European subsidiary, MeaTech Europe BV, with an initial focus on hybrid foods using Peace of Meat’s cultivated fat. Hybrid foods are products composed of both plant and cultivated meat ingredients that have the potential to offer a meatier experience than purely plant-based meat alternatives.

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In March 2022, we announced that Peace of Meat intends to build an R&D facility and pilot plant in Belgium. The new facility is designed to expand and accelerate our cultivated avian technology and R&D capabilities and help propel our market entry.

In May 2022, Peace of Meat signed a strategic agreement with 3FBIO Ltd., trading as ENOUGH, a leader in the field of mycoprotein, a fungi-based fermented food ingredient, which is expected to help accelerate commercialization of our culture avian fat product. This innovative initiative is expected to create advanced hybrid alternative meat products that better resemble the flavor, aroma, texture, and even nutritional value of conventional meat.

Asia
In November 2022, we received a registered trademark for our name in Japan, which we view as an important next step in our plans to penetrate the Japanese market and other markets in Asia. This follows on our collaboration with Umami Meats, a Singapore-based cultivated seafood company, for the joint development of 3D-printed cultivated structured seafood.

Sales and Distribution
 
We are working to develop and establish sales and distribution capabilities. In the event that we complete the development of our technologies and secure adequate funding, we intend to consider commercialization collaborations where appropriate.

Apart from end consumers in B2C and B2B2C models of branded products, we believe that our ideal business customers will be value-added food processors and retailers that wish to benefit from cultivated meat manufacturing capabilities. We intend to provide our corporate customers with a solution to these needs in the form of highly-automated, cleaner and ‘just-in-time’ manufacturing of cultivated meat products using a repeatable, consistent manufacturing process. Our goal is for our customers to be able to streamline their meat supply chain, introduce greater manufacturing flexibility and locate their cultivated meat production facilities closer to the point of retail or consumption.
 
We intend to provide our business licensees with assistance in constructing facilities to employ our proprietary technology and processes. We expect that we will need to collaborate with third parties to obtain and make available to our customers the expertise necessary to provide this assistance. In addition, we intend to procure the equipment our licensees need to deploy our proprietary technology and processes from third-party providers. Some equipment, such as piping, clean rooms and packing and freezing equipment are standard industry equipment and can be sourced on open markets. Other equipment, such as bioreactors and our proprietary bioprinters, will need to be produced by contract manufacturers.
 
Intellectual Property
 
We have sought and continue to seek patent protection as well as other intellectual property rights for our products, processes and technologies in the United States and internationally. Our policy is to pursue, maintain, expand, protect and defend our patent rights and trade secrets, which we believe enable us to deliver long-term protection for the proprietary technologies, inventions and improvements that are commercially important to the development of our business.

During the course of 2022, we received notices of grant or allowance for patent applications in the USA, Canada, Australia and New Zealand relating to our development of systems and methods to apply external forces to muscle tissue that result in the development of high-quality complex structured meat.

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We have a growing portfolio of 15 provisional and non-provisional patent applications pending with the USPTO, WIPO (filed through the Paris Convention Treaty, or PCT, and in various countries worldwide. A provisional patent application is a preliminary application, and establishes a priority date for the patenting process of inventions disclosed therein.
  
Our existing patent portfolio can currently be divided into three main areas: 
 
Mechanical: covering printer components and peripherals used in the fabrication of the tissue cultures with two applications filed
 at the national stage of prosecution. The first; directed to print heads operable in a bioprinting systems for the fabrication of edible biostructures using drop-on-demand, the print heads specifically designed to accommodate bio fluids of suspended systems without causing demixing, while still delivering bio fluids with high accuracy and precision.

Following a favorable patentability opinion, the Application was filed in the USPTO and is currently undergoing accelerated examination having received a grant for a petition to make special under the Patent Prosecution Highway (PPH) program.  The second application currently undergoing examination in 7 countries, is directed to systems and methods of physically manipulating a resilient container (bladder) of bioprinted tissue culture having non-random three dimensional cell structure over 4 dimensions, namely elongation, compression, torsion and shear, to modulate the tissue and achieve the desired texture for each meat type. The Application was already granted in United States, Australia, and New Zealand, and was given a notice of allowance in Canada. 

Current development work in the mechanical area will most likely result in the development of additional intellectual property, although at this point it remains to be seen whether it would be registerable.
  
Biological: covering initial materials used in the process with several provisional, and PCT applications filed and currently pending. 
  
These include an application directed to methods for harvesting ICM from bovine blastocysts; methods and compositions for the xeno-free propagation of bESC on bovine umbilical stem cells (bUCSC), derived from a bovine umbilical cord; the use of plant-based lecithins and/or their components in a composition as a differentiation drivers for use in selectively promoting adipocytes differentiation; and methods and compositions for accelerated myotube formation.

Applications: covering the final consumable formed using mechanical and biological inputs, with a couple of applications currently pending.

These include a provisional application for a beef-emulating consumable formed of stacked 3D-pronted layers of muscle and fat tissues; and an application for a method and composition for achieving the flaky characteristics associated with fish.
  
In addition to patent applications, we maintain trade secrets covering know-how and proprietary information relating to our core technologies and make practicable efforts to protect our confidential trade secrets.  To this end, we require our employees engaged in the development of intellectual property to enter into confidentiality agreements prohibiting the disclosure of confidential information and further, require disclosure and assignment of any inventions and associated intellectual property rights that are important to our business. Additionally, we require all entering employees to represent they are not bringing in, or are using any third party’s Trade Secrets. We have also registered our new name and logo as registered trademarks in various countries, and maintain ongoing rights to our domain name. Steakholder Foods® was registered in Japan and is currently undergoing examination in several other countries, including US.

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While our policy is to obtain patents by application, license or otherwise, to maintain trade secrets and to seek to operate without infringing on the intellectual property rights of third parties, technologies related to our business have been rapidly developing in recent years. Additionally, patent applications that we may file or license from third parties may not result in the issuance of patents, and our current or future issued patents may be challenged, invalidated or circumvented. Therefore, we cannot predict the extent of claims that may be allowed or enforced against our patents, nor be certain of the priority of inventions covered by pending third-party patent applications. If third parties prepare and file patent applications that also claim technology or therapeutics to which we have rights, we may have to engage in proceedings to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable. Moreover, because of the extensive time required for clinical development and regulatory review of products we may develop, it is possible that the patent or patents on which we rely to protect such products could expire or be close to expiration by the commencement of commercialization, thereby reducing the value of such patent. Loss or invalidation of certain of our patents, or a finding of unenforceability or limited scope of certain of our intellectual property, could also have a material adverse effect on us. See “Risk Factors — Risks Related to our Intellectual Property and Potential Litigation.”.

Competition
 
We expect that demand for our cultivated meat manufacturing plants will be driven by consumer demand for alternative proteins and, more specifically, consumer acceptance of cultivated meat as the alternative protein of choice. We believe that we will compete with other cultivated meat manufacturers, alternative protein manufacturers and the conventional meat industry as a whole. We expect to directly compete with companies licensing know-how or otherwise enabling the establishment of cultivated meat manufacturing plants. We are aware of certain companies that have announced plans to provide their cultivated meat technology on a B2B basis; however, we are not currently aware of a potential competitor focusing on complex, industrial-scale, bioprinted, high-value real meats, such as steak.

Companies such as Upside Foods, Inc. and Mosa Meat BV are focused on producing red meats, while BluNalu, Inc. is focusing on fish and Shiok Meats Pte. Ltd. is focusing on crustaceans. There are different companies working on culturing varying cell types, such as chicken, pork, kangaroo and foie gras. This push on scaling-up cellular agriculture can serve as a solution to the scale and environmental challenges confronting traditional meat production. Other alternative protein competitors such as Beyond Meat, Inc. and Impossible Foods, Inc. are already selling plant-based meat substitutes, but to the best of our knowledge, these companies are not focused on the production of real meat products produced with animal cells.
 
Companies Developing Vegetable and Insect Protein Alternatives
 
There are numerous companies focused on developing meat substitutes. In order for a product to achieve commercial acceptance as an alternative to meat, it must have an appearance, taste, smell and nutritional values ​that are similar enough to the type of meat that it seeks to replace or with which it seeks to compete. These meat substitute companies generally employ proprietary formulae for manufacturing that are based wholly on ingredients of plant origin. In addition, we are aware of several companies developing insect-protein production capabilities, employing among other insects, flies, larvae and grasshoppers.
 
Companies Developing Cultivated Meat
 
The cellular agriculture meat sector is in early stages of development. The sector is currently primarily comprised of companies developing a full technology stack from developing cell lines to scaling up cellular cultivation, developing media and researching the food technology aspects of the final product. Market dynamics have led to a large number of companies operating in this manner. We are aware of approximately one company that operates in the cell-based field that is developing cellular agriculture for ground-meat alternatives and appears to be progressing with its technological development. This company has indicated readiness to bring cell-based meat products to market as early as the fourth quarter of 2022 or 2023. We do not believe that any companies in this space have already developed the capability to produce industrial quantities at prices low enough to compete on a dollar-per-pound basis against conventionally-harvested meat.


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A number of larger companies have begun engaging in this sector. For example, companies such as Merck & Co., Inc. and Lonza Group AG are currently investing in capabilities to accommodate the market’s desire for change in the cell culture media market. Additionally, a number of bioreactor companies are rumored to be interested in the cellular agriculture market opportunity. Over time, we expect that larger players will continue to increase their exposure to cellular meat production either by selling to, or collaborating with, the many start-ups in the space.
 
Currently, cellular agriculture companies are for the most part paving their own path, with a goal of producing meat cells suitable as a replacement for ground meat. The ground meat type of cellular product may also be suitable as an ingredient in a hybrid plant-based food product. The cell-types relevant to this effort are primarily muscle and fat cells. What exactly these cell-based companies will offer is likely to be affected by consumer expectations and underlying cost structures. We believe that these companies may have to mix their cellular meat product with plant-based ingredients in the interests of cost or appearance.
 
Companies Developing Structured Cultivated Meat Products
 
To our knowledge, there is currently no other company focused on the scaling up of three-dimensional bioprinting. However, there are companies attempting to produce steaks by means of other approaches, such as growing bovine cells, including fat, muscle and connective tissue on a pre-prepared scaffold, in order to create a contiguous piece of meat, which has so far yielded steaks.

Government Regulation
 
Regulators around the world are in the process of developing a regulatory approval process for cultivated meat. Cultivated meat is not yet generally commercially available, but technologies like ours are anticipated to facilitate the imminent scaling up of cultivated meat production. In general, cultivated meat production is expected to be subject to extensive regulatory laws and regulations in the United States and in other jurisdictions such as Canada, Japan, the European Union and the United Kingdom. In the United States, existing food safety requirements are expected to apply. Additional details are being developed at the U.S. Food and Drug Administration, or FDA, and the U.S. Department of Agriculture, or USDA, pursuant to a Memorandum of Understanding, or MOU, published by the FDA and USDA on March 7, 2019 entitled the “Formal Agreement to Regulate Cell-Cultured Food Products from Cell Lines of Livestock and Poultry.” For example, the FDA anticipates publishing Draft Guidance on premarket safety oversight by December 31, 2022, and in September 2021, the USDA published an Advance Notice of Proposed Rulemaking (ANPR), indicating that the USDA will be developing new labeling requirements for foods under its jurisdiction produced through cell culture technology.  
 
Under the MOU, which is expected to affect our customers producing cultivated meat, the two agencies will operate under a joint regulatory framework wherein the FDA will oversee cell collection, cell banks and cell growth and differentiation. A transition from FDA to USDA oversight will then occur during the cell harvest stage, at which point the USDA will oversee the production and labeling of cultivated meat. The USDA will be advancing new labeling requirements. To the best of our knowledge, the regulatory approval details under development, including the Draft Guidance on FDA premarket oversight, are not expected to apply to our business directly, but they are instructive as to the regulatory requirements that our cultivated meat production customers are expected to face and their expectations of us, in the form of customer assurances, regarding our products.

At this time, our business is limited to developing cultivated meat production technology, such as bioprinters, that will be marketed to cultivated meat producers, and that of Peace of Meat, which is limited to developing cultivated meat ingredients, such as cultivated avian fat. In the United States, and consistent with the Federal Food, Drug and Cosmetic Act, or the FDCA, the Federal Meat Inspection Act, and the Poultry Products Inspection Act, food ingredient manufacturers, like Peace of Meat, must comply with the FDA’s food production requirements under the FDCA, as amended by the Food Safety Modernization Act, to ensure that the food is safe, and the USDA's requirements that the ingredients, when used in USDA-regulated meat and poultry products, are effective and suitable for their intended use.

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In addition, production equipment manufacturers must ensure that their products do not contribute to the production of adulterated food. The regulatory obligation falls on the food manufacturer to ensure that all food produced, including cultivated meat, is wholesome and not adulterated. Therefore, when sourcing food processing equipment, such as the three-dimensional bioprinter that we are developing, our customers will request assurances that the bioprinter is safe for its intended use and will not result in the production of adulterated food. We intend to monitor developments at the FDA and USDA in connection with the MOU to determine whether any specific requirements or recommendations are published with specific regard to cultivated meat equipment manufacturers.
 
In the United States, we expect companies manufacturing cultivated meat products to be subject to regulation by various government agencies, including the FDA, USDA, and the FTC. Equivalent foreign regulatory authorities include the Canadian Food Inspection Agency, the Japanese Food Safety Commission, the European Food Safety Authority and authorities of the EU member states, the State Food and Drug Administration of China and the Singapore Food Agency, or SFA. These agencies, among other things, prescribe the requirements and establish the standards for food quality and safety, and regulate various food technologies, including alternative meat product composition, ingredients, manufacturing, labeling and other marketing and advertising to consumers.
 
In June 2022, Singapore was the first country to approve cultivated meat for sale. The SFA has published comprehensive guidance explaining all of the requirements necessary for the safety assessment of novel foods, covering all of the specifications required for the approval of cultivated meat in Singapore.

In November 2022, the FDA announced that it completed its first pre-market consultation of human food made from cultured animal cells. Through a process with a U.S.-based cultivated meat technology company, which involved evaluating the company’s production process and the cultured cell material made by the production process, including the establishment of cell lines and cell banks, manufacturing controls, and all components and inputs, the FDA determined that it had no further questions about the company’s safety conclusion. As this was the first instance of the FDA giving the greenlight to a cultivated meat product, the FDA further announced that the world is experiencing a food revolution and the FDA is committed to supporting innovation in the food supply.

We expect that federal, state and foreign regulators will have the authority to inspect our customers’ facilities to evaluate compliance with applicable food safety requirements. Federal, state and foreign regulatory authorities also require that certain nutrition and product information appear on the product labels of our customers’ food products and, more generally, that such labels, marketing and advertising be truthful, non-misleading and not deceptive to consumers.
 
As the cell-based agriculture industry is young and its regulatory framework is emerging and evolving, legislation and regulation may evolve to raise barriers to our go-to-market strategies.
 
In addition to federal regulatory requirements in the United States, certain states impose their own manufacturing and labeling requirements. For example, states typically require facility registration with the relevant state food safety agency, and those facilities are subject to state inspections as well as federal inspections. Further, states can impose state-specific labeling requirements. In the United States, the USDA will be developing new labeling requirements for foods under its jurisdiction produced through cell culture technology as noted in an Advance Notice of Proposed Rulemaking (ANPR) published in September 2021.
 
We are subject to labor and employment laws, laws governing advertising, privacy laws, safety regulations and other laws, including consumer protection regulations that regulate retailers or govern the promotion and sale of merchandise. Our operations are subject to various laws and regulations relating to environmental protection and worker health and safety matters. We monitor changes in these laws and believe that we are in material compliance with applicable laws.

Environmental, Health and Safety Matters

We, our agents and our service providers, including our manufacturers, may be subject to various environmental, health and safety laws and regulations, including those governing air emissions, water and wastewater discharges, noise emissions, the use, management and disposal of hazardous, radioactive and biological materials and wastes and the cleanup of contaminated sites. We believe that our business, operations and facilities, including, to our knowledge, those of our agents and service providers, are being operated in compliance in all material respects with applicable environmental and health and safety laws and regulations. Based on information currently available to us, we do not expect environmental costs and contingencies to have a material adverse effect on us. However, significant expenditures could be required in the future if we, our agents or our service providers are required to comply with new or more stringent environmental or health and safety laws, regulations or requirements.

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Except as stated above, we are not aware of any environmental risks related to our operations, and therefore, we do not believe that environmental regulations will have a significant effect on us. However, in the future, we may be required to meet environmental protection standards or regulations which could have a material impact on our activities, activities, profitability and ability to remain competitive.

Organizational Structure
 
Our subsidiaries and the countries of their incorporation are as follows:
 
Name
 
Jurisdiction of
Incorporation
 
 
Parent
 
% Ownership
(direct or
otherwise)
 
Steakholder Foods USA, Inc.
 
 
Delaware, U.S.
 
 
Steakholder Foods Ltd.
 
 
100
%
Steakholder Innovation Ltd.
 
 
Israel
 
 
Steakholder Foods Ltd.
 
 
100
%
Steakholder Foods Europe BV
 
 
Belgium
 
 
Steakholder Foods Ltd.
 
 
100
%
Peace of Meat BV
 
 
Belgium
 
 
Steakholder Foods Europe BV
 
 
100
%

Property and Infrastructure

Our principal executive offices and laboratory are located at 5 David Fikes St., Rehovot, Israel. The laboratory and office space total approximately 18,300 square feet. The lease for this facility will expire in January 2026, although we have an option to renew it for four years, and the annual rent (including parking fees) is approximately $0.7 million, linked to the Israeli CPI.

Employees

As of October 31, 2022, we had 48 employees based at our office and laboratory in Rehovot, Israel and 32 employees based at our office in Antwerp, Belgium.
 
Local labor laws govern the length of the workday and workweek, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination, Social Security payments or regional equivalents, and other conditions of employment, including equal opportunity and anti-discrimination laws. None of our employees is party to any collective bargaining agreements. We generally provide our employees with benefits and working conditions beyond the required minimums. We believe we have a good relationship with our employees, and have never experienced any employment-related work stoppages.

Legal Proceedings

From time to time, we may be party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations.

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MANAGEMENT

The following table sets forth the name, age and position of each of our executive officers and directors as of the date of this prospectus. Unless otherwise stated, the address of our executive officers and directors is Steakholder Foods Ltd., 5 David Fikes St., Rehovot 7638205, Israel.

Name
 
Age
 
Position
Executive Officers:
       
Arik Kaufman          
 
42
 
Chief Executive Officer
Guy Hefer          
 
41
 
Chief Financial Officer
Dan Kozlovski          
 
38
 
Chief Technologies Officer
Non-Employee Directors:
       
Yaron Kaiser          
 
44
 
Chairman of the Board of Directors
David Gerbi(1)(2)(3)          
 
43
 
Director
Eli Arad(1)(2)(3)          
 
49
 
Director
Sari Singer(1)(2)(3)          
 
42
 
Director

(1)          Member of the audit committee
(2)          Member of the compensation committee
(3)          Independent director as defined under Nasdaq Marketplace Rule 5605(a)(2) and SEC Rule 10A-3(b)(1).

Executive Officers

Arik Kaufman, Chief Executive Officer

Arik Kaufman has served as our Chief Executive Officer since January 2022. He has founded various Nasdaq- and TASE-traded foodtech companies, and currently serves as director of Wilk Technologies Ltd.  He is also a founding partner of the BlueSoundWaves collective, led by Ashton Kutcher Guy Oseary and Effie Epstein, which recently partnered with Steakholder Foods to assist in attempting to accelerate the Company’s growth. Mr. Kaufman holds extensive personal experience in the fields of food-tech and bio-tech law, and has led and managed numerous complex commercial negotiations, as part of local and international fundraising, M&A transactions and licensing agreements. He holds a B.A. degree in Law from Reichman University (formerly the Interdisciplinary Center Hertzliya).

Guy Hefer, Chief Financial Officer

Guy Hefer has served as our Chief Financial Officer since October 2020. He has over ten years of experience in investment banking and corporate finance roles. Between 2019 and 2020, he was the chief financial officer of Prytek Holdings Pte Ltd., a private holding group investing in technology companies globally. Prior to that, Mr. Hefer was an investment banker at Leumi Partners Ltd. between 2018 and 2019 and GCA Altium Israel Ltd. between 2017 and 2018 in Israel and at Barclays investment banking division between 2011 and 2016 in the UK and in Israel. Prior to that Guy worked at Fahn Kanne Grant Thornton Israel, an accounting firm in Israel between 2009 and 2011. Mr. Hefer holds a B.A. degree in Accounting and Economics from the Tel Aviv University, Israel.

Dan Kozlovski, Chief Technologies Officer

Dan Kozlovski has served as our Chief Technologies Officer since February 2022, having previously served as our Vice President of Research & Development from August 2020 after joining us in December 2019. He specializes in R&D and product development, with expertise in three-dimensional computer-aided design. Mr. Kozlovski has more than ten years of experience working in high-technology companies in the printing market. Previously, he served as Future Platform R&D Mechanical Engineer at HP Indigo Division from June 2018 to December 2019. Mr. Kozlovski has also worked as Mechanical Team Leader at Nano Dimension Ltd. from August 2015 to June 2018. Mr. Kozlovski holds a B.Sc. degree in Mechanical Engineering from Ben Gurion University of the Negev and an Executive MBA in Technology, Innovation & Entrepreneurship Management from Tel Aviv University.

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Directors

Yaron Kaiser, Chairman of the Board of Directors

Yaron Kaiser has founded various Nasdaq- or TASE-traded foodtech companies, and has served as Chairperson of Wilk Technologies Ltd. since January 2021. Mr. Kaiser is a founding partner of the BlueSoundWaves collective since 2021, and practices law in the fields of securities, commercial and corporate law, representing numerous public companies on fundraising, IPOs, M&A, the Israel Securities Authority and corporate governance, most recently at JST & Co., Law Office, between 2010 and May 2021, and since then as a founding partner of Kaufman Kaiser Raz, Law Firm. He holds an LL.B. degree from the College of Management Academic Studies, Israel.

Eli Arad, Director

Eli Arad has served as a director since February 2018. Mr. Arad has been chief executive officer of the real-estate and life science investment company Merchavia Holdings and Investments Ltd (TASE:MRHL) since 2011. Mr. Arad has served as a director of Cleveland Diagnostics, Inc., a clinical-stage biotechnology company developing technology to improve cancer diagnostics since 2016, E.N. Shoham Business Ltd. (TASE:SHOM) since 2019, and a number of privately-held companies (Veoli Ltd., Train Pain Ltd., EFA Ltd., Nervio Ltd. and Cardiosert Ltd.). He has had leadership roles in many biomedical startup companies, and has extensive experience in all areas of financial management. Mr. Arad is a certified practicing accountant who holds a diploma in Accounting from Ramat Gan College and an Executive B.A. (Hons.) in Business Administration from the Ruppin Academic Center.

David Gerbi, Director

David Gerbi has served as a director since August 2019. Mr. Gerbi is managing partner of accounting firm Gerbi & Co., and serves as Chief Financial Officer of Israir Group Ltd. (TASE:ISRG) since 2017, Erech Finance Cahalacha Ltd. (TASE:EFNC) since 2019, Nur Ink Innovations Ltd. (TASE:NURI) since June 2021 and Bee-io Honey Ltd. (TASE:BHNY) since November 2021. Mr. Gerbi holds a B.A. in Business Administration and Accounting from the Israeli College of Management Academic Studies and an M.B.A. in Finance from Tel Aviv University.

Sari Singer, Director

Sari Singer has served as a director since March 2021. Ms. Singer has served as General Counsel and Executive Vice President at NewMed Energy LP (formerly Delek Drilling LP), the oil and gas arm of the Delek Group in Israel, and a partner in the Leviathan offshore gas field, as well as other petroleum assets offshore Israel and Cyprus, since 2012, where she has led significant strategic processes, including restructurings and complex financing rounds totaling some $7 billion in various transactions in the international and domestic markets. Ms. Singer holds an LL.B. (cum laude) from Tel Aviv University and has been a member of the Israel Bar since 2007.

Family Relationships

There are no family relationships among any of our directors or officers.

Compensation of Executive Officers and Directors

Aggregate Compensation of Office Holders

The aggregate compensation we paid to our executive officers and directors for the year ended December 31, 2021, was approximately $1.2 million. This amount includes approximately $0.2 million paid, set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include share-based compensation expenses, or business travel, professional and business association dues and expenses reimbursed to office holders, and other benefits commonly reimbursed or paid by companies in our industry. As of the date of this prospectus, options to purchase 2,472,540 Ordinary Shares granted to our officers and directors were outstanding under our share option plans at a weighted average exercise price of $0.62 per share, in addition to 157,790 restricted share units with no exercise price.

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Individual Compensation of Office Holders

The table and summary below outlines the compensation granted to our then-Chief Executive Officer and Chief Technology Officer, the then-Chairman of our board of directors, our then-Deputy Chief Executive Officer, our Chief Financial Officer and our then-Vice President of Research and Development (now Chief Technologies Officer), with respect to the year ended December 31, 2021. For purposes of the table and the summary below, “compensation” includes base salary, bonuses, equity-based compensation, retirement or termination payments, benefits and perquisites such as car, phone and social benefits and any undertaking to provide such compensation.

Name and Principal Position
 
Salary(1)
   
Bonus(2)
   
Equity-Based
Compensation(3)
   
Other
Compensation(4)
   
Total
 
   
(USD in thousands)
 
Mr. Steven H. Lavin
                             
Chairman of the Board of Directors(5)          
 
$
180
   
$
-
   
$
281
     
-
   
$
461
 
Mr. Sharon Fima
                                       
Chief Executive Officer & Chief Technology Officer(6)
   
240
     
-
     
83
     
-
     
323
 
Mr. Omri Schanin (7)
                                       
Deputy Chief Executive Officer          
   
190
     
46
     
121
     
-
     
357
 
Mr. Guy Hefer
                                       
Chief Financial Officer          
   
193
     
39
     
116
     
-
     
348
 
Mr. Dan Kozlovski
                                       
Vice-President, Research & Development (later Chief Technologies Officer)
 
$
170
   
$
48
   
$
24
     
-
   
$
242
 


(1)
Salary includes the officer’s gross salary plus payment by us of social benefits on behalf of the officer. Such benefits may include payments, contributions and/or allocations for savings funds (e.g., Managers’ Life Insurance Policy), pension, severance, risk insurance (e.g., life, or work disability insurance), payments for social security and tax gross-up payments, vacation, medical insurance and benefits, convalescence or recreation pay and other benefits and perquisites consistent with our policies.


(2)
Represents annual bonuses paid with respect to 2021.


(3)
Represents the equity-based compensation expenses recorded in our consolidated financial statements for the year ended December 31, 2021, based on the options’ fair value on the grant date, calculated in accordance with applicable accounting guidance for equity-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 10(B) to our annual consolidated financial statements included elsewhere in this prospectus.


(4)
Represents benefits and perquisites such as car, phone and social benefits.


(5)
Mr. Levin resigned his position as Chairman on January 24, 2022.
 

(6)
Mr. Fima resigned as Chief Executive Officer & Chief Technology Officer on January 24, 2022.
 

(7)
Mr. Schanin resigned as Deputy Chief Executive Officer as of April 27, 2022.
 


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Employment Agreements and Director Fees

      We have entered into written employment agreements with each of our executive officers, which provide for notice periods of varying duration for termination of the agreement by us or by the relevant executive officer, during which time the executive officer will continue to receive base salary and benefits. These agreements also contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. See “Risk Factors — Risks relating to our operations — Under applicable employment laws, we may not be able to enforce covenants not to compete” for a further description of the enforceability of non-competition clauses.

The material employment terms for Mr. Kaufman, our Chief Executive Officer, are as follows: (1) a gross annual salary of NIS 564,000 ($176,000); (2) reimbursement of annual travel expenses of up to NIS 60,000 ($19,000); (3) options to purchase 500,000 Ordinary Shares (currently equivalent to 50,000 ADSs), vesting over three years from the date of his appointment as Chief Executive Officer, pursuant to which 1/12 will vest every quarter until fully vested, expiring one year following Mr. Kaufman’s cessation of service in all then-applicable capacities, but in any case after four years, with an exercise price of $0.519 per ordinary share (currently equivalent to $5.19 per ADS) and subject to acceleration upon termination pursuant to our sale or change in control; (4) an annual performance bonus in the aggregate amount of NIS 282,000 ($87,000), subject to his meeting certain performance milestones as determined by our board of directors on an annual basis; (5) termination of the employment relationship upon provision of six months’ advance notice by either party; (6) severance pay equal to 25% of the gross annual salary upon termination of Mr. Kaufman’s employment by us, not for cause, following three to twelve months of service, or 50% following twelve or more months of service (or 50% of these amounts upon Mr. Kaufman’s resignation); and (7) social benefits that we pay on behalf of officers, such as payments, contributions and/or allocations for savings funds (e.g., Managers’ Life Insurance Policy), pension, severance, risk insurance (e.g., life, or work disability insurance), payments for social security and tax gross-up payments, vacation, medical insurance and benefits, convalescence or recreation pay and other benefits and perquisites consistent with our policies, such as inclusion in our directors’ and officers’ liability insurance policy, and provision of indemnification, exculpation and exemption undertakings to the fullest extent permitted by the Companies Law.

The material terms for Mr. Kaiser, the Chairman of our board of directors, are as follows: (1) an annual fee of $150,000, to be paid in four equal quarterly installments in USD or in NIS at the then-current exchange rate, which will automatically increase by an amount equal to seven percent at the end of each year of service; (2) reimbursement of annual travel expenses of up to $18,000; (3) options to purchase 350,000 Ordinary Shares (currently equivalent to 35,000 ADSs), vesting over three years from the date of his appointment as Chairman, pursuant to which 1/12 will vest every quarter until fully vested, expiring one year following Mr. Kaiser’s cessation of service in all then-applicable capacities, but in any case after four years, with an exercise price of $0.519 per ordinary share (currently equivalent to $5.19 per ADS) and subject to acceleration upon termination pursuant to our sale or change in control; (4) an annual bonus equal to 50% of the bonus awarded to the Chief Executive Officer in the applicable year; (5) severance pay equal to 12.5% of Mr. Kaiser’s annual fee upon the involuntary termination of his directorship, not for cause, following three to twelve months of service, or 25% following twelve or more months of service (or 50% of these amounts upon Mr. Kaiser’s resignation); and (6) other benefits and perquisites consistent with our policies, such as inclusion in our directors’ and officers’ liability insurance policy, and provision of indemnification, exculpation and exemption undertakings to the fullest extent permitted by the Companies Law.

In addition, we pay fees to our non-executive directors in return for their service on our board of directors, in accordance with our compensation policy.

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Our other employees are employed under the terms prescribed in their respective employment contracts. The employees are entitled to the social benefits prescribed by law and as otherwise provided in their agreements. These agreements each contain provisions standard for a company in our industry regarding non-competition, confidentiality of information and assignment of inventions. Under currently applicable labor laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees. See “Risk Factors—Risks Related to Our Operations” for a further description of the enforceability of non-competition clauses.

Executive officers are also employed on the terms and conditions prescribed in employment agreements. These agreements provide for notice periods of varying duration for termination of the agreement by us or by the relevant executive officer, during which time the executive officer will continue to receive base salary and benefits. See “Risk Factors—Risks Related to Our Operations—If we are unable to attract and retain qualified employees, our ability to implement our business plan may be adversely affected.”

Option and RSU Allocation Plan 

In June 2018, the board of directors of Ophectra adopted our Option and RSU Allocation Plan, as amended, or the share option plan, to issue options to purchase our Ordinary Shares and restricted stock units to our directors, officers, employees and consultants, and those of our affiliated companies (as such term is defined under share option plan), or the Grantees. The share option plan is administered by our board of directors or a committee that was designated by the board of directors for such purpose, or the Administrator.

Under the share option plan, we may grant options to purchase Ordinary Shares and/or RSUs, or options, under four tracks: (i) Approved 102 capital gains options through a trustee, which was approved by the Israeli Tax Authority in accordance with Section 102(a) of the Israeli Income Tax Ordinance (New Version), 1961, or ITO, and granted under the tax track set forth in Section 102(b)(2) of the ITO. The holding period under this tax track is 24 months from the date of issuance of options to the trustee or such period as may be determined in any amendment of Section 102 of the ITO, or any applicable tax ruling or guidelines; (ii) Approved 102 earned income options through a trustee, granted under the tax track set forth is Section 102(b)(1) of the ITO. The holding period under this tax track is 12 months from the date of issuance of options to the trustee or such period as may be determined in any amendment of Section 102 of the ITO; (iii) Unapproved 102 options (the options will not be issued through a trustee and will not be subject to a holding period); and (iv) 3(i) options (the options will not be subject to a holding period). These options shall be subject to taxation pursuant to Section 3(i) of the ITO, or Section 3(i).

Options pursuant to the first three tax tracks (under Section 102 of the ITO) can be granted to our employees and directors and the grant of options under Section 3(i) can be granted to our consultants and controlling shareholders (a controlling shareholder is defined under the Section 102 of the ITO is a person who holds, directly or indirectly, alone or together with a “relative,” (i) the right to at least 10% of the company’s issued capital or 10% of the voting power; (ii) the right to hold at least 10% of the company’s issued capital or 10% of the voting power, or the right to purchase such rights; (iii) the right to receive at least 10% of the company’s profits; or (iv) the right to appoint a company’s director). Grantees who are not Israeli residents may be granted options that are subject to the applicable tax laws in their respective jurisdictions.

We determine, in our sole discretion, under which of the first three tax tracks above the options are granted and we notify the Grantee in a grant letter, as to the elected tax track. As mentioned above, consultants and controlling shareholders can only be granted Section 3(i) options.

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The number of Ordinary Shares authorized to be issued under the share option plan will be proportionately adjusted for any increase or decrease in the number of Ordinary Shares issued as a result of a distribution of bonus shares, change in our capitalization (split, combination, reclassification of the shares or other capital change), or issuance of rights to purchase Ordinary Shares or payment of a dividend. We will not issue fractions of Ordinary Shares and the number of Ordinary Shares shall be rounded up to the closest number of ordinary shares.

In the event of a (i) merger or consolidation in which we (in this context, specifically Steakholder Foods Ltd.) are not the surviving entity or pursuant to which the other company becomes our parent company or that pursuant to which we are the surviving company but another entity holds 50% or more of our voting rights, (ii) an acquisition of all or substantially all of our Ordinary Shares, (iii) the sale of all or substantially all of our assets, or (iv) any other event with a similar impact, we may exchange all of our outstanding options granted under the share option plan that remain unexercised prior to any such transaction for options to purchase shares of the successor corporation (or those of an affiliated company) following the consummation of such transaction.

The exercise price of an option granted under the share option plan will be specified in the grant letter every Grantee received from us in which the Grantee notifies of the decision to grant him/her options under the share option plan, and will be denominated in our functional currency at the time of grant or the currency in which the Grantee is paid, at our discretion.

The Administrator may, in its absolute discretion, accelerate the time at which options granted under the share option plan or any portion of which will vest.

Unless otherwise determined by the Administrator, in the event that the Grantee’s employment was terminated, not for Cause (as defined in the share option plan), the Grantee may exercise that portion of the options that had vested as of the date of such termination until the end of the specified term in the grant letter or the share option plan. The portion of the options that had not vested at such date, will be forfeited and can be re-granted to other Grantees, in accordance with the terms of the share option plan.

At the discretion of our board of directors, and subject to receipt of taxation authority approvals, we may allow Grantees to exercise their options on a cashless basis.

2022 Share Incentive Plan

The 2022 Share Incentive Plan, or the 2022 Plan, provides for the grant of equity-based incentive awards to our employees, directors, office holders, service providers and consultants in order to incentivize them to increase their efforts on behalf of the Company and to promote the success of the Company’s business.

Shares Available for Grants. The maximum number Shares (which means ordinary shares, of no par value, (including ordinary shares resulting or issued as a result of share split, reverse share split, bonus shares, combination or other recapitalization events, and including in the form of ADSs), or shares of such other class of shares as shall be designated by the board of directors of the Company in respect of the relevant award) available for issuance under the 2022 Plan is equal to the sum of (i) 8,500,000 Shares, (ii) 1,127,850 Shares, which represents the number of Shares available for issuance under the Option and RSU Allocation Plan, or the Prior Plan, on the effective date of the 2022 Plan, and (iii) an annual increase on the first day of each year beginning in 2023 and on January 1st of each calendar year thereafter and ending on January 1, 2032, equal to the lesser of (A) 5% of the outstanding ordinary shares of the Company on the last day of the immediately preceding calendar year, on a fully diluted basis; and (B) such amount as determined by our board of directors if so determined prior to January 1 of a calendar year. Shares issued under the 2022 Plan may be, in whole or in part, authorized but unissued Shares, (and, subject to obtaining a ruling as it applies to 102 awards) treasury shares (dormant shares) or otherwise Shares that shall have been or may be repurchased by the Company (to the extent permitted pursuant to the Companies Law).

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Any Shares (a) underlying an award granted under the 2022 Plan or an award granted under the Prior Plan (in an amount not to exceed 8,498,490 Shares under the Prior Plan) that has expired, or was cancelled, terminated, forfeited, or settled in cash in lieu of issuance of Shares, for any reason, without resulting in the issuance of Shares; (b) if permitted by the Company, subject to an award that are tendered to pay the exercise price of an award; or withholding tax obligations with respect to an award; or  if permitted by the Company, subject to an award that are not delivered to a Grantee because such Shares are withheld to pay the exercise price of such award; or withholding tax obligations with respect to such award may again be available for issuance under the 2022 Plan and for issuance upon exercise or (if applicable) vesting thereof for the purposes of the 2022 Plan, unless determined otherwise by the Board. Our board of directors may also reduce the number of ordinary shares reserved and available for issuance under the 2022 Plan in its discretion.

The maximum aggregate number of Shares that may be issued pursuant to the exercise of incentive stock options granted under the 2022 Plan, or the ISO Limit, shall be the sum of (a) the aggregate number of Shares set forth in clauses (a) and (b) in the above paragraph; and (b) any Shares underlying awards granted under the Prior Plan that are returned to the 2022 Plan (not to exceed 8,498,490 Shares). To the extent permitted under Section 422 of the United States Internal Revenue Code of 1986, and any applicable regulations promulgated thereunder, all as amended (the “Code”), any Shares covered by an award that has expired, or was cancelled, terminated, forfeited, or settled in cash without the issuance of Shares shall not count against the ISO Limit. Shares that actually have been issued under the 2022 Plan shall not become available for future issuance hereunder pursuant to incentive stock options.

Administration. Our board of directors, or a duly authorized committee of our board of directors, or the Administrator, or the Administrator, will administer the 2022 Plan. Under the 2022 Plan, the Administrator has the authority, subject to applicable law, to interpret the terms of the 2022 Plan and any award agreements or awards granted thereunder, designate recipients of awards, determine and amend the terms of awards, including the exercise price of an option award, the fair market value of an ordinary share, the time and vesting schedule applicable to an award or the method of payment for an award, accelerate or amend the vesting schedule applicable to an award, prescribe the forms of agreement for use under the 2022 Plan and take all other actions and make all other determinations necessary for the administration of the 2022 Plan.

The Administrator also has the authority to approve the conversion, substitution, cancellation or suspension under and in accordance with the 2022 Plan of any or all option awards or ordinary shares, and the authority to modify option awards to eligible individuals who are foreign nationals or are individuals who are employed outside Israel to recognize differences in local law, tax policy or custom, in order to effectuate the purposes of the 2022 Plan but without amending the 2022 Plan; provided, that if the Administrator takes such action with respect to an award held by a U.S. service provider, it shall do so in accordance with the requirements of Section 409A of the Code, if applicable.

The Administrator also has the authority to amend and rescind rules and regulations relating to the 2022 Plan or terminate the 2022 Plan at any time before the date of expiration of its ten year term.
 
Eligibility. The 2022 Plan provides for granting awards under various tax regimes, including, without limitation, in compliance with Section 102 of the Israeli Income Tax Ordinance (New Version) 5271-1961, and the regulations and rules promulgated thereunder, all as amended from time to time (the “Ordinance”), and Section 3(i) of the Ordinance and in compliance with Section 422 of the Code and Section 409A of the Code as they relate to U.S. service providers when granted Nonqualified Stock Options, and  to U.S. service providers who are Employees when granted Incentive Stock Options.

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Grants. All awards granted pursuant to the 2022 Plan will be evidenced by an award agreement, in a form approved, from time to time, by the Administrator in its sole discretion. The award agreement will set forth the terms and conditions of the award, including the type of award, number of shares subject to such award, vesting schedule and conditions (including performance goals or measures) and the exercise price, if applicable. Certain awards under the 2022 Plan may constitute or provide for a deferral of compensation, subject to Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards.

Unless otherwise determined by the Administrator and stated in the award agreement, and subject to the conditions of the 2022 Plan, awards vest and become exercisable under the following schedule: 25% of the shares covered by the award on the first anniversary of the vesting commencement date determined by the Administrator (and in the absence of such determination, the date on which such award was granted) and 6.25% of the Shares covered by the award at the end of each subsequent three-month period thereafter over the course of the following three years; provided that the grantee remains continuously as an employee or provides services to the company throughout such vesting dates.

Each award will expire ten years from the date of the grant thereof, unless such shorter term of expiration is otherwise designated by the Administrator.

Awards. The 2022 Plan provides for the grant of stock options (including incentive stock options and nonqualified stock options), ordinary shares, restricted shares, RSUs, stock appreciation rights and other share-based awards.

Options granted under the 2022 Plan to the Company employees who are U.S. residents may qualify as “incentive stock options” within the meaning of Section 422 of the Code, or may be non-qualified stock options. The exercise price of an option may not be less than the par value of the Shares (if the Shares bear a par value) for which such option is exercisable. The exercise price of an Incentive Stock Option may not be less than 100% of the fair market value of the underlying share on the date immediately preceding the day of the grant or such other amount as may be required pursuant to the Code, and in the case of Incentive Stock Options granted to ten percent stockholders, not less than 110%.

Nonqualified stock options may not be granted to a U.S. service provider unless (i) the Shares underlying such options constitute “service recipient stock” under Section 409A of the Code and such options meet the other requirements to be exempt from Section 409A of the Code or (ii) such options comply with the requirements of Section 409A of the Code. A nonqualified stock option may be granted with an exercise price lower than the minimum exercise price set forth above if (i) such option is granted pursuant to an assumption or substitution for another option in accordance with and pursuant to Section 409A of the Code or (ii) the Administrator expressly determined that the option will have a lower exercise price and the Option complies with Section 409A of the Code or meets another exemption under Section 409A of the Code.

Incentive stock options may be granted only to U.S. service providers who are employees of the Company. However, if for any reason an option (or portion thereof) does not qualify as an incentive stock option, then, to the extent of such non-qualification, such option (or portion thereof) shall be treated as a nonqualified stock option granted under the 2022 Plan.

An RSU may be awarded to any service provider, including under Section 102 of the Ordinance. Subject to Applicable Law, RSUs may be granted in consideration of a reduction in the recipient’s other compensation. No payment of exercise price shall be required as consideration for RSUs, unless included in the award agreement or as required by applicable law. The grantee shall not possess or own any ownership rights in the Shares underlying the RSUs. Settlement of vested RSUs shall be made in the form of Shares. Distribution to a grantee of an amount (or amounts) from settlement of vested RSUs can be deferred to a date after vesting as determined by the Administrator; provided, that no such deferral shall be made with respect to RSUs held by a U.S. service provider if such deferral would cause such RSUs to fail to qualify for an exemption under Section 409A of the Code and become subject to the requirements of Section 409A of the Code, unless expressly determined by the Administrator, or would violate the requirements of Section 409A. In no event shall any dividends or dividend equivalent rights be paid before the vesting of the portion of the RSUs to which such dividends or dividend equivalent rights relate, unless otherwise provided for in an award agreement or determined by the Committee. Any RSUs granted under the 2022 Plan that are not exempt from the requirements of Section 409A of the Code shall contain such restrictions or other provisions so that such RSUs will comply with the requirements of Section 409A of the Code.

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Exercise. An award under the 2022 Plan may be exercised by providing the Company with a written or electronic notice of exercise and full payment of the exercise price for such shares underlying the award, if applicable, in such form and method as may be determined by the Administrator and permitted by applicable law. An award may not be exercised for a fraction of a share. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2022 Plan, the Administrator may, in its discretion, accept cash, provide for net withholding of shares in a cashless exercise mechanism or direct a securities broker to sell shares and deliver all or a part of the proceeds to the Company or the trustee. The exercise period of an award will be determined by the Administrator and stated in the award agreement, but will in no event be longer than ten (10) years from the date of grant of the award. Notwithstanding anything to the contrary, the Administrator may extend the periods for which awards held by any grantee may continue to vest and/or be exercisable; it being clarified that such awards may lose their entitlement to certain tax benefits under applicable law; if done so with respect to a U.S service provider, the Administrator shall act in accordance with Section 409A of the Code, as applicable.

Transferability. Other than by will, the laws of descent and distribution or as otherwise provided under the 2022 Plan, neither the options nor any right in connection with such options are assignable or transferable.

Termination of Employment. In the event of termination of a grantee’s employment or service with the Company or any of its affiliates, all vested and exercisable awards held by such grantee as of the date of termination may be exercised within three months after such date of termination, unless otherwise determined by the Administrator, but in no event later than the date of expiration of the award as set forth in the award agreement. After such three-month period, all such unexercised awards will terminate and the shares covered by such awards shall again be available for issuance under the 2022 Plan.