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Item 1A. Risk Factors

2024-05-13 compared with 2023-11-06 · 76 added, 45 removed, 7 unchanged (95% of the section changed)

3 unchanged sentences

March 5, 2024.

political and economic instability in the Middle East may harm our business.

principal research and development facilities and sole manufacturing facility are located in Israel.

In addition, part of our key employees,

officers and directors are residents of Israel.

Accordingly, political, economic and military conditions in the Middle East may affect

our business directly.

Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel

and its neighboring countries and terrorist organizations active in the region, including Hamas (an Islamist militia and political group

in the Gaza Strip) and Hezbollah (an Islamist militia and political group in Lebanon).

particular, in October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of

attacks on civilian and military targets.

Hamas also launched extensive rocket attacks on the Israeli population and industrial centers

located along Israel’s border with the Gaza Strip and in other areas within the State of Israel.

These attacks resulted in thousands

of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers.

Following the attack, Israel’s security

cabinet declared war against Hamas and commenced a military campaign against Hamas and these terrorist organizations in parallel to their

continued rocket and terror attacks.

cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can we predict how this war will ultimately

affect our business and operations or Israel’s economy in general.

Additionally,

political uprisings, social unrest and violence in various countries in the Middle East, including Israel’s neighbor Syria, have

affected the political stability of those countries.

This instability may lead to deterioration of the political relationships that exist

between Israel and certain countries and have raised concerns regarding security in the region and the potential for armed conflict.

In addition, Iran has threatened to attack Israel.

Iran is also believed to have a strong influence among the Syrian government, Hamas

and Hezbollah.

These situations may potentially escalate in the future into more violent events which may affect Israel and us.

situations, including conflicts which involved missile strikes against civilian targets in various parts of Israel have in the past negatively

affected business conditions in Israel.

hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could have a

material adverse effect on our business.

The political and security situation in Israel may result in parties with whom we have contracts

claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions.

or other Israeli political or economic factors could harm our operations and product development.

Any hostilities involving Israel or

the interruption or curtailment of trade between Israel and its present trading partners could adversely affect our operations and could

make it more difficult for us to raise capital.

We could experience disruptions if acts associated with such conflicts result in any

serious damage to our facilities.

Furthermore, several countries, as well as certain companies and organizations, continue to restrict

business with Israel and Israeli companies, which could have an adverse effect on our business and financial condition.

interruption insurance may not adequately compensate us for losses, if at all, that may occur as a result of an event associated with

a security situation in the Middle East, and any losses or damages incurred by us could have a material adverse effect on our business.

there are significant shifts in the political, economic and military conditions in Israel and its neighbors, it could have a material

adverse effect on our business relationships and profitability.

executive office, sole manufacturing facility and certain of our key personnel are located in Israel.

Our business is directly affected

by the political, economic and military conditions in Israel and its neighbors.

Since the establishment of the State of Israel in 1948,

a number of armed conflicts have occurred between Israel and its Arab neighbors.

October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian

and military targets.

Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s

border with the Gaza Strip and in other areas within the State of Israel.

These attacks resulted in extensive deaths, injuries and kidnapping

of civilians and soldiers.

Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against

these terrorist organizations commenced in parallel to their continued rocket and terror attacks.

In addition, since the commencement

of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization)

and southern border (with the Houthi movement in Yemen, as described below).

It is possible that hostilities with Hezbollah in Lebanon

will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other

hostile countries will join the hostilities.

In addition, Iran recently launched a direct attack

on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely believed to be developing

nuclear weapons.

Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah

in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq.

These situations may potentially escalate

in the future to more violent events which may affect Israel and us.

Additionally, Yemeni rebel group, the Houthis, launched series of

attacks on global shipping routes in the Red Sea, causing disruptions of supply chain.

Such clashes may escalate in the future

into a greater regional conflict.

connection with the Israeli security cabinet’s declaration of war against Hamas and possible hostilities with other organizations,

several hundred thousand Israeli military reservists were drafted to perform immediate military service, including five full time employees

in Israel of ours.

Although many of such military reservists have since been released, including the majority of our employees, they

may be called up for additional reserve duty, depending on developments in the war in Gaza and along Israel’s other borders.

of the date hereof, two of our non-management employees in Israel.

Military service call ups that result in absences of personnel from

us for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations.

As of the date hereof, we currently have 56 full-time employees located in Israel and 12 employees located outside of Israel.

the war broke out on October 7, 2023, our operations have not been adversely affected by this situation, and we have not experienced

disruptions to our clinical studies.

None of the clinical sites currently participating in our clinical studies are located in Israel

however we currently manufacture our CGuard at our facility in Tel Aviv, Israel.

If there were a disruption to our existing manufacturing

facility or our ability to procure raw materials and ship our products, we would have no other means of manufacturing and distributing

CGuard until we were able to restore the manufacturing and distribution capability at our facility or develop alternative manufacturing

facilities and distribution capabilities.

intensity and duration of Israel’s current war against Hamas is difficult to predict at this stage, as are such war’s economic

implications on the Company’s business and operations and on Israel’s economy in general.

If the war extends for a long period

of time or expands to other fronts, such as Lebanon, Syria and the West Bank, our operations may be adversely affected.

commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism.

Although the Israeli

government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot

assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages.

Any losses or damages

incurred by us could have a material adverse effect on our business.

Any armed conflicts or political instability in the region would

likely negatively affect business conditions and could harm our results of operations.

continued political instability and hostilities between Israel and its neighbors and any future armed conflict, terrorist activity or

political instability in the region could adversely affect our operations in Israel and adversely affect the market price of our shares

of common stock.

In addition, several organizations and countries may restrict doing business with Israel and Israeli companies have

been and are today subjected to economic boycotts.

The interruption or curtailment of trade between Israel and its present trading partners

could adversely affect our business, financial condition and results of operations.

political conditions within Israel may affect our operations.

Israel has held five general elections between 2019 and 2022, and prior

to October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political

debate and unrest.

To date, these initiatives have been substantially put on hold.

Actual or perceived political instability in Israel

or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and,

in turn, our business, financial condition, results of operations and growth prospects.

Unregistered Sales of Equity Securities and Use of Proceeds

2 unchanged sentences

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What changed 10-Q

Item 1A. Risk Factors