UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549



FORM 20-F

 

FORM 20-F

(Mark One)
 
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 20202022
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of event requiring this shell company report
 
For the transition period from __________ to __________
 
Commission file number 001-40173
 
MeaTech 3DSteakholder Foods Ltd.
(Exact name of Registrant as specified in its charter)
 
N/A
(Translation of Registrant’s name into English)
 
Israel
(Jurisdiction of incorporation or organization)
 
18 Einstein5 David Fikes St., P.O. Box 4061
Ness Ziona 7414001
Rehovot 7638205 Israel


(Address of principal executive offices)
 
Sharon Fima
Arik Kaufman
+972-77-541-6555
18 Einstein972-73-332-2853
info@steakholderfoods.com
5 David Fikes St., P.O. Box 4061
Ness Ziona 7414001Rehovot 7638205 Israel
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
 
Title of each class Trading Symbol(s) Name of each exchange on which registered
American Depositary Shares, each representing ten ordinary shares, no par value per share MITCSTKH The Nasdaq Stock Market LLC
     
Ordinary shares, no par value per share ____ The Nasdaq Stock Market LLC*
     
 
*Listed not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares representing such ordinary shares pursuant to the requirements of the Securities and Exchange Commission. The American Depositary Shares are registered under the Securities Act of 1933, as amended, pursuant to a separate registration statement on Form F-6 (File No. 333-253915).
 
Securities registered or to be registered pursuant to Section 12(g) of the Act.
 
None
(Title of Class)
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
 
None
(Title of Class)

 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 79,866,264As of December 31, 2022, the registrant had outstanding 146,471,677 ordinary shares, no par value.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes    No
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes    No
 
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes    No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer Accelerated filer Non-accelerated filer
  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 13(a) of the Exchange 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.
 

Indicate by check mark whether the registrant has filed a report on the attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
U.S. GAAP
International Financial Reporting Standards as issued by the
International Accounting Standards Board
Other
 
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17    Item 18
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    No
 
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.                     

Yes ◻     No ◻


 ii



TABLE OF CONTENTS
 
INTRODUCTION
 
 3
   
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iii

INTRODUCTION
 
Certain Definitions
 
In this Annual Report on Form 20-F, unless the context otherwise requires:
 
references to “MeaTech,“Steakholder Foods,” the “Company,” “us,” “we” and “our” refer to Steakholder Innovation Ltd. (formerly MeaTech MT Ltd. (formerlyand MeaTech Ltd.) from its inception until the consummation of the January 2020 merger described herein, and Steakholder Foods Ltd. (formerly MeaTech 3D Ltd.) (the “Registrant”), an Israeli company, thereafter, unless otherwise required by the context;
 
references to “ordinary shares,” “our shares” and similar expressions refer to the Registrant’s ordinary shares, no nominal (par) value per share;
 
references to “ADS” refer to the American Depositary Shares listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “MITC,“STKH,” each representing ten ordinary shares of the Registrant;
 
references to “dollars,” “U.S. dollars” and “$” are to United States Dollars;
 
references to “NIS” are to New Israeli Shekels, the currency of the State of Israel;
 
references to the “Companies Law” are to Israel’s Companies Law, 5759-1999, as amended; and
 
references to the “SEC” are to the United States Securities and Exchange Commission.
 
Forward-Looking Statements
 
This Annual Report on Form 20-F contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements that are not historical facts may be deemed to be forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms including “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, but these are not the only ways these statements are identified. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. You should not put undue reliance on any forward-looking statements. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements. Readers are encouraged to consult the Company’s filings made on Form 6-K, which are periodically filed with or furnished to the SEC.
 
Forward-looking statements contained in this prospectus include, but are not limited to:
 
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 BV, or 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 attract, hire and retain qualified employees and key personnel; and
 
other risks and uncertainties, including those listed in “Item 3. —Key Information—Risk Factors.”
 

2
iv


PART I
 
 
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 
Not applicable.
 
 
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
 
Not applicable.
 
 
ITEM 3.
KEY INFORMATION
 
A. Selected Financial Data
 
The following table sets forth our selected consolidated financial data for the periods ended and as of the dates indicated. The following selected historical consolidated financial data for our company should be read in conjunction with “Item 5.—Operational and Financial Review and Prospects” and other information provided elsewhere in this Annual Report on Form 20-F and our consolidated financial statements and related notes. The selected consolidated financial data in this section is not intended to replace the consolidated financial statements and is qualified in its entirety thereby.[Reserved]
Historical results are not necessarily indicative of the results that may be expected in the future. Our financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The selected consolidated statements of income and of comprehensive loss for the fiscal years ended December 31, 2020 and 2019, and the eight months ended December 31, 2018, and the consolidated statement of financial position data for the fiscal years ended December 31, 2020, 2019 and 2018 are derived from our audited consolidated financial statements. Although our functional currency is the NIS, we report our financial results in U.S. dollars.
  
Fiscal Year Ended
December 31,
  Eight Months Ended December 31, 
  2020  2019  2018 
  (USD, in thousands, except per share data) 
          
Consolidated Statements of Income and of Comprehensive Loss:         
Revenues $-  $-  $51 
Operating expenses:            
Research and development expenses  2,491   166   - 
Marketing expenses  506   -   - 
General and administrative expenses
  5,380   256   53 
Public listing expenses  10,164   -   - 
Operating loss  18,541   422   2 
Financing expense (income), net  (17)  1   - 
Net loss $18,524  $423  $2 
Basic and diluted net loss per ordinary share $0.308  $0.022  $0 
 Weighted average number of ordinary shares outstanding, basic and diluted(1)
  60,112,197   19,484,478   
14,919,810
 


(1)
Net loss per share for periods prior to the closing date of the merger in January 2020, described herein, were calculated by dividing the weighted average of MeaTech 3D’s ordinary shares that were outstanding during the corresponding periods, into the loss or earnings of MeaTech in the corresponding periods, multiplied by the exchange ratio according to which ordinary shares of MeaTech 3D were issued in return for ordinary shares of MeaTech. Subsequent to the merger date, the weighted average of the ordinary shares used in calculating the net loss per share is that of MeaTech 3D.

1


  
Fiscal Year Ended
December 31,
  Eight Months Ended December 31, 
  2020  2019  2018 
  (USD, in thousands) 
          
Consolidated Statements of Financial Position Data:         
Cash and cash equivalents $13,556   1,274   31 
             
Total assets $17,474   1,987   35 
Total liabilities $1,843   496   37 
Total capital $15,631  $1,491  $(2)
 
B. Capitalization and Indebtedness
 
Not applicable.
 
C. Reasons for the Offer and Use of Proceeds
 
Not applicable.
 
D. 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.
 
SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS


Our business is subject to a number of risks of which you should be aware before a decision to invest in the ADSs.aware. You should carefully consider all the information set forth in this prospectusAnnual Report on Form 20-F and, in particular, should evaluate the specific factors set forth in the sections titled “Risk Factors” before deciding whether to invest in the ADSs.. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. Among these important risks are, but not limited to, the following:

We have experienced net losses in every period since the inception of MeaTech and we expect to continue incurring significant losses for the foreseeable future and may never become profitable;

We have a limited operating history to date and our prospects will be dependent on our ability to meet a number of challenges;

Our business and market potential are unproven, and we have limited insight into trends that may emerge and affect our business;

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;

The research and development associated with technologies for cultured meat manufacturing, including three-dimensional meat production, is a lengthy and complex process;

Business or economic disruptions or global health concerns, including the COVID-19 pandemic, may have an adverse impact on our business and results of operations;

We may not be able to compete successfully in our highly competitive market;

We may suffer reputational harm due to real or perceived quality or health issues with products manufactured by our licensees using our technology;

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;

2


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 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 expect that products utilizing our technologies will be subject to regulations that could adversely affect our business and results of operations;

Regulatory authorities may impose new regulations on manufacturers of alternative proteins;

Any changes in, or changes in the interpretation of, applicable laws, regulations or policies of the U.S. Department of Agriculture, 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;

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

If there are significant shifts in the political, economic and military conditions in Israel, it could have an adverse impact on our operations; and

If we encounter delays or challenges, such as operational challenges inherent in managing a foreign business, we may not fully realize the anticipated benefits of the acquisition of Peace of Meat.


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 MeaTech. 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 in the near term. 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.activities.
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, and manufacturing and supply, as well as general operating expenses. In addition, other unanticipated costs may arise.

There is no certainty thatsubstantial doubt as to whether 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, suchcan continue 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.a going concern.
3

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 both Israel and 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.

Raising additional capital may cause dilution to our existing shareholders or restrict our operations or require us to relinquish rights to our technologies.operations.

Until such time, if ever, as 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.
RISKS RELATED TO OUR BUSINESS AND STRATEGY

We have a limited operating history to date and our 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 to date. 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.

4


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, based on rapid growing cycles. 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 aiming to have printed 100 grams of edible, cultured meat tissue, consisting of cells bred in our laboratory and developed into a tissue using our three-dimensional printing technology, by the end of 2021, following which we would plan 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, including our acquisition of Peace of Meat, will entail numerous potential risks, including:
increased operating expenses and cash requirements;

the assumption of additional indebtedness or contingent liabilities;
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.successful.

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 researchgrowth, 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.
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.

5

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 the novel coronavirus disease, or COVID-19, pandemic, 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, severe 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 the year, 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.
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.


63

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.
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 failed to discover undisclosed liabilities of Peace of Meat.
Our investigations and due diligence review of Peace of Meat may have failed to discover undisclosed liabilities of Peace of Meat. Such undisclosed liabilities may affect the results of operations of Peace of Meat, and as a result, could have an adverse effect our business and results of operations and may adversely affect the value of the ADSs and ordinary shares.
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 it in an efficient and timely manner that would disrupt operations. In addition, as Peace of Meat is located in a different country, which also 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.model.
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 as yet 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.
 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.
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We may suffer reputational harm due to real or perceived quality or health issues with products manufactured by our licensees using our technology.licensees.
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.

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.regions.
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.change.
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.

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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.
Wemay 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 difficultyissues in obtaining adequate and timely manufacturing capacity for our proprietary cultured meat printers and bio-inks. 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.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 and have a negative impact on our reputation or business.liabilities.

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. This proceeding is of an administrative nature and carries a potential penalty in the form of a monetary fine which, under applicable Israeli law, could be as high as NIS 5 million. We were advised that the maximum fine likely to be imposed in this case, if any, is $0.26 million (NIS 0.85 million). In April 2021, following negotiations with the ISA, we agreed to settle the matter for $0.21 million (NIS 0.7 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 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. 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.
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.customers.
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 employees, such as Mr. Sharon Fima, our Chief Executive Officeraffected, and Chief Technological 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.
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Under applicable employment laws, we may not be able to enforce covenants not to compete.compete under applicable employment laws.

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 insuranceInsurance 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, reputation and operations wouldcould suffer in the event of information technology system failures including security breaches.or a cybersecurity incident.

Despite the implementation of security measures, our internal computer systemsFood safety 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.
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, wefood-borne illness incidents 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, andmaterially adversely affect our business.


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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.

RISKS RELATED TO GOVERNMENT REGULATION

We expect that productsProducts 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 US, the FDA and the U.S. Department of Agriculture’s, or USDA's, Food Safety and Inspection Service, or FSIS share an ingredient approval process. FDA determines the safety of substances and prescribes safe conditions of use.  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 U.S. Department of Agriculture, 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, 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.

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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 directly be 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.
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,failure by our supplier to comply with, 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 European Union (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.
For example, in 2018, the State of Missouri passed a law that prohibits any person engaged in advertising, offering for sale, or sale of food products from representing products as meat that are not derived from harvested production of livestock or poultry. This law has been challenged in court as a violation of free speech by the Good Food Institute, the Animal Legal Defense Fund and American Civil Liberties Union, however additional states subsequently passed similar laws. Similar regulatory developments are taking place in foreign jurisdictions. For example, the Agriculture Committee of the European Parliament proposed in May 2019 to reserve the use of “meat” and meat-related terms and names for products that are manufactured from the edible parts of animals. If such measures are adopted, they may affect our customers’ ability to label and advertise cultured meat products as they see fit. Further, in 2018, the USDA received a petition from the cattle industry requesting that the USDA exclude products not derived from slaughtered animals from being labeled and marketed as “meat,” and exclude products not derived from cattle born, raised and harvested in the traditional manner from being labeled and marketed as “beef.” On June 9, 2020, the Harvard Law School Animal Law & Policy Clinic petitioned USDA to urge it to adopt a labeling approach for cell-based meat and poultry products that does not overly restrict speech, asserting that USDA should wait until it has a better understanding of the compositional and safety characteristics of finished cell-based meat products, and until USDA has the opportunity to review proposed labels, before establishing any speech restrictions. The USDA has not yet responded substantively to these petitions but has indicated that these petitions are being considered as petitions for policy changes under the USDA’s regulations. On July 31, 2020, the USDA announced that its FSIS, an agency within the USDA, will be developing new regulatory requirements with regard to the labeling of human food produced using animal cell culture technology, derived from cell lines of USDA-amenable species, otherwise referred to as cultured meat by many in the sector. The USDA has not yet asserted whether it will authorize the use of the term “meat” and similar terms for cultured meat.  Should regulatory authorities take action to enforce a definition of the term “meat” or similar terms limited to slaughtered animals, such that we are unable to use those terms with respect to our technologies, our customers could be subject to enforcement action, and therefore we, as a manufacturer focused on developing commercial technologies that food processing and food retail companies can license to manufacture alternative foods without the need for animal slaughter may be required to modify our business strategy, and our prospects and results of our operations or financial condition could be adversely affected.

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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.

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 six 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.commercialization.
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.
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.

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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.costs.
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 or third party intellectual property which could be expensive, time consuming, and unsuccessful.rights.

Competitors may infringe our intellectual property. IfOur articles of association provide that unless we wereconsent to initiate legal proceedings against a third party to enforce a patent covering onean alternate forum, the federal district courts 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 couldshall be an alleged failure to meet anythe exclusive forum 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.
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,resolution 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.arising under the Securities Act.

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.
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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. 
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.

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.

RISKS RELATED TO OWNERSHIP OF THE ADSs

The ADS price may be volatile, and you may lose all or part of your investment.

We have never paid dividends on our share capital, nor do we intend to pay dividends for the foreseeable future.

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 our shareholders.

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

We follow certain home country corporate governance practices instead of certain Nasdaq and Exchange Act requirements.

If we are a “passive foreign investment company” for U.S. income tax purposes, there may be adverse tax consequences to U.S. investors.

If we are a controlled foreign corporation, there could be adverse U.S. income tax consequences to certain U.S. holders.

4

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 our predecessor entity, Steakholder Innovation Ltd., or Steakholder Innovation. 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.
Steakholder Innovation, 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.

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.

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There is substantial doubt as to whether we can continue as a going concern.
Our consolidated financial statements as of December 31, 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 December 31, 2022, totaled approximately $67.7 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.
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.

6


We may engage in future acquisitions, joint ventures or collaborations, 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;

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 collaborations with partner organizations, and may enter into future collaborations under which our collaborators may 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;

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.

7

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.
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.
8


Business or economic disruptions or global health concerns may have an adverse impact on our business and results of operations.
The COVID-19 pandemic 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, implemented significant governmental measures 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. The extent of the impact of future disruptions, such as another 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, are uncertain and cannot be predicted.
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. 

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.
9

 
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.
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.

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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.
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.
If we are unable to develop manufacturing capacity to commence cultivated meat 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.

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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.
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.
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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.
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.
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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.
Non-compliance with environmental, social, and governance, or ESG, practices could harm our reputation, or otherwise adversely impact our business, while increased attention to ESG initiatives could increase our costs.

Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG and sustainability practices. Certain market participants, including institutional investors and capital providers, are increasingly placing importance on the impact of their investments and are thus focusing on corporate ESG practices, including the use of third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions, and engaging with companies to encourage changes to their practices. Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry. If we do not comply with investor or stockholder expectations and standards in connection with our ESG initiatives or are perceived to have not addressed ESG issues within our company, our business and reputation could be negatively impacted and our share price could be materially and adversely affected, as well as our access to and cost of capital.
While we may, at times, engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) or commitments to improve the ESG profile of our company and/or products, such initiatives or achievements of such commitments may not have the desired effect and may be costly.
In addition, we may commit to certain initiatives or goals but not ultimately achieve such commitments or goals due to factors that are both within or outside of our control. Moreover, actions or statements that we may take based on expectations, assumptions, or third-party information that we currently believe to be reasonable may subsequently be determined to be erroneous or be subject to misinterpretation. Even if this is not the case, our current actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulator engagement on our ESG initiatives and disclosures, even if such initiatives are currently voluntary. In addition, increasing ESG-related regulation, such as the SEC’s climate disclosure proposal, may also result in increased compliance costs or scrutiny.
Expectations around a company's management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control. To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees or customers, which may adversely impact our operations.

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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. We do not intend to manufacture, distribute and sell branded cultured-meat end products for consumer consumption.
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.
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.

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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 develop 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.
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 18 patents and 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.

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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.
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.

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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.
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. 
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.

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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 andfrom 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.
 
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.
 
The Israeli government is currently pursuing extensive changes to Israel’s judicial system. This has sparked extensive political debate. In response to the foregoing developments, many individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in security markets, and other changes in macroeconomic conditions. To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors.

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 Steakholder Foods Europe BV and Peace of Meat BV, or 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.
 

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Currency exchange controls may restrict our ability to utilize our cash flows.1

We expect to receive proceeds from sales of any product we may develop, and also to pay a portion of our operational costs and expenses, in U.S. dollars, Euros and other foreign currencies. However, we may be subject to existing or future rules and regulations on currency conversion. In 1998, the Israeli currency control regulations were liberalized significantly, and there are currently no currency controls in place. Legislation remains in effect, however, pursuant to which such currency controls could be imposed in Israel by administrative action at any time. We cannot assure that such controls will not be reinstated, or if reinstated, that they would not have an adverse effect on our operations.
 
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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 ourOur 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. Therefore,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 obtained against us or any of these persons in the United States, including one 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 collectible in the United States and may not be enforced by an Israeli court. It may also be difficultmost appropriate forum to affect service of process on these persons in the United States or to assert U.S. securities laws claims in original actions instituted in Israel.bring such a claim.
 
Even
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.
 
Subject to specified time limitations and legal procedures, under the rules of private international law currently prevailing in Israel,Moreover, an Israeli courts maycourt will not enforce a final U.S.non-Israeli judgment if (among other things) it was given in a civil matter, including judgments based upon the civil liability provisions of the U.S. securitiesstate whose laws and including a monetary or compensatory judgment in a non-civil matter, provided that:
the judgment is enforceable in the state in which it was given;
the judgment was rendered by a court of competent jurisdiction under the rules of private international law prevailing in Israel;
the laws of the state in which the judgment was givendo not provide for the enforcement of judgments of Israeli courts;
adequate service of process has been effected andcourts (subject to exceptional cases), or if its enforcement is likely to prejudice the defendant has had a reasonable opportunity to be heard;
the judgment and the enforcement of the judgment are not contrary to the law, public policy,sovereignty or security or sovereignty of the State of Israel;
the judgmentIsrael, or if it was not obtained by fraudulent means and does not conflictfraud or in absence of due process, or if it is at variance with any otheranother valid judgment that was given in the same matter between the same parties; and
an actionparties, or if a suit in the same matter between the same parties was pending before a court or tribunal in the same matter is not pending in any Israeli courtIsrael, at the time the lawsuit is instituted in the foreign court.
action was brought.
 
There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court.
 
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 shareholder’s 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.

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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. A shareholder also has a general duty to refrain from discriminating against other shareholders. 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, butduties. There is limited case law available to assist in understanding the implications of these provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations.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, for allwhich as a result would result in the acquirer to hold over 90% of a company'sthe 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. Completion ofcapital (or the tender offer also requires approval ofapplicable class) and if a majority of the offerees that do not have a personal interest in the tender offer,offer; unless, following consummation ofthe 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 would hold at least 98%offered to purchase will be transferred to the acquirer by operation of the company's outstanding shares. Furthermore,law. the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completiondate of acceptance of the tender offer, claim that the consideration for the acquisition of the shares does not reflect their fair market value,, and petition an Israeli court to alterdetermine whether the considerationtender offer was for less than fair value and whether the acquisition accordingly, unlessfair value should be paid as determined by the acquirer stipulatedcourt. However, an offeror may provide in its tenderthe offer that a shareholder that acceptswho 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 seek such appraisalacquire 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 the acquirer or the company published all required information with respect to the tender offer prior to the tender offer's response date.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.
 
AsOur articles of association and Israeli law could prevent a foreign private issuer whose ADSs are listed on Nasdaq, we follow certain home country corporate governance practices insteadtakeover that shareholders consider favorable and could also reduce the market price 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.ADSs.
 
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. While the ADSs are listed on Nasdaq, we are permitted to follow certain home country corporate governance practices insteadCertain provisions of certain requirements of the rules of Nasdaq. As permitted under the Israeli Companies Law 1999, or Companies Law, pursuant tolaw and our articles of association could have the quorumeffect of delaying or preventing a change in control and may make it more difficult for ana 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;

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;
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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 shall be(referred to as simple majority), and solely the presence of at least two shareholders present in person, by proxy or by a voting instrument, who hold at least 25%amendment of the voting powerprovision relating to the removal 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, we follow Israeli corporate governance practices instead of Nasdaq requirements with regard to, among other things, the compositionmembers of our board of directors, andrequire 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 nomination procedures. For example,vacancies may be filled by our board of directors currently comprises eight directors, four of whom we have determined are independent, in compliance with our home-country requirements. Accordingly, our shareholders may be afforded less protection that what is provided under the Nasdaq corporate governance rules to investors in U.S. domestic issuers. See “Item 16G. —Corporate Governance—Nasdaq Listing Rules and Home Country Practices.”
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.

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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 “Item 10.—Additional Information—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 “Item 10.—Additional Information—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.directors.
 
RISKS RELATED TO OWNERSHIP OF THE ADSSADSs
 
If we are unable to maintain compliance with Nasdaq listing standards, our ADSs may be delisted from the Nasdaq Stock Market and you may face significant restrictions on the resale of your shares.
There can be no assurances that we will be able to maintain our Nasdaq listing in the future. On March 27, 2023, we received a notification from Nasdaq that the trading price of our ADSs did not meet the minimum bid price requirement of $1.00 per share for a period of 30 consecutive trading days. We were granted a 180-day compliance period, or September 18, 2023, to regain compliance by achieving a closing bid price of at least $1.00 per share for a minimum of 10 consecutive trading days. In the event we are unable to regain compliance with the Nasdaq Capital Market listing standards and our ADSs are delisted from the exchange, it would, among other things, likely lead to a number of negative implications, including an adverse effect on the price of our ADSs, reduced liquidity in our ADSs and greater difficulty in obtaining financing. In the event of a de-listing, we would take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our ADSs to become listed again, stabilize the market price or improve the liquidity of our ADSs, prevent our ADSs from dropping below the Nasdaq minimum bid price requirement in the future, or prevent future non-compliance with Nasdaq’s listing requirements. If we cannot restore our compliance with Nasdaq’s listing requirements, we would pursue eligibility for trading of these securities on other markets or exchanges, such as the OTCQB or OTCQX, which are unorganized, inter-dealer, over-the-counter markets which provides significantly less liquidity than the Nasdaq Capital Market or other national securities exchanges.

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;
 
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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;
 
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;
 
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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.
 
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.
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Our shares are listed for trading on more than one stock exchange, and this may result in price variations.
Our ordinary shares are currently traded on the TASE and following the offering, the ADSs, representing our ordinary shares, are listed for trading on the Nasdaq Capital Market, or Nasdaq. This may result in price variations. The ADSs and ordinary shares will be traded on these markets in different currencies, U.S. dollars on Nasdaq and NIS on the TASE. These markets have different opening and closing times and close on different days. Different trading times and differences in exchange rates, among other factors, may result in our shares being traded at a price differential on these two markets. In addition, market influences in one market may influence the price at which our shares are traded on the other.
 
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.
 
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 of 1933, as amended, or 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 our shareholders.
 
ADS holders do not have the same rights as our shareholders.  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.
 
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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.
 
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 Israeli Companies Law 1999, or Companies Law, pursuant to our articles of association, 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, we follow Israeli corporate governance practices instead of Nasdaq requirements with regard to, among other things, the composition of our board of directors. For example, our board of directors currently comprises four directors, three of whom we have determined are independent, however during 2021, the majority of our board of directors was not deemed to be independent, in compliance with our home-country requirements. Accordingly, our shareholders may be afforded less protection that what is provided under the Nasdaq corporate governance rules to investors in U.S. domestic issuers. See “Item 16G. —Corporate Governance—Nasdaq Listing Rules and Home Country Practices.”
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.
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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 may 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 the average percentage of our 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 “Item 10.—Additional Information—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. See “Item 10.—Additional Information—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,” “global intangible low-taxed 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. 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, directly, indirectly, or constructively, 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.
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ITEM 4.
INFORMATION ON THE COMPANY
 
A. History and Development of the Company
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 Ltd. and later Steakholder Innovation Ltd., or MeaTech,Steakholder Innovation, and commenced our cultured meat technology development operations. In January 2020, MeaTechSteakholder Innovation completed a merger with Ophectra Real Estate and Investment Ltd., or Ophectra, a company incorporated in Israel whose shares were traded on the TASE, whereupon the name of Ophectra was changed to Meat-Tech 3D Ltd., and later further changed tothen MeaTech 3D Ltd. and finally Steakholder Foods Ltd., or MeaTech 3D.Steakholder Foods.
 
According to the terms of the merger, MeaTech 3DSteakholder Foods acquired all outstanding shares of MeaTechSteakholder Innovation from MeaTech’sthe shareholders of Steakholder Innovation, in return for the issuance of 30,525,506 ordinary shares with no par value to the shareholders of MeaTech. FollowingSteakholder Innovation, as well as non-tradable merger warrants to receive ordinary shares upon the issuance, these shares formed 60%achievement of our outstanding capital,pre-defined milestones, which were achieved in 2020 and MeaTech2021. Steakholder Innovation become MeaTech 3D’sSteakholder Foods’ wholly-owned subsidiary. In September 2020, MeaTech changed its name to Chicken Meat-Tech Ltd. and later further changed its name to MeaTech MT Ltd.
 
In connection with the merger, the Tel Aviv District Court for Economic Affairs approved an arrangement whereby all of Ophectra’s assets and liabilities, whether certain or contingent, at the time of the merger were irrevocably assigned to a trust accountsettlement fund, or Settlement Fund, for the purpose of settling Ophectra’s pre-merger liabilities (except for Ophectra’s ownership of 14.74% of the outstanding shares of Therapin Ltd., or Therapin, a company incorporated in Israel, which we temporarily retained with the provision that should the trust account funds and assets not suffice to pay the aforesaid liabilities, we will be liable for a portion of them, up to the value of the Therapin asset)as described below). This includes all future liabilities arising from Ophectra’s activities prior to the merger (including tax liabilities, if any), and any commitments made by Ophectra prior to the merger. We also provided the trust accountSettlement Fund approximately NIS 1.3 million (approximately $0.4 million), which we includeincluded in our public listing expenses, for the purpose of settling any of Ophectra’s debts, and bear no additional liabilities to the settlement fund.Settlement Fund. Anyone who believed they had a claim to Ophectra’s assets were invited to lodge their claims to the trustees. The fund isDue to the fact that two years have passed since the merger, and the fact that the Settlement Fund no longer contains any assets, its trustees are expected to remain active until January 2022, after which we intendinstigate proceedings to askwind up the court to assign us the assets remaining in the trust account, if any.
In connection with the merger, MeaTech shareholders received non-tradable merger warrants to purchase 12,718,961 ordinary shares upon the achievement of pre-defined milestones, which would increase the holdings of MeaTech shareholders to 68% of our outstanding capital, as of the date of issuance. These warrants will expire if not exercised by January 2025. The merger warrants have no exercise price, but can be exercised into the equivalent number of our ordinary shares upon request, following the achievement of pre-defined milestones, such that 50% of the warrants vested in the third quarter of 2020, upon the development of a prototype to create a stem-cell layer using three-dimensional printing technology, while the remaining 50% will vest upon the creation of 100 grams of edible, cultured meat tissue, consisting of cells bred in our laboratory that are printed using our three-dimensional printing technology, or upon completion of all the conditions required for listing our securities on a stock exchange outside Israel.
Upon completion of the merger, all directors and officers of MeaTech became directors and officers of MeaTech 3D, in addition to some of the independent directors of Ophectra.Settlement Fund.
 
Although MeaTech 3DSteakholder Foods was the legal acquirer of MeaTech’sSteakholder Innovation’s shares as described above, because (i) the shareholders of MeaTech received the majority of the voting rights in MeaTech 3D and the ability to determine its financial and operational policy, (ii) the management of MeaTech continues to serve as the management of MeaTech 3D and (iii) at the time of completion of the merger MeaTech 3D was a company without significant business operations, the merger is not considered a business acquisition as defined in IFRS 3. As a result, it was determined that MeaTechSteakholder Innovation 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, the 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 MeaTech MT Ltd.),Steakholder Innovation, other than the information concerning earnings per share, which is presented according to the equity information of MeaTech 3DSteakholder Foods (then called Ophectra Real Estate and Investments Ltd.), and our consolidated financial statements and financial data included herein from January 1, 2020 onward relate to MeaTech 3D.Steakholder Foods.
 
For details of the accounting treatment of the merger, see “Item 5. —Operating and Financial Review and Prospects—Operating Results—Public Listing Expenses” below.
We temporarily maintained ownership of 14.74% of the outstanding shares of Therapin Ltd., or Therapin, a company incorporated in Israel, while considering a possible collaboration, however, in May 2020, we returned these holdings to Therapin, and agreed to convert our investment of NIS 7.25 million in Therapin 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) or in full upon an exit event, 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.

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B. Business Overview
Overview
We are an international deep-tech food company, headquartered in Rehovot, Israel, that initiated activities in 2019 and are listed on the Nasdaq Capital Market under the ticker “STKH”. 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 are on a mission to make meat sustainable, delicious, and clean. 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 customized bio-ink in a three-dimensional geometry to form 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 August 2020, we announced the completion of Project Carpaccio, whereby we printed a thin slice of meat consisting of muscle and fat tissue developed from stem cells, having developed the entire growth process of the tissue components, followed by three-dimensional printing using our dedicated, in-house printer.
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.
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. McKinsey & Company estimates between $20 and $25 billion in sales by 2030, and 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. Jefferies likewise forecasts a $240-470 billion meat market, with 9%-18% of global meat demand provided by cultivated meat by 2040.
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.
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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:
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 has a similar taste to fruits such as apples and mangoes. While it contains substantially greater protein than these fruits, its protein content is lower than that of meat. Therefore, while its texture is somewhat similar to that of shredded meat, 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, and its lower protein content.
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 protein biomass, 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.
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We are engaged with experimentation to develop optimal and cost-effective cell culture media composition. 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”.
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, 63%-95% less land use, 51% to 78% 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.

Mitigating and reducing of health risks: 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 controlled manufacturing practices that are designed to contribute to improved nutrition, health and wellbeing. Therefore, cultivated meat reduces the risk of new diseases and future pandemics. Plant-based and cultivated meats are expected to be insusceptible to animal diseases and should therefore not contribute to pandemic risk because they do not require the use of live animals. Moreover, cultivated meat does not require antibiotics during its production and therefore will not contribute to antibiotic resistance.

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. While the original cultivated burger is thought to have cost around $330 thousand, consulting firm CE Delft estimates that economies of scale combined with technological improvements will bring the cost of cultivated meat down to less than $8 per kilogram by 2035.

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.

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, enabling the production of the food of the future. 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.
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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, business development bioprinting, tissue engineering, industrial stem cell growth, software engineering, electronic and mechanical 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:

Commercialize our technologies for use in consumer and business markets. We intend to commercialize our three-dimensional bio-printing capabilities, while also customizing bio-inks to enable the production of products based on a wide range of species in accordance with the needs of our partners and customers. We also 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.

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 (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.
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 companies in fields including food processing, food retail and cultivated meat.  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 toprovide 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 December 2022, we announced that we will focus on commercialization of our 3D bio-printer in 2023 to accelerate our go-to-market strategy through business collaborations and partnerships. To facilitate an accelerated go-to-market plan, we will focus resources on dedicating business personnel to create and develop partnerships during 2023.

Develop additional alternative proteins to meet growing industry demand. There are substantial technological challenges inherent in expanding our offering beyond our current cultivated beef 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. In January 2023, we announced a collaboration with Singaporean cultivated seafood developer, Umami Meats, to develop 3D-printed structured eel and grouper products pursuant to a grant from the Singapore-Israel R&D Foundation. The initiative is being funded by a grant from the Singapore-Israel Industrial R&D Foundation (SIIRD), a cooperation between Enterprise Singapore (ESG) and the Israel Innovation Authority (IIA). The collaboration aims to develop a scalable process for producing structured cultivated fish products and will involve the use of our newly-developed technology for mimicking the flaky texture of cooked fish which was the subject of a recent patent application.
By the end of the first quarter of 2023, we intend to complete the project’s first prototype, a structured hybrid grouper product printed using our proprietary three-dimensional bio-printing technology and bio-inks, customized for cells provided by Umami Meats.

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.
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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;
Thee-dimensional, printed, hybrid, structured products such as hybrid steaks, chicken breast and fish fillets (“ready to cook”); and
Fully-cultivated structured meat products, such as 3D-printed steaks.
We are focusing on developing complex structured products, starting with ready-to-cook structured hybrid products, followed by fully cultivated and structured, maturated whole cuts of meat.
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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We expect to reach industrial-speed printing capabilities in the second half of 2023 and generate initial revenues from our hybrid product technologies commencing in 2024, followed by whole cuts of meat commencing in 2025.

Omakase Beef Morsels (Photo credit: Shlomo Arbiv)
Meat Ingredients for Hybrid and Unstructured Cultivated Products
 
We continue to develop novel, proprietary, stem-cell-based technologies to produce fat, muscle and connective tissue biomass from multiple species, such as beef and fish, 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 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 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.
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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, with a view to completing animal-free growth media and bio-ink by the first half of 2023;
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. We expect the media to be composed of food-grade ingredients, with growth factors 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.
In February 2023, we announced that we had analyzed our muscle cells and found that they offer the same amino acid profile as that of the native tissue. The amino acid profile has two important roles in our cultivated beef products – taste and nutritional value. Our biology team tested 17 amino acids and compared them to native tissue, with the results showing that the team was able to create the same amino acid profile in the lab as in animals, This demonstrates that cultivated meat has the same biochemical composition as conventional meat, and we believe that it has the potential to provide similar nutritional value.
Amino acids are the building blocks of proteins, playing a crucial role in human nutrition. Meat is a rich source of amino acids, particularly those that are considered "essential" because the human body cannot produce them on its own. These essential amino acids include leucine, isoleucine, valine, lysine, methionine, phenylalanine, threonine, tryptophan, and histidine. These amino acids are important for a variety of bodily functions, including muscle growth and repair, immune function, and hormone production. The specific amino acid profile of meat, as well as its taste, varies depending on the animal species and how it is raised, as well as the cut of meat.
We are also 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.
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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 can be isolated from various adult tissues and give rise to more cells of the same type, such as either fat or muscle tissues, while stem cells isolated from the umbilical cord immediately following birth can give rise to multiple types of cells, including both fat and muscle cells. Each of these cells has advantages and disadvantages and their adaptation to our robust meat production process is currently being evaluated.
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 initiate differentiation processes into multiple cell types, such as muscle and fat.
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 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 edible 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.
We also have the capability to customize bio-inks for businesses that we work with, offering the opportunity to 3D print with their cell lines. This is currently being proven in the collaboration with Umami Meat as we are customizing the bio-ink to the Umami Meats Grouper cells.
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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.
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. We aim to conclude our first strategic engagement to this end in the second half of 2023.
In addition, in December 2022, we announced the development of a temperature-controlled print bed for our industrial-scale printer, which is a step forward on our path toward mass production of cultivated meat using 3D printing technology. Temperature control is a critical requirement when printing a cultivated product containing live cells. Maintaining optimal temperature poses a challenge in the architecture of our industrial printers, so the development of temperature-controlled print beds is a major milestone on the path to production at scale, whereby contactless electromagnetic power is delivered to the print bed which is connected to a wireless communication module that monitors and controls its temperature.
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.
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 cells. 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 our 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.
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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. We plan to make a regulatory submission in the United States for approval of our cultivated meat in the second half of 2023.
Europe
PeaceLimitations of Conventional Meat AcquisitionProduction
 
On February 10, 2021, we consummated an agreement with allIn 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 shareholders of Peace of Meat, a private limited liability company incorporated, organizedworld’s freshwater is used for raising livestock for meat and existing under the laws of Belgium, or Peace of Meat, to acquire allleather. At least 18% of the outstanding share capitalgreenhouse gases entering the atmosphere are from the livestock industry. 26% of Peacethe planet’s ice-free land is used for livestock grazing and 33% of Meat not yet owned by us, through our wholly-owned subsidiary, MeaTech Europe BV,croplands are used for total considerationanimal feed.  With regard to treatment of upanimals in conventional meat production, more than 70 billion animals are slaughtered annually with steady increases to €15.4 million ($17.2 million). The total consideration payable by usbe expected in line with increased demand for meat.
Another common consumer concern with industrial-scale animal rearing is the acquisition consists of €7.7 million ($8.6 million), comprised of €4.1 million ($4.6 million) in cash and 4,070,766 of our ordinary shares, with a fair value of €3.6 million ($3.9 million), paidreliance on the closing date,intensive use of antibiotics. Antibiotics are used in livestock, especially pigs and uppoultry, to an additional €7.5 million ($8.3 million) payablemanage 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 €3.9 million ($4.4 million)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:
Mycoproteins:Some of the most commercially successful novel alternative protein products are currently mycoproteins, which are derived from fungi. They are high in cashprotein and 4,070,766 of our ordinary sharesfiber, low in the amount of €3.6 million ($3.9 million)saturated fat, and contain no cholesterol.  However, they have been associated with allergic and gastrointestinal reactions. They are fermented to become a fair value of €2.4 million ($2.7 million), upon the achievement of four defined milestones related to Peace of Meat’s biomass and bioreactor size, density, capacity and production. The acquisition agreement specified that each milestone must be reached within a six-month period, over a total of two years,dough, which can be extended by updevelop a texture similar to nine additional months under circumstances set forth in the acquisition agreement. The agreement also includes acceleration events,that of meat.
Jackfruit: Jackfruit is a tropical fruit native to India, which has a similar taste to fruits such as breachapples and mangoes. While it contains substantially greater protein than these fruits, its protein content is lower than that of meat. Therefore, while its texture is somewhat similar to that of shredded meat, it is not generally viewed as an alternative to meat for consumers used to animal proteins, due to the acquisition agreement by us; certain merger, consolidation or acquisition transactions involving us; our delisting;difference in taste from traditional meat products, and the termination of employment of two or more of the founders of Peace of Meat during the milestone period under circumstances set forth in the acquisition agreement.its lower protein content.
 
PeaceInsects: 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 was established in Belgium in 2019 and is developing cultured 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, and has received approximately $1 million in private investments. Solution
We believe that its innovative technology has the potentialcultivated meat grown through cellular agriculture, which aims to support an industrial process for the production of cultured 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 and to accelerate research and production processes in the industry, and has conducted taste tests for hybrid products it has developed.
B. Business Overview
Overview
We are a technology company focused on developing and out-licensing our proprietary three-dimensional printing technology, biotechnology processes and customizable manufacturing processes to food processing and food retail companies seeking to manufactureproduce 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.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 protein biomass, 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.
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We are engaged with experimentation to develop optimal and cost-effective cell culture media composition. 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”.
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, 63%-95% less land use, 51% to 78% 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.

Mitigating and reducing of health risks: 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 controlled manufacturing practices that are designed to contribute to improved nutrition, health and wellbeing. Therefore, cultivated meat reduces the risk of new diseases and future pandemics. Plant-based and cultivated meats are expected to be insusceptible to animal diseases and should therefore not contribute to pandemic risk because they do not require the use of live animals. Moreover, cultivated meat does not require antibiotics during its production and therefore will not contribute to antibiotic resistance.

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. While the original cultivated burger is thought to have cost around $330 thousand, consulting firm CE Delft estimates that economies of scale combined with technological improvements will bring the cost of cultivated meat down to less than $8 per kilogram by 2035.

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.

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, enabling the production of the food of the future. 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 novel, proprietary three-dimensional bioprinter to deposit layers of differentiated stem cells, scaffolding, and cell nutrients in a three-dimensional form of structured cultured meat. We believe the cultured meat production processes we are developing, which areprocess that is designed to offerprovide 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.
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We are designing our eventualcellular agriculture and bioprinting processes to be modular so that customers an alternativecan initiate their cultivated meat activities at scales suitable for their specific needs and to industrial slaughter, have the potentialgrow their activities as their needs evolve. Whether a customer wishes to improve the quality of the environment, shorten global food supply chains,manufacture a hybrid product that includes cultivated and reduce the likelihood of health hazards suchplant-based ingredients, cultivated fat as zoonotic diseases transferred from animalsa raw material, or even 3D-printed steak, each facility can be adapted to humans (including viruses, such as virulent avian influenzascale-out product capabilities and COVID-19, and drug-resistant bacterial pathogens, such as some strains of salmonella).production volumes.
 
We are initially focused on developing cultureda fully automated, clean and proprietary process for cultivated meat steak technology.  While cultured meat companies have made some progress developing unstructured alternative meat products, such as minced meatmanufacturing in a controlled, sterile environment, which is expected to significantly increase food safety. Our production facilities will not house a single animal and sausage, to datewill contain robust integrated monitoring systems and minimal human interaction, which will greatly reduce the industry has struggled in developing high-margin, high-value structured and cultured meat products such as steak. Unlike minced meat, a cultured meat steak product has to grow in fibers and contain connective tissues and fat. To be adopted by diners, we believe cultured 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. This is the test on which we have set our sights – a three-dimensional, printed steak based on animal cells, rather than plant-based alternatives. We believe we are the first company to be developing both a proprietary bioprinter and the related processes for growing cultured meat to focus on what we believe is a high value sectorrisk of pathogen contamination of the alternative protein market.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, business development bioprinting, tissue engineering, industrial stem cell growth, software engineering, electronic and mechanical 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:

Commercialize our technologies for use in consumer and business markets. We intend to commercialize our three-dimensional bio-printing capabilities, while also customizing bio-inks to enable the production of products based on a wide range of species in accordance with the needs of our partners and customers. We also 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.

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 (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.
In addition, we intend to license our proprietary 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, bothwhether directly andor through contractors, to companies in fields including food processing, and food retail companies.and cultivated meat.  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. We intend to chargecells, for a fee for such restocking, employing a cost-plus pricing model.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’“white-labelled” generic materials or proprietary materials that we have developed, we may charge a fee for restocking such materials with a cost-plus pricing model,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 toprovide paid product implementation and guidance services to our customers looking to establish culturedcultivated 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 expertiseexpert knowledge in order to set up and implement our licensed technologies.
In December 2022, we announced that we will focus on commercialization of our 3D bio-printer in 2023 to accelerate our go-to-market strategy through business collaborations and partnerships. To facilitate an accelerated go-to-market plan, we will focus resources on dedicating business personnel to create and develop partnerships during 2023.

Develop additional alternative proteins to meet growing industry demand. There are substantial technological challenges inherent in expanding our offering beyond our current cultivated beef 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. In January 2023, we announced a collaboration with Singaporean cultivated seafood developer, Umami Meats, to develop 3D-printed structured eel and grouper products pursuant to a grant from the Singapore-Israel R&D Foundation. The initiative is being funded by a grant from the Singapore-Israel Industrial R&D Foundation (SIIRD), a cooperation between Enterprise Singapore (ESG) and the Israel Innovation Authority (IIA). The collaboration aims to develop a scalable process for producing structured cultivated fish products and will involve the use of our newly-developed technology for mimicking the flaky texture of cooked fish which was the subject of a recent patent application.
By the licensedend of the first quarter of 2023, we intend to complete the project’s first prototype, a structured hybrid grouper product printed using our proprietary three-dimensional bio-printing technology and processes.bio-inks, customized for cells provided by Umami Meats.

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.
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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;
Thee-dimensional, printed, hybrid, structured products such as hybrid steaks, chicken breast and fish fillets (“ready to cook”); and
Fully-cultivated structured meat products, such as 3D-printed steaks.
 
We are ledfocusing on developing complex structured products, starting with ready-to-cook structured hybrid products, followed by fully cultivated and structured, maturated whole cuts of meat.
In September 2022, we announced the development of Omakase Beef Morsels, a richly-marbled, structured meat product developed using our Chief Executive Officer, Sharon Fima, who previously foundedproprietary 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 servedfat 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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We expect to reach industrial-speed printing capabilities in the second half of 2023 and generate initial revenues from our hybrid product technologies commencing in 2024, followed by whole cuts of meat commencing in 2025.

Omakase Beef Morsels (Photo credit: Shlomo Arbiv)
Meat Ingredients for Hybrid and Unstructured Cultivated Products
 
We continue to develop novel, proprietary, stem-cell-based technologies to produce fat, muscle and connective tissue biomass from multiple species, such as Chief Technology Officerbeef and fish, 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 Nano Dimension Ltd. (TASE/Nasdaq: NNDM)three-dimensional bioprinting technology. The first expected application of the technology is in hybrid food products, which combines plant-based protein with cultivated animal 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 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.
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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, with a complete desktopview to completing animal-free growth media and bio-ink by the first half of 2023;
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. We expect the media to be composed of food-grade ingredients, with growth factors 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.
In February 2023, we announced that we had analyzed our muscle cells and found that they offer the same amino acid profile as that of the native tissue. The amino acid profile has two important roles in our cultivated beef products – taste and nutritional value. Our biology team tested 17 amino acids and compared them to native tissue, with the results showing that the team was able to create the same amino acid profile in the lab as in animals, This demonstrates that cultivated meat has the same biochemical composition as conventional meat, and we believe that it has the potential to provide similar nutritional value.
Amino acids are the building blocks of proteins, playing a crucial role in human nutrition. Meat is a rich source of amino acids, particularly those that are considered "essential" because the human body cannot produce them on its own. These essential amino acids include leucine, isoleucine, valine, lysine, methionine, phenylalanine, threonine, tryptophan, and histidine. These amino acids are important for a variety of bodily functions, including muscle growth and repair, immune function, and hormone production. The specific amino acid profile of meat, as well as its taste, varies depending on the animal species and how it is raised, as well as the cut of meat.
We are also developing proprietary bioprinting and tissue engineering technologies to enable the design and bioprinting of three-dimensional printing systemtissues. Our goal is for multilayer printed circuit boards,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.
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We are working on proprietary conductive nano-silver inks alongslaughter-free meat development processes, including cell proliferation and differentiation and experiments with novel insulating and substrate inks.  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.  We are further guided by world-renowned consultants, including Professor Shlomo Magdassi, Ph.D. and Professor Tal Dvir, Ph.D. Professor Magdassi is a professor of chemistry at the Casali Center for Applied Chemistry, the Institute of Chemistry and the Center for Nanoscience and Nanotechnology at the Hebrew University of Jerusalem, Israel. He is the head of the Center for 3D and Functional Printing at the Hebrew University, where he holds the Enrique Berman Chairmedia to grow high-density stem cells based solely on compounds produced in Solar Energy. Professor Dvir is the Head of the Laboratory for Tissue Engineering and Regenerative Medicine in Tel Aviv University. He is affiliated with the Department of Biotechnology and the Department of Materials Science and Engineering. Prof. Dvir is the Director of Tel Aviv University’s Center for Nanoscience and Nanotechnology and the Founding Director of the University's Center for Regenerative Biotechnology.

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laboratory processes.
 
Cultured 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 expectedIn these experiments, we have developed stem cells able to continue to do so. The rising growth of demand for farm animalsdifferentiate into fat or muscle cells which allows for the food industry has createdmaturation 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 environmental, health, financialmuscle fibers that better resemble those in whole cuts of meat. Bovine stem cells were isolated, proliferated in the lab and ethical challenges.differentiated into matured muscle cells with improved muscle fiber density, thickness and length.
Cell source for cultivated meat products
 
The globalprocess 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 can be isolated from various adult tissues and give rise to more cells of the same type, such as either fat or muscle tissues, while stem cells isolated from the umbilical cord immediately following birth can give rise to multiple types of cells, including both fat and muscle cells. Each of these cells has advantages and disadvantages and their adaptation to our robust meat production process is currently being evaluated.
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 initiate differentiation processes into multiple cell types, such as muscle and fat.
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 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 edible 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.
We also have the capability to customize bio-inks for businesses that we work with, offering the opportunity to 3D print with their cell lines. This is currently being proven in the collaboration with Umami Meat as we are customizing the bio-ink to the Umami Meats Grouper cells.
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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.
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. We aim to conclude our first strategic engagement to this end in the second half of 2023.
In addition, in December 2022, we announced the development of a temperature-controlled print bed for our industrial-scale printer, which is a step forward on our path toward mass production of cultivated meat using 3D printing technology. Temperature control is a critical requirement when printing a cultivated product containing live cells. Maintaining optimal temperature poses a challenge in the architecture of our industrial printers, so the development of temperature-controlled print beds is a major milestone on the path to production at scale, whereby contactless electromagnetic power is delivered to the print bed which is connected to a wireless communication module that monitors and controls its temperature.
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.
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 was valued by Zion Market Research at approximately $714 billionpenetration in 2016the 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 cells. Beyond hybrid products, cultivated fat is expected to more than doublebe a component in value by 2022, reflectingother fat-based products, whether edible or otherwise, and an average compound annual growth rate, or CAGR, of around 14%. Accordingintegrated component in our printing technology. We are working to market research firm Allied Market Research, the global meat substitute market was estimated at $4.5 billion in 2018create synergy and is expected to grow to $7.55 billion by 2025. Of this, the cultured meat category alone is expected to reach $214 million by 2025, with an annual growth rate of approximately 16%. With regardadded value to the longer term, AT Kearney predicted in 2019 that by 2040, just 40% ofcultivated meat market, while also sustaining animal welfare and meeting the growing global demand for the global meat market will be provided by conventional meat, with 35% provided by cultured meat and an additional 25% by plant-based meat replacements.meat.
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International Expansion
 
The meat industry is showing strong interestUnited 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 alternative protein space, both in plant-based and cell-based proteins. There are several drivers underlyingUnited States, by isolating cells sourced from cattle raised on a farm approved by the strong engagement with alternative proteins.United States Department of Agriculture, or USDA. 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 seekingplan to minimize human involvementmake a regulatory submission in the manufacturing process. To that end, retailers such as Costco and Walmart are increasingly opening their ownUnited States for approval of our cultivated meat processing facilities on which they can rely exclusively.in the second half of 2023.
Europe
 
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'sworld’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. Twenty-six percent26% of the planet'splanet’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, approximately 72more than 70 billion animals wereare slaughtered annually with steady increases to be expected in 2018 alone.line with increased demand for meat.
 
Another common consumer concern with industrial-scale animal-rearinganimal rearing is the reliance on the intensive use of added growth hormones and antibiotics. Hormonal substances and antibioticsAntibiotics are used in livestock, especially pigs and poultry, to manage animal growth and health, and to treat or prophylactically prevent diseases such as avian flu and swine flu. The hormones used in livestock include estradiol-17β, progesterone, testosterone, zeranol, trenbolone, and melengestrol acetate, and theirTheir effects on human health continue to be disputed by researchers.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 beyondbesides traditional plant-based proteins, such as soy, peas and chickpeas. Some of the alternative proteins being developed for human consumption for this purpose include:
 
Mycoproteins:Some of the most commercially successful novel alternative protein products are currently mycoproteins, which are derived from fungi. They are high in protein high inand 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 has a similar taste to fruits such as apples and mangoes. While it contains substantially greater protein than these fruits, its protein content is high in protein. Itslower than that of meat. Therefore, while its texture is somewhat similar to that of shredded meat, although its taste is similar to other fruits, such as apples and mangoes, so while it is a good source of protein, it is not generally viewed as an alternative to meat for consumers used to animal proteins.proteins, due to the difference in taste from traditional meat products, and its lower protein content.
 
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Insects: Insects are an environmentally-friendly source of protein requiringthat requires significantly less land and water, and emittingemits 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,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 CulturedCultivated Meat Solution

We believe culturedthat cultivated meat grown through cellular agriculture, which aims to produce culturedcultivated 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 utilizingthat utilizes advanced technologies with conceptual similarities to hydroponics, butwhich are used for growing meat cells rather than fruit. CulturedCultivated meat is grown in cell culture rather than inside animals applyingand applies tissue engineering practices for fat and muscle production for the purpose of human consumption. In placeInstead of animal slaughter, stem cells are removedisolated from an animal tissue, such as from an umbilical cord following birth,(following birth), an adipose or a muscle tissue, and then cultivated in vitro to form protein biomass, muscle fibers. Alsofibers and fat cells. While also known as clean meat, in“cultured meat”, “clean meat”, “in vitro meat, lab-grown meat, green meat, cell-based meat, and motherless meat,meat” or “lab-grown meat”, the term “cultured“cultivated meat” has arguably gained the most traction in public discourse in describing slaughter-free real meat.as of late and is the term believed to best appeal to consumers.
 
CulturedCultivated meat production is an advanced technology operatingthat operates as part of the wider field of cellular agriculture, (growingwhich entails growing animal cells in bioreactors), whichbioreactors 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 onof scaling-up cellular agriculture has the potential to offer a solution to the scale and environmental challenges confronting conventional meat production. Other alternative protein competitorscompanies 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.
 
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We are engaged with experimentation to develop optimal and cost-effective cell culture media.media composition. 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 effectiveefficient and cost-effective processes.
While many challenges remain, surveys are consistently showing consumer openness toward, and enthusiasm for, culturedcultivated meat. For example, a survey on perceptionsAccording to “Consumer Acceptance of cultured meat among 3,030 consumers in the United States, India and China conductedCultured Meat: An Updated Review (2018–2020)” published by researchers fromat 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 Good Food Instituteworld. Cultivated meat is generally seen as more acceptable than other food technologies, and the Center for Long Term Prioritiesmore 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 published in 2019, showed overwhelming willingnessit is more appealing to begin purchasing cultured meat regularly, albeit less so in the United States than in India and China.

Consumer Attitudes Toward Regular Purchase of Cultured Meat

 Unlikely to PurchaseSomewhat or Moderately LikelyVery or Extremely Likely
United States          23.6%46.6%29.8%
India          10.7%37.7%48.7%
China          6.7%33.9%59.3%

The top reasons for consumer demand for cultured meat, according to a survey from August 2018 performed by Mattson Co., were reduction of hormones and antibiotics in meat (39% of respondents), animal welfare concerns, together with a desire to reduce animal cruelty and slaughter (36%) and the beneficial impact expected on the environment (27%)certain demographic groups”. Additional reasons included consumer health, food security and production hygiene.
 
We believe that culturedcultivated meat hascould 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 cultured 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 cultured meat could have a long-term positive impact on the environment.

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, 63%-95% less land use, 51% to 78% 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.

Mitigating and reducing of health risks: 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 controlled manufacturing practices that are designed to contribute to improved nutrition, health and wellbeing. Therefore, cultivated meat reduces the risk of new diseases and future pandemics. Plant-based and cultivated meats are expected to be insusceptible to animal diseases and should therefore not contribute to pandemic risk because they do not require the use of live animals. Moreover, cultivated meat does not require antibiotics during its production and therefore will not contribute to antibiotic resistance.
 
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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.

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. While the original cultivated burger is thought to have cost around $330 thousand, consulting firm CE Delft estimates that economies of scale combined with technological improvements will bring the cost of cultivated meat down to less than $8 per kilogram by 2035.
 
Controlled Growing Environment: Another potential benefit of cultured 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 practice, or GMP, controls to contribute to improved nutrition, health and wellbeing.

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.
 
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 cultured

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. Cultured 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 Competitive Strengths

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.
 
We believe we will benefit from the following competitive strengths as we work to develop and out-license our three-dimensional bioprinting technology and tissue development processes:
We are developing technologies and processes with the potential to allow food processing and food retail companies to create products that are healthier for the consumer. We are dedicated to developing technologies and processes that are designed to create cuts of meat that require substantially less antibiotic and growth-hormone treatments than conventionally-farmed meat. The proprietary technologies and processes we are developing are designed to allow food companies to manufacture meat under laboratory conditions on an industrial scale. We believe the use of meat manufactured under laboratory conditions minimizes or eliminates a number of hygiene-related risks to the consumer, such as the risk of transmission of pathogens from animals to humans, as happened at the outset of the COVID-19 pandemic and numerous other human health crises.
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 is not otherwise expected to be able to meet the growing demand for protein caused by rising population numbers and global affluence, due to inefficiencies inherent in conventional meat farming. These include the large amount of land and water use needed for raising livestock, causing precious natural resources to be squandered.
Our mission is aligned with consumer sentiment and demand. We believe that our technologies and processes have the potential to capitalize on growing consumer preferences for real meat proteins that do not involve animal suffering or slaughter, and do not entail significant negative environmental consequences including, but not limited to, those that exacerbate climate change, such as the release of methane and effluent run-off.
We are focused on providing customers with industrial scale-up capability. Much of the work in the development of alternative proteins has been focused on developing individual proof-of-concept products which may not feasibly scale up to the industrial quantities needed for a profitable business.  We are designing our technology and processes with large-scale cultured meat production in mind to be measurable in tons of meat produced daily.
We have experienced and accomplished leadership with strong backgrounds in a variety of fields. The research and development of cultured meat products requires personnel with up-to-date professional knowledge and interdisciplinary expertise, as well as the ability to combine different areas of knowledge for the development of different products. Our CEO previously founded and was CTO of Nano Dimension Ltd. (TASE/Nasdaq: NNDM), which developed a complete desktop three-dimensional printing system for multilayer printed circuit boards. Previously, he held research and development leadership positions at XJET and HP Indigo Division. We have carefully selected personnel for the rest of our executive management team who possess substantial industry experience and share our core values, from diverse fields including bioprinting, tissue engineering, industrial stem cell growth, and bioprinter and print materials development. We believe this blend of talent and experience 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.

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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, enabling the production of the food of the future. 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.
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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, business development bioprinting, tissue engineering, industrial stem cell growth, software engineering, electronic and mechanical 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:
 

Commercialize our technologies for use in consumer and business markets. We intend to commercialize our three-dimensional bio-printing capabilities, while also customizing bio-inks to enable the production of products based on a wide range of species in accordance with the needs of our partners and customers. We also 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.
Perfect the development of our cultured steak manufacturing technology and processes.  We intend to continue developing and refining our processes, procedures and equipment until we are in a position to initiate out-licensing of our technology.  We currently aim to print 100 grams of structured, edible, cultured meat, similar in taste, appearance, smell and texture to steak, consisting of cells bred in our laboratory and developed into fat, muscle and connective tissue using our three-dimensional printing technology, by the end of 2021.  Upon satisfaction of this milestone, we plan to tackle the technological challenges involved in scaling up the printing process to industrial-scale levels before seeking potential licensees.

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 (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.
 
Launch our B2B product solution for companies in the food industry.  WeIn 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 companies in fields including food processing, and food retail companies.and cultivated meat.  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. We intend to chargecells, for a fee for such restocking, employing a cost-plus pricing model.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, or ‘white-labelled’“white-labelled” generic materials or proprietary materials that we have developed, we may charge a fee for restocking such materials with a cost-plus pricing model,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 toprovide paid product implementation and guidance services to our customers looking to establish culturedcultivated 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 theour licensed technologies.
 
Develop additional alternative proteins, such as poultry,In December 2022, we announced that we will focus on commercialization of our 3D bio-printer in 2023 to meet growing industry demand. There are substantial technological challenges inherent in expandingaccelerate our offering beyond cultured beef technologiesgo-to-market strategy through business collaborations and partnerships. To facilitate an accelerated go-to-market plan, we will focus resources on dedicating business personnel to additional alternative proteins, such as cultured poultry or cultured fish.  However, we believe that our experience, know-howcreate and intellectual property portfolio form an excellent basis from which to surmount such challenges. In February 2021, we completed the acquisition of Peace of Meat, with the aim of developing avian meat for the alternative meat industry, applying proprietary technology to mimic the cellular composition of conventional poultry.develop partnerships during 2023.
 

Develop additional alternative proteins to meet growing industry demand. There are substantial technological challenges inherent in expanding our offering beyond our current cultivated beef 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. In January 2023, we announced a collaboration with Singaporean cultivated seafood developer, Umami Meats, to develop 3D-printed structured eel and grouper products pursuant to a grant from the Singapore-Israel R&D Foundation. The initiative is being funded by a grant from the Singapore-Israel Industrial R&D Foundation (SIIRD), a cooperation between Enterprise Singapore (ESG) and the Israel Innovation Authority (IIA). The collaboration aims to develop a scalable process for producing structured cultivated fish products and will involve the use of our newly-developed technology for mimicking the flaky texture of cooked fish which was the subject of a recent patent application.
Acquire synergistic and complementary technologies and assets.  We
By the end of the first quarter of 2023, we intend to optimizecomplete the project’s first prototype, a structured hybrid grouper product printed using our processesproprietary three-dimensional bio-printing technology and diversify our product range to expand the cultured meat technologies upon which marketable products can be based,bio-inks, customized for cells provided by Umami Meats.

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.
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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;
Thee-dimensional, printed, hybrid, structured products such as hybrid steaks, chicken breast and fish fillets (“ready to cook”); and
Fully-cultivated structured meat products, such as 3D-printed steaks.
We are focusing on developing complex structured products, starting with ready-to-cook structured hybrid products, followed by fully cultivated and structured, maturated whole cuts of meat.
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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We expect to reach industrial-speed printing capabilities in the second half of 2023 and generate initial revenues from our hybrid product technologies commencing in 2024, followed by whole cuts of meat commencing in 2025.

Omakase Beef Morsels (Photo credit: Shlomo Arbiv)
Meat Ingredients for Hybrid and Unstructured Cultivated Products
 
We continue to develop novel, proprietary, stem-cell-based technologies to produce fat, muscle and connective tissue biomass from multiple species, such as beef and fish, 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 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 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.
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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, with a view to complementing our own processescompleting animal-free growth media and diversifying our product range alongbio-ink by the cultured meat production value chain in order to introduce cultured products to the global market as quickly as possible. See also “- Additional Technologies” below.first half of 2023;

The MeaTech 3D Cultured Steak
 
Our initial focus isCell 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 developmeat ingredients for use in hybrid meats and unstructured, cultivated meat, we are developing the technology and processes that can allow our eventual customers to produce culturedcultivated 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 plant-basedgrowth 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. TheWe expect the media areto be composed of food-grade ingredients, and we expect theirwith 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 through the destruction of a calf fetus.from animals. We are engaged with experimentation to develop optimal and cost-effective antibiotic-free cell culture media, and in 2020, announced the development of a lower cost cell-culturing growth medium. 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 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.
 
In February 2023, we announced that we had analyzed our muscle cells and found that they offer the same amino acid profile as that of the native tissue. The amino acid profile has two important roles in our cultivated beef products – taste and nutritional value. Our biology team tested 17 amino acids and compared them to native tissue, with the results showing that the team was able to create the same amino acid profile in the lab as in animals, This demonstrates that cultivated meat has the same biochemical composition as conventional meat, and we believe that it has the potential to provide similar nutritional value.
Amino acids are the building blocks of proteins, playing a crucial role in human nutrition. Meat is a rich source of amino acids, particularly those that are considered "essential" because the human body cannot produce them on its own. These essential amino acids include leucine, isoleucine, valine, lysine, methionine, phenylalanine, threonine, tryptophan, and histidine. These amino acids are important for a variety of bodily functions, including muscle growth and repair, immune function, and hormone production. The specific amino acid profile of meat, as well as its taste, varies depending on the animal species and how it is raised, as well as the cut of meat.
We are also developing proprietary printingbioprinting 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 the quantityso that fat content of fat in the meat, for example, can be adjusted to amounts above or belowother than those occurring naturally in animals in order to meet varied consumer preferences).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.


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In the course of developing our technologies, for out-licensing, we intend to develop a large-scale technology demonstration model. However, once we begin licensing our technology and processes, we plan to be only minimally involved in the production of cultured meat products (for example, by providing the initial cell sample for sale as an associated product), with our licensees to be responsible for the bulk of cultured meat preparation, printing, packaging and shipping.
We have set forth below an illustration of the process that we are developing that we believe will, upon completion, will allow food companies licensingus and our technologycustomers to develop and manufacture culturedcultivated steaks at industrial scale.
 

Harvesting Embryonic Cells

The first step in the cultured meat process we are developing, the harvesting of embryonic cells, is based on the isolation of inner cell mass from bovine blastocysts, cultured to emulate tissue and/or organs for food consumption. At the early stages of development, an egg is surrounded by the zona pellucida (transparent zone), or ZP. After the fertilized cattle egg has replicated into 32 cells, an internal cavity forms and the cluster is called a blastocyst. This early stage of the developing embryo lasts from about the ninth to twelfth day after fertilization, prior to implantation in the womb. It contains two types of cells, namely the trophectoderm, or TE, which is the outer layer that produces extra embryonic membranes; and the inner cell mass, or ICM, which is the pole of the blastocyst and has a thicker accumulation of cells, from which all embryonic tissues develop. The image below is of a blastocyst, showing inner cell mass surrounded by the ZP and TE, which supplies the embryo with nourishment and later forms the major part of the placenta.


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Embryonic
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 can be derivedisolated from various adult tissues and give rise to more cells of the same type, such as either fat or muscle tissues, while stem cells isolated from the ICMumbilical cord immediately following birth can give rise to multiple types of the blastocyst at the stagecells, including both fat and muscle cells. Each of embryogenesis, near the end of first week of development. We believe these extracted embryonic cells can be cultured in the laboratoryhas advantages and proliferate indefinitely, under the right conditions. ES cells growing in this undifferentiated state retain the potentialdisadvantages and their adaptation to differentiate into cells of all three embryonic tissue layers.our robust meat production process is currently being evaluated.
Our method for establishing a tissue culture from the ICM of a bovine blastocyst includes the following steps:
obtaining a plurality of blastocysts, each blastocyst having a ZP, a TE, and an inner cell mass;
perforating each blastocyst;
isolating the inner cell mass from each blastocyst through the perforations;
seeding the inner call mass on a predetermined surface, called a substrate; and
culturing the inner cell mass to establish a bovine inner cell mass tissue culture.
 
Bioreactors

The next step in the process weWe are developing usesusing software-controlled bioreactors to foster cell growth.proliferation. The initial growth phase leverages exponential growth of stem cells to achieve sufficient cell volumes for food production. The second bioreactor stage is that of differentiation, where theThese stem cells differentiateinitiate differentiation processes into multiple cell types, such as muscle and fat. The final incubation phase commences post-printing, and allows the cells to settle and grow in place as printed.
 
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 printing. In addition, our wholly-owned subsidiary, Peace of Meat, has successfully demonstrated its owndevelopment. We have already developed a cell-suspension growth process using chicken cells.
and beef cells in the course of developing both structured and unstructured products.

Our Bio-Inks
 
The next stepStructured, three-dimensional printed products require the use of the process we are developing relies on ouredible bio-inks, which are printable biological materials that are grownproduced from stem cellsthe biomass produced in a growth medium, and differentiatedour bioreactors, as well as scaffolding materials. Bioinks produced differ in their differentiation potential into inks to form various types of tissue, such as muscle, fat and connective tissue, as well as scaffolding inks that may be non-biological in origin.tissue. In this step, our bio-inks are printed in thin layers in the desired combination, providingwhich provides creative control over the steak design, in a process that maintains the ongoing viability of the bio-ink cells. AsSince the printed layers are composed of viable cells, they are then able to join togethercoalesce and mature in an incubator with the help of bonding agents formingthat 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.
 
To date,We also have the capability to customize bio-inks for businesses that we have produced and manufactured bio-inks designedwork with, offering the opportunity to create fat and muscle cells and tissues.  We have also built and successfully tested a three-dimensional prototype digital3D print with their cell lines. This is currently being proven in the collaboration with Umami Meat as we are customizing the bio-ink printer for printing cultured meat cells, as well as supporting systems, with a view to developing industrial bio-print heads for the purpose of large-scale printing.Umami Meats Grouper cells.

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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 usingbio-inks. This is done through the use of an inkjet-style printer with drop-on-demand capabilities where inks are dispensed only where needed.printed precisely into a three-dimensional design.
 
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The image below depicts a potential laboratory model that food companies licensing our technology and processeswe could use for the development and production of culturedcultivated meat steaks.

 
OnceAfter the completion of the bioprinting process, the tissue is bioprinted, the culture is transferred to an incubation bioreactor,into a special incubator, where, in addition to providing nutrients and other chemical and biological agents, the systems providedsystem may physically manipulate the tissues to increasetissue. This “training” process increases the muscle cells differentiation, (thea process byin which a cell changes from one type to another)its function and adjust the physical properties of the extracellular matrix, or ECM. The ECM isphenotype, and produces a three-dimensional network of very large molecules, such as collagen, that provide structural and biochemical support to surrounding cells. Collagen is the ECM of a scaffold that contains nutrients, adherents, and essential growth factors for the surrounding cells, supporting the development growth of complex muscle tissues in living animal bodies. Building muscle tissues in vitro requires the development of artificial scaffolds. Plants are an obvious candidate for artificial scaffolding, as plant fiber is similar in composition to collagen fiber.stronger, more fibrous tissue.
 
To date, we have printed several cell types, which coalesced into fat and muscle tissue grown in our laboratory. To the best of our knowledge, this is the first commercial digital bio-ink printing of food performed by any commercial company using a bioprinter developed in-house that has brought about the coalescence of a living tissue made up of several different cells derived from a live cow. We observed that the digital printer arranged the cells in space as planned, with coalescence observed both between different cells and between cells and their environment, both of which are essential for tissue formation.  In the third quarter of 2020,December 2021, we announced that we had achievedsuccessfully three-dimensionally printed a significant milestone3.67 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 the successful printingan 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 uniform, thin, slaughter-free meatsteak 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 produced from stem cells.to form our steak.
 
CulturedIn 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. We aim to conclude our first strategic engagement to this end in the second half of 2023.
In addition, in December 2022, we announced the development of a temperature-controlled print bed for our industrial-scale printer, which is a step forward on our path toward mass production of cultivated meat using 3D printing technology. Temperature control is a critical requirement when printing a cultivated product containing live cells. Maintaining optimal temperature poses a challenge in the architecture of our industrial printers, so the development of temperature-controlled print beds is a major milestone on the path to production at scale, whereby contactless electromagnetic power is delivered to the print bed which is connected to a wireless communication module that monitors and controls its temperature.
Cultivated Steak Scaffolding
 
Growing three-dimensional meat presents a unique challenge. Typically, animal cells must remain within 200 microns fromof 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 dimensionalthree-dimensional structure whichthat mimics the three-dimensional environment of the natural extracellular material, or ECM. The ECM provides short-term mechanicalis 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 tissue culture,ECM. Plants are an obvious candidate for scaffolding as they are sustainable, cost worthy and provides an increased surface area for cell adhesion, proliferation, migration, and differentiation, eventually leadingcould be processed to accelerated tissue formation.have similar properties of collagen fibers. We are developing technology to allow for the formation of a composite scaffold.
 
To date, we have developed stem cell growth media, which we have used in experiments to grow high-density stem cells based solely on compounds produced in laboratory processes, rather than animal-sourced materials.  We sorted stem cells into fat and muscle cells, allowing the building of muscle fibers, following on from a successful trial of a sorting process of basic stem cells that we harvested from an umbilical cord. These cells were nourished with a nutritional compound that we developed as a growth medium to direct the stem cells to be sorted into fat cells, as needed for the fat tissue in the printed steaks we are developing.
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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, inmeaning that they can work using different sizes of factory.factory sizes. We believe we could license our technology to customers with industrial plants close to urban areas seeking to provide ‘just“just in time’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, allowingwhich would allow places like the United Arab Emirates, Hong Kong or Singapore to potentially become more agriculturally independent thusby 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.
 
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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, startingbeginning 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 thatwill 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.
 
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 culturedcultivated meat to other types of animals, as well as achieving market penetration in the shortest timeframe possible, thus realizingwhich would allow us to realize the great potential in the market. While weWe are developing beef combined with three-dimensional digital printing technology, our acquisition Peace of Meat is developing cultured avian fat. We estimate that the firstcultivated meat, both unstructured hybrid products basedand structured, three-dimensional printed products, with an initial emphasis on Peace of Meat technology may enter the market as early as 2022.bovine cells. Beyond hybrid products, culturedcultivated fat is expected to be a component in other fat-based products, (edible and otherwise),whether edible or otherwise, and an integrated component in MeaTech’sour printing technology. We are working to create synergy and added value to the culturedcultivated meat market, while also sustaining animal welfare and meeting the growing global demand for meat.
 
Hybrid Products – Path to Market Entry
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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. We plan to make a regulatory submission in the United States for approval of our cultivated meat in the second half of 2023.
Europe
Peace of Meat hasAcquisition

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. Peace of Meat was established in Belgium in 2019 and developed a unique, proprietary, stem-cell-basedcultured avian fat directly from animal cells without the need to grow or kill animals.
In April 2021, we commenced food technology to produce avian fats, such as those from chicken or geese, without harming any animals. We are leveragingdevelopment activities through our European subsidiary, MeaTech Europe BV, with an initial focus on hybrid foods using Peace of Meat’s technologies, including through novel hybridcultivated 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. We currently expect food products,technology development activities to expedite market entry whilecontinue at our Israeli headquarters.
 
On March 7, 2023, we develop an industrial processannounced a restructuring plan for cultivating and producing real meat using three-dimensional bioprinting technology, without harming animals. The technologies’ first expected application is in hybrid food products, combining plant-based protein with cultured animal fat, designed to provide meat analogues with qualitiesPeace of “meatiness” (taste and texture) closer to that of conventional meat products,Meat, to which end Peace of Meat has conductedbegan implementing a numberseries of taste tests, demonstratingchanges designed to streamline its operations. On April 4, 2023, we announced that Peace of Meat would close, in the potential that its cultured fat has to enhancecontext of optimizing our funds and investment strategy, alongside enabling a greater focus on recently-announced core goals such as accelerating the tastecommercialization of plant-based protein products. We believe adding 10-25%our 3D printing technology.
As part of our purchase of the shares of Peace of Meat cultured fatat the end of 2020, Peace of Meat’s management had been granted full contractual autonomy throughout 2021 and 2022, and was provided with the funding required to a plant-based meat hasdevelop its technologies in accordance with the potentialterms of the purchase. Following the conclusion of the autonomous period and following our previously announced plans to enhance meatiness.restructure Peace of Meat, we further evaluated the expected return on our investment, and decided not to provide additional funds to Peace of Meat, in order to focus our efforts in the advancement of its core technology 3D printing of cultured fatproducts, and potential collaborations. As a result, Peace of Meat has ceased operations and is designedexpected to be antibiotic free,liquidated. As part of this process, we expect Peace of Meat’s assets to be realized, following which provides enhanced fatty acid profileswe shall consider how and personalized nutritional profiles.when to continue development of cultivated avian products. The closure of Peace of Meat is expected to reduce our expenses by about $4.5 million annually, relative to 2022.
 
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 for the joint development of 3D-printed cultivated structured seafood. In addition, we plan to make a regulatory submission for approval of our cultivated meat in Singapore in the first half of 2023.
On April 3, 2023, we announced our participation in a strategic investment round in Wilk Technologies Ltd. (TASE: WILK), alongside leading players in the food industry, such as Danone and the Central Bottling Co. Ltd. (owner of Tara, Coca Cola Israel and more). The transaction was approved by our audit committee (due to related party considerations) and board of directors. As part of the investment, we purchased ordinary shares of Wilk in the amount of $450,000 at a 15% discount below their 45-day average closing price, giving us a 2.5% stake in Wilk. In parallel with this investment, we aim to identify synergies with Wilk, including various types of strategic cooperation with the company surrounding our proprietary biology and printing technologies.

Sales and Distribution
 
We do not yet have anyare working to develop and establish sales marketing orand distribution infrastructure or capabilities. In the event that we complete the development of our technologies and secure adequate funding, we intend to consider commercialization collaborations where appropriate.
 
We have engagedApart from end consumers in a consulting agreement with the Adom Group, or Adom, under which Adom serves as a consultant for the developmentB2B2C models of our operations in the cultured meat production industry, and will assist us in penetrating the markets in which Adom operates in Europe and South America. Under the agreement with Adom,branded products, we granted Adom first refusal rights for establishing a production plant using the technologybelieve that we are developing, in one target country, such as Israel, Poland, Argentina or Brazil. According to the terms of the agreement, should Adom induce a leading producer in the local meat industry in the target country to invest in us at least $1 million and engage with the producer to establish a production plant franchise based on our technologies, we will grant Adom and the franchisee first refusal rights for production in that target country, subject to the completion of certain fundraising milestones, by or in conjunction with Adom.
We believe our ideal prospectivebusiness customers will be value-added food processors and retailers that wish to benefit from culturedcultivated meat manufacturing capabilities. We intend to provide our prospective corporate customers with a solution to these needs in the form of highly-automated, cleaner and ‘just-in-time’ manufacturing of complexcultivated meat structuresproducts 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 culturedcultivated meat production facilities closer to the point of retail or consumption.
 
We intend to provide our prospective customersbusiness 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.

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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.
 
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Since the beginning of 2022, we have 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.
We have a growing portfolio of six15 provisional and non-provisional patent applications pending with the USPTO, and WIPO filed(filed through the PCT.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 twothree main areas:
 
Mechanical:Mechanical: covering printer components and peripherals used in the fabrication of the tissue cultures with one provisional and one PCTtwo applications filed:
filed at the national stage of prosecution. The first isfirst; 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. Research, development and engineering of the technology is continuing. Publication is expected in September 2021.
 
Following a favorable patentability opinion, the Application was filed in the USPTO and has received a first office action indicating an intent to grant upon correction of some minor procedural deficiencies.  The second application currently undergoing examination in 7 countries, is a PCT application 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 PCT Application was filed September 22, 2020. Research, developmentalready granted in the United States, Canada, Australia and engineering of the technology is continuing.New Zealand. 
 
Biological:Current development work in the mechanical area will most likely result in the development of at least two additional intellectual property registrations.
Biological: covering initial materials used in the process and the methods for their use in the bioprinted tissues with twoseveral provisional, and PCT applications filed and two provisional applications filed.currently pending. 
 
The first PCTThese include an application a foundational patent application, directed to methods and compositions implementable in an inkjet bioprinting systems for the fabrication of edible muscle, cartilage and bone biostructures using drop-on-demand printing technology, having a predetermined three dimensional structure of more than 1.5 inch thick for a slab, which can be assembled from substantially two-dimensional patterns with cells, stem cells and ECM incorporated therein, whether in the presence of biocompatible scaffolding, anchor particles or not, with tissue growth and structure occurring in a controlled non-random two- and three dimensional pattern. The application was filed on July 8, 2020 under the PCT and was published on January 8, 2021.
The second PCT application is directed to methods for harvesting ICM from bovine blastocysts, the systems used to implement the methods with the disclosed compositions, are used to culture the harvested inner cell mass (ICM) for embryonic stem cells (ESC) for the formation of tissue cultured to emulate tissues and/or organs for (non-vegan) food consumption. The PCT application was filed on January 13, 2021, under the PCT, with publication due July 13, 2022.
The first pending provisional is directed to support for an adherent and/or semi-adherent cell growth culture, the product of, which can be used for bio-ink raw material, as well as the bio-ink itself, providing some rigidity to the printed bio-ink. The support is a three-dimensional (3D) network of wormlike micelles (3DNWM) manipulated to promote cell adherence, either as a stand-alone, or as a further stabilized 3D network, using an interpenetrating polymer network of, for example, telechelic polymers and/or oligomers and other bio-compatible polymers and/or oligomers. The provisional application was filed on June 8, 2020.
The second pending provisional is directed toblastocysts; methods and compositions for the xeno-free propagation of bESC on bovine umbilical stem cells (bUCSC), derived from a bovine umbilical cord. Thecord; 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 was filed on January 13, 2021. Work onfor 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 technology continues and a Go/No-go decision is expected to be made in the third quarter of 2021. 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 filedalso registered our logonew name, Steakholder Foods, and brand name as a graphic markregistered trademarks in various countries, and maintain ongoing rights to our domain name. Steakholder Foods® was registered in Japan and the European Community and is currently undergoing examination in several other countries, including the United States, with additional marks in the process of being registered. We have further secured rights to at least one top-level domain name (www.meatech3d.com).States.
 
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 “Item 3. — Key Information — Risk“Risk Factors — Risks Related to our Intellectual Property and Potential Litigation.”.
 
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Competition
 
We expect that demand for our culturedcultivated meat manufacturing plantstechnologies will be driven by consumer demand for alternative proteins and, more specifically, consumer acceptance of culturedcultivated meat as the alternative protein of choice. We believe that we will compete with other culturedcultivated 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 culturedcultivated meat manufacturing plants. We are aware of certain companies that have announced plans to provide their culturedcultivated meat technology on a B2B basis,basis; however, we are not currently aware of a potential competitor focusing on complex, industrial-scale, bioprinted, high-value real structured meats, such as steak.
The following table shows the mapping of some companies that we know to operate in the field of conventional meat substitutes, distinguishing between vegetable meat substitutes and real cultured meat, as well as between 3D-printing and non-printing technologies, with only the former providing the high-resolution control needed for premium, structured products with specific shape and texture.
 
Companies such as Memphis MeatsUpside 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.
 
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Companies Developing CulturedCultivated 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 thirty companies operating in the cell-based field, several of whom are developing cellular agriculture for ground-meat alternatives and appear to be progressing with their technological development. Some have indicated readiness to bring cell-based meat products to market during the period as early as late 2021 through 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.
 
A number of larger companies have begun engaging in this sector. For example, companies such as Cargill, Inc., JBS Foods, Nestlé S.A., Tyson Foods, Inc., Merck & Co., Inc., and Lonza Group AG and Nestlé S.A. 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 CulturedCultivated Meat Products
 
To our knowledge, there is currently no other company that is advanced as Steakholder Foods who focused on the scaling up of three-dimensional bioprinting.bioprinting for the cultivated meat industry. As far as we know we are the only company to publicly demonstrate our printing technology in a few of the main food tech events in 2023. 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 approximately the size and thickness of a credit card.steaks.
 
Government Regulation
 
Regulators around the world are in the process of developing a regulatory approval process for culturedcultivated meat. CulturedCultivated meat is not yet generally commercially available, but technologies like ours are anticipated to facilitate the imminent scaling up of culturedcultivated meat production. In general, culturedcultivated 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, and additionalapply. 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.  
 
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Under the MOU, which is expected to affect our customers producing culturedcultivated 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 culturedcultivated 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 culturedcultivated meat production customers are expected to face and their expectations of us, in the form of customer assurances, regarding our product.products.
 
At this time, our business is limited to developing culturedcultivated meat production technology, (i.e., bioprinters)such as bioprinters, that will be marketed to culturedcultivated meat producers, and that of Peace of Meat is limited to developing cultured meat ingredients (such as cultured avian fat). In the United States, and consistent with the Federal Food, Drug and Cosmetic Act, Federal Meat Inspection Act, and 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, or the FSMA, 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.
In addition, productionproducers. 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 culturedcultivated 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 aforementioned FDA-USDA MOU to determine whether any specific requirements or recommendations are published with specific regard to culturedcultivated meat equipment manufacturers.
 
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In the United States, we expect companies manufacturing culturedcultivated 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.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. In March 2023, the FDA completed a second such consultation.
 
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, be truthful and non-misleading and that marketing and advertising be truthful, non-misleading and not deceptive to consumers.
In the United States, new labeling requirements are being developed for cultured meat. On July 31, 2020, the USDA Food Safety and Inspection Service, or USDA-FSIS, announced that it will be preparing new regulatory requirements with regard to the labeling of cultured meat products and will propose these new requirements through its administrative rulemaking process. No timeline has yet been provided for this rulemaking. As background, in February 2018, the U.S. Cattlemen’s Association petitioned USDA-FSIS to exclude products not derived from the tissue or flesh of animals that have been harvested in the traditional manner from being labeled and marketed as “meat,” and exclude products not derived from cattle born, raised and harvested in the traditional manner from being labeled and marketed as “beef.” On June 9, 2020, the Harvard Law School Animal Law & Policy Clinic petitioned USDA to urge it to adopt a labeling approach for cell-based meat and poultry products that does not overly restrict speech, asserting that USDA should wait until it has a better understanding of the compositional and safety characteristics of finished cell-based meat products, and until USDA has the opportunity to review proposed labels, before establishing any speech restrictions. The USDA has not yet responded substantively to these petitions but has indicated that these petitions are being considered as petitions for policy changes under the USDA’s regulations. The United States Congress has also considered federal legislation on this issue, most recently the Real MEAT (Marketing Edible Artificials Truthfully) Act introduced in October 2019, which could potentially affect requirements for our product labeling and marketing, such as having to identify products as “imitation” meat products in the U.S. We are closely monitoring developments on the labeling front as any changes in, or changes in the interpretation of, applicable laws, regulations or policies of the USDA, 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.
 
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. For example,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 2018, the Statean Advance Notice of Missouri passed a law that prohibits any person engagedProposed Rulemaking (ANPR) published in advertising, offering for sale, or sale of food products from representing products as meat that are not derived from traditionally harvested production of livestock or poultry. This law has been challenged in court as a violation of free speech by the Good Food Institute, the Animal Legal Defense Fund and American Civil Liberties Union. Additional states subsequently passed similar laws. We intend to manufacture and label our products in material compliance with all relevant state requirements.
Similar regulatory developments are taking place in foreign jurisdictions. For example, the Agriculture Committee of the European Parliament proposed in May 2019 to reserve the use of “meat” and meat-related terms and names for products that are manufactured from the edible parts of animals. If such measures are adopted, they may affect our ability to label and advertise our products as we see fit.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.
 
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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.
 
C. Organizational Structure
 
Our subsidiaries and the countries of their incorporation are as follows:
 
Name Jurisdiction of

Incorporation
 Parent % Ownership
(direct or
otherwise)
 
MeaTech MT Ltd.Steakholder Foods USA, Inc.           IsraelDelaware, U.S. MeaTech 3DSteakholder Foods Ltd.  100%
MeaTechSteakholder Innovation Ltd.          IsraelSteakholder Foods Ltd.100%
Steakholder Foods Europe BV           Belgium MeaTech 3DSteakholder Foods Ltd.  100%
Peace of Meat BV           Belgium MeaTechSteakholder Foods Europe BV  100%

D. Property Plant and EquipmentInfrastructure
 
Our officeprincipal executive offices and laboratory are located at 18 Einstein5 David Fikes St., Ness Ziona,Rehovot, Israel. The laboratory and office space total approximately 3,60018,300 square feet. OurThe lease for this office and laboratory space expiresfacility will expire in October 2021, howeverJanuary 2026, although we have an option to extendrenew it until October 2022. Thefor four years, and the annual rent (including parking fees) is approximately $0.1$0.7 million, and is linked to the Israeli Consumer Price Index.CPI.
Employees
As of December 31, 2022, we employed 49 employees based at our office and laboratory in Rehovot, Israel and Peace of Meat employed 32 employees based at its office and laboratory in Antwerp, Belgium. On March 7, 2023, we announced a strategic restructuring for Peace of Meat, including targeted layoffs in areas of the business that were unrelated to its updated focus, and on April 4, 2023, we announced the expected liquidation of Peace of Meat, as a result of which it will no longer employ employees.
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 constructedgenerally provide our laboratory facilitiesemployees 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 December 2019any legal proceedings that could reasonably be expected to facilitatehave a material adverse effect on our developmentbusiness, prospects, financial condition or results of stem-cell-based ink development processes.operations.
 
 
ITEM 4A.
UNRESOLVED STAFF COMMENTS

None.
 
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ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 
The following “Operating and Financial Review and Prospects” should be read together with the information in our financial statements and related notes included elsewhere in this Annual Report. The following discussion is based on our financial information prepared in accordance with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, which may differ in material respects from generally accepted accounting principles in other jurisdictions, including U.S. GAAP. The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described in “Risk Factors” and elsewhere in this Annual Report. Please also see “Forward-Looking Statements.”

For a discussion of our results of operations for the eight monthsyear ended December 31, 2018,2021, including a comparison between 20192021 and 2018,2020, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Year Ended December 31, 20192021 Compared to Eight-Month Period From Inception of MeaTechYear Ended December 31, 2018”2020” in our final prospectusannual report on Form 20-F filed pursuant to Rule 424(b)(4) on March 15, 2021, which is incorporated by reference herein.24, 2022.

A. 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 small-scale equipment; and
 
costs associated with regulatory compliance.
 
We recognize research and development expenses as we incur them.
 
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 external professional service costs, including legal, accounting, audit, finance and human resource services, and other consulting fees.

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Finance Expenses (income), Net
 
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. The acquisition consideration, in the amount of $11.4 million, was set based on the closing price of Ophectra's shares on the Tel Aviv Stock Exchange 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 fund as described in “- Merger” above) were recognized in profit or loss as public listingFinance expenses in the amount of $10.2 million, that did not affect cash flow.
Finance Expenses, 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 in Israel.income. As of December 31, 2020,2022, our operating tax loss carryforwards were approximately $3.5 million (NIS 11.2 million).$23.6 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. 

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

  Year Ended December 31, 
  2022  2021 
       
Operating expenses:      
Research and development expenses           $9,801  $7,594 
Marketing expenses            3,044   1,628 
General and administrative expenses            6,937   8,010 
Impairment loss 
  15,577   - 
Loss from operations           $35,359  $17,232 
Finance income            4,878   509 
 Finance expense            286   1,299 
Finance expense (income), net            (4,592)  790 
Net loss           $30,767  $18,022 
  Year Ended December 31, 
  2020  2019 
       
Operating expenses:      
Research and development expenses           $2,491  $166 
Marketing expenses            506   - 
General and administrative expenses            5,380   256 
Public Listing expenses            10,164   - 
Loss from operations           $18,541  $422 
Finance income            110   1 
Finance expense            93   - 
         
Finance expense (income), net            (17)  1 
Income tax            -   - 
Net loss           $18,524  $423 


Year Ended December 31, 20202022 Compared to Year Ended December 31, 20192021
 
Research and development expenses

Research and development expenses increased by approximately $2.3$2.2 million, or 1150%29%, to approximately $2.5$9.8 million for the year ended December 31, 2020,2022, compared to $0.2$7.6 million for year ended December 31, 2019.2021. 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 Foods’ growing investment in research and development as it achieves its milestones and expands its cultured meat technology capabilities.

Marketing expenses
 
Marketing expenses increased by approximately $0.5$1.4 million, or 87%, to approximately $0.5$3.0 million for the year ended December 31, 2020,2022, compared to $0$1.6 million for year ended December 31, 2019.2021. The increase resulted mainly from payroll expenses,professional services, personnel costs, including share-based compensation related to employees, and business development, public relations expenditures which commenced in 2020.and investor relations services.


General and administrative expenses
 
General and administrative expenses increaseddecreased by approximately $5.1$1.1 million, or 1700%13%, to approximately $5.4$6.9 million for the year ended December 31, 2020,2022, compared to approximately $0.3$8.0 million for the year ended December 31, 2019.2021. The increasedecrease resulted mainly from payroll expenses, including share-based compensation, and professional services expenditures.
corporate costs reduction.

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Impairment from re-measurement of cash-generating unit
As part of an annual impairment test, we tested the Peace of Meat Cash-Generating Unit (“CGU”) for impairment as of December 31, 2022. We determined that the value in use of the operation is negative, and therefore assessed the fair value less costs of disposal of the CGU. As of the date of publication of these financial statements, we have not identified a potential market participant that may purchase the CGU in an arm’s-length transaction. Thus, we have concluded that the fair value less costs of disposal of the CGU is immaterial. The fair value less costs of disposal of the CGU’s IPR&D asset was determined to be zero, as the Company did not identify any potential buyer for this asset. We have allocated the impairment loss to the CGU’s fixed assets based on their fair value. The fair value of fixed assets that are available for sale to a market participant is based on their estimated selling value as of the valuation date, net of selling costs. We estimated the selling value net of selling costs of the fixed assets based on actual offers received, previous purchases, and our knowledge of the second-hand industry market. In allocating the impairment loss, we have not reduced the carrying amount of each asset below its fair value net of disposal costs on an individual basis, if determinable.  As a result, we recognized an impairment loss of USD 14,367 thousand for our IPR&D asset and USD 1,210 thousand for our fixed assets. The total impairment loss recorded was USD 15,577 thousand.
Net loss

Net loss increased by approximately $18.1$12.8 million to approximately $18.5$30.8 million for the year ended December 31, 2020,2022, compared to $0.4$18.0 million for the year ended December 31, 2019. The increase was2021. Net of the $15.6 million non-cash impairment and $3.8 million net financial income in 2021 and 2022, the net loss increased by approximately $2.6 million, or 15%, driven mainly the result of public listing expenses of $10.2 millionby increased research and increased operating expenses as we expanded development of our cultured meat technology platform.and marketing expenses.


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Critical Accounting Policies

We describe our significant accounting policies and estimates in Note 3, Summary of Significant Accounting Policies, to our annualthe consolidated financial statements contained elsewhere in this prospectus.annual report. 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, if applicable, are discussed in Note 3 Summary of Significant Accounting Policies, to theour 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.

Emerging Growth Company Status

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or 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:

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 Critical Audit Matters 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.

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 $1.07$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 Nasdaq offering of March 2021. We may choose to take advantage of some but not all of these exemptions. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Given that we currently report and expect to continue to report our financial results under IFRS as issued by the IASB, we will not be able to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB.

B. 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 MeaTechSteakholder Innovation through December 31, 2020,2022, we raised an aggregate of $15.4$53.0 million in four rounds of private placements of our securities, our initial public offering of securities on the Nasdaq and $2.8a registered direct offering, and $6.1 million in proceeds from option exercises. As of December 31, 2020,2022, we had $13.6$6.3 million in cash and cash equivalents.
 
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In March 2021, subsequent to the financial reporting date, we raised an additional $24.7 million in aggregate net proceeds in the framework of our initial public offering of securities on Nasdaq.
The table below shows a summary of our cash flows for the periods indicated:


  Year Ended December 31, 
  2020  2019 
       
Net cash used in operating activities           $(3,832) $(173)
Net cash used in investing activities            (1,875)  (253)
Net cash provided by financing activities            17,345   1,648 
Net increase in cash and cash equivalents           $11,638  $1,222 

  Year Ended December 31, 
  2022  2021 
       
Net cash used in operating activities           $(14,253) $(13,951)
Net cash used in investing activities            (3,533)  (9,191)
Net cash provided by financing activities            5,572   28,865 
Net increase (decrease) in cash and cash equivalents $(12,214) $5,723 

Year Ended December 31, 20202022 Compared to Year Ended December 31, 20192021
 
Net cash provided by (used in)used in operating activities

Net cash used in operating activities increased by $3.6$0.3 million, or 2%, to approximately $3.8$14.3 million for the year ended December 31, 20202022 compared to approximately $0.2$14.0 million for the year ended December 31, 2019.2021. This increase was mainly due to payrollthe increase in its research and development and marketing expenses and professional services expenditures.growing activity with reduction in corporate costs.

Net cash used in investing activities


Net cash used in investing activities increaseddecreased by $1.6$5.7 million, or 62%, to approximately $1.9$3.5 million for the year ended December 31, 20202022 compared to $0.3 thousand for the year ended December 31, 2019.  This increase was mainly due to our investment in Peace of Meat and our acquisition of fixed assets.

Net cash provided by financing activities

Net cash provided by financing activities increased by $15.7 million, to approximately $17.3$9.2 million for the year ended December 31, 2020 compared2021.  This decrease was driven mainly by our investment in Peace of Meat in year ended December 31, 2021.
Net cash provided by financing activities
Net cash provided by financing activities decreased by $23.3 million, or 81%, to $1.6approximately $5.6 million for the year ended December 31, 2019.2022 compared to $28.9 million for the year ended December 31, 2021. This increasedecrease was due todriven mainly from the Company’s initial Nasdaq public offering and issuance of shares and warrants and receipt of proceeds from the exercise of share options.taking place in year ended December 31, 2021.


We have incurred losses and cash flow deficits from operations since the inception of MeaTech,Steakholder innovation, resulting in an accumulated deficit as of December 31, 20202022 of approximately $18.9$67.7 million. 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 until December 2022.through the third quarter of 2023 (including January 2023 funding round). 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.
 
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;
 
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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.

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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 USD 67.7 million. 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. On January 9, 2023, we consummated a securities purchase agreement with gross proceeds of approximately USD 6.5 million. Consequently, our management is of the opinion that our existing cash will be sufficient to fund operations until the third quarter of 2023. As a result, there is substantial doubt about our ability to continue as a going concern.
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.

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 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.
 
Inflation risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations in the reporting period. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through hedging transactions. Our inability or failure to do so could harm our business, financial condition and results of operations.

Foreign Currency Exchange Risk

Currency fluctuations could affect us primarily through increased or decreased costs, mainly for goods and services acquired outside of Israel.foreign currency-denominated expenses. Currency fluctuations did not havehad a material effect on our results of operations during the yearsyear ended December 31, 2020 and 2019.2022, although not in the year ended December 31, 2021.

4148


C. Research and development, patents and licenses, etc.
 
For a description of the Company’sour research and development policies for the last three years, see “Item 4.—Information on the Company—Business Overview—Intellectual Property.”
 
D. Trend Information
 
Not applicable.
 
E. Off-Balance Sheet ArrangementsCritical Accounting Estimates

     We have not entered into any off-balance sheet arrangementsCritical 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 current or future effectmaterial impact on ourthe financial condition changes in financial condition, revenues or expenses, results of operations liquidity, capital expenditures or capital resources that are materialof the registrant. For further information, see Note 2E to investors.
F. Tabular Disclosure of Contractual Obligations

The following table summarizes our significant contractual obligations as at December 31, 2020, excluding expected interest payments:
  Payment due by period 
  Total  Less than
1 year
  1-3 years  3-5 years  More than
5 years
 
  USD thousands 
Operating Lease Obligations(1)          
 $180  $180  $  $  $ 


(1)
We are subject to operating lease obligations in connection with the lease of the property on which we maintain our laboratory and offices.

G. Safe Harbor
Thisannual consolidated financial statements included in this Annual Report on Form 20-F contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements.”20-F.
 
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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ITEM 6.          DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior 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 Annual Report on Form 20-F. Unless otherwise stated, the address of our executive officers and directors is MeaTech 3DSteakholder Foods Ltd., 18 Einstein5 David Fikes St., P.O. Box 4061 Ness Ziona 7414001,Rehovot 7638205, Israel.
 
Name Age Position
     
Executive Officers:    
Sharon FimaArik Kaufman           4542 Chief Executive Officer Chief Technology Officer and Director
Omri Schanin          31Deputy Chief Executive Officer, Chief Operating Officer and Director
Guy Hefer           3941 Chief Financial OfficerOfficer*
Dan Kozlovski           3638 Vice President, Research and DevelopmentChief Technologies Officer
Non-Employee Directors:
    
Steven H. LavinYaron Kaiser           6545 Chairman of the Board of Directors
Daniel Ayalon          65Director
David Gerbi(1)(2)(3)           4143 External Director
Eli Arad(1)(2)(3)           48External Director
Shirly Cohen(1)(2)(3)          5350 Director
Sari Singer(3)Singer(1)(2)(3)           4143 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).
 
*As previously announced, effective April 5, 2023, Eitan Noah has been appointed as the Company’s Chief Financial Officer, replacing Mr. Hefer in this role. For more information, see Item 8 – Significant Changes.
Executive Officers
 
Sharon Fima,Arik Kaufman, Chief Executive Officer Chief Technology Officer and Director
 
Sharon FimaArik Kaufman has served as our Chief Executive Officer and Chief Technology Officer since September 2019, and a director since January 2020.2022. He has over 20 yearsfounded 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 printing-industry entrepreneur. From 2018 to 2019, he wasB.A. degree in Law from Reichman University (formerly the founder and CEO of Agama Extreme Ltd., and from 2014 to 2018, he was the founder and CTO of Nano Dimension Ltd. (Nasdaq/TASE: NNDM), which developed a complete desktop three-dimensional printing system for multilayer printed circuit boards, working on proprietary conductive nano-silver inks along with novel insulating and substrate inks. Prior to Nano Dimension, Mr. Fima was R&D Integration Manager at XJET Ltd. from 2010 to 2013, and an R&D team leader between 1997 and 2010 at HP Indigo Divison, a division of Hewlett Packard’s graphic solutions business.Interdisciplinary Center Hertzliya).
 
Omri Schanin, Deputy Chief Executive Officer, Chief Operating Officer and Director
Omri Schanin has served as our Chief Operating Officer since October 2020, after co-founding and joining us in September 2019, and as a director since March 2021. Between 2018 and 2019, he was founder and CEO of Docomed, a digital health company offering better treatment through continuous pain monitoring and data collection, and co-founder and CEO of Cannova, a developer of sublingual alginate strips to supply active ingredients of the cannabis plant through the tongue into the bloodstream, between 2018 and 2019. He was previously a Merage Fellow at the University of California, Irvine. Between 2013 and 2016, he attained the rank of Major (Res.) while serving as a deputy commander of an Israeli Navy ship. He was included in the Forbes Israel 30 Under 30 list for 2021. Mr. Schanin holds B.Sc. degrees in Life Sciences and Biotechnology from the Hebrew University of Jerusalem, Israel, and Business Management and Political Science from the University of Haifa, and an MBA in Entrepreneurship and Innovation from the College of Management Academic Studies.

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Guy Hefer, Chief Financial Officer
 
Guy Hefer has served as our Chief Financial Officer since October 2020. HeMr. Hefer will step down from his position as our Chief Financial Officer on April 5, 2023, at which time Mr. Eitan Noah, our current Vice President of Finance will assume such role. Mr. Hefer has over ten years of experience in investment banking and corporate finance roles. Most recentlyBetween 2019 and 2020, he was the CFOchief 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 investment bankingAltium 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 AccountingIsrael, 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.
 
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Dan Kozlovski, Vice President of Research & DevelopmentChief Technologies Officer
 
Dan Kozlovskihas served as our Chief Technologies Officer since February 2022, having previously served as our Vice President of Research & Development sincefrom 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.
 
Non-Executive Directors
 
Steven H. Lavin,Yaron Kaiser, Chairman of the Board of Directors
 
Steven H. LavinYaron Kaiser has served on our board of directors as Chairman since May 2020. He is president of Lavin & Gedville, P.C., a boutique law firm where he specializes in providing advice, negotiatingfounded various Nasdaq- or TASE-traded foodtech companies, and completing financing transactions, business acquisitions and dispositions, corporate structure and organizations. Mr. Lavin is a member of Germin8 Ventures, LLC, a venture capital firm investing in transformative food and agricultural technology and providing investment and strategic resources to companies addressing major demand trends and improving the global food system through disruptive technologies and solutions. Since 2004, Mr. Lavin has served on the board of managers, and since 2005 he has served as vice-chairmanChairperson of OSI Group, LLC,Wilk Technologies Ltd. since January 2021. Mr. Kaiser is a leading global providerfounding partner of primarythe BlueSoundWaves collective since 2021, and value added further processed proteinpractices law in the fields of securities, commercial and other food products. Mr. Lavin is also a director of Bank Leumi USA,corporate law, representing numerous public companies on fundraising, IPOs, M&A, the U.S. subsidiary of one of Israel’s largest banks, as wellIsrael Securities Authority and corporate governance, most recently at JST & Co., Law Office, between 2010 and May 2021, and since then as a numberfounding partner of OSI subsidiaries. Mr. LavinKaufman Kaiser Raz, Law Firm. He holds a J.D. from Loyola University School of Law and a B.S. in Accountancyan LL.B. degree from the UniversityCollege of Illinois. He is a member of the Illinois Bar, the American Bar Association, the Illinois State Bar Association and the Chicago Bar Association.
Daniel Ayalon, Director
Daniel Ayalon has served as a director since May 2020. He served as Foreign Policy Advisor to Israeli Prime Minister Ariel Sharon and as Israel's Ambassador to the United States between 2002 and 2006. Mr. Ayalon is a member of the board of governors of Tel Aviv University, and the board of trustees of the Lantos Human Rights and Justice Foundation in Washington, DC. Mr. Ayalon was elected to Israel’s parliament, the Knesset, in 2009, and served as Deputy Minister of Foreign Affairs until 2013. He is chairman of Hod Ayalon Ltd., a firm that consults to governments and international corporations, and was a visiting professor of foreign policy studies at Yeshiva University. Mr. Ayalon holds a B.A. in Economics and LaborManagement Academic Studies, from the Tel Aviv University, and an M.B.A. from Bowling Green State University.Israel.
 
Eli Arad, External Director
 
Eli Arad has served as an externala director since February 2018. Mr. Arad has been CEOchief executive officer of the real-estate and life science investorsinvestment company Merchavia Holdings and Investments Ltd (TASE:MRHL) since 2010.2011. Mr. Arad has served as a director of Cleveland Diagnostics, Inc., a clinical-stage biotechnology company developing technology to improve cancer diagnostics since 2016, as well as B.G.I. Investments (1961)E.N. Shoham Business Ltd. (TASE:BGI)SHOM) since 2019, and a number of privately-held companies (Veoli Ltd., since 2016.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 B.A.diploma in Accounting from Ramat Gan College and an M.B.A. from the Ruppin Academic Center.
Shirly Cohen, Director
Shirly Cohen has served as a director since January 2018. She is the Chief Financial Officer of Stopmarket Ltd., a position she has held since 2016. Ms. Cohen was also the Chief Financial Officer of Y Bair Holding Ltd. from 2003 to 2016. Ms. Cohen is a certified practicing accountant who holds aExecutive B.A. (Hons.) in Accounting from Ramat Gan College and an M.B.A.Business Administration from the Ruppin Academic Center.
 
David Gerbi, External Director
 
David Gerbihas served as an externala director since August 2019. Mr. Gerbi is managing partner of accounting firm Gerbi & Co. and of consulting firm Do Finance Consulting,, and serves as Chief Financial Officer of B.G.I. Investments (1961)Israir Group Ltd. (TASE:BGI).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.
 
44


Sari Singer, Director
 
Sari Singerhas served as a director since March 2021. Ms. Singer serveshas served as General Counsel and Executive Vice President at NewMed Energy LP (formerly Delek Drilling LP,LP), the oil and gas arm of the Delek Group in Israel, and a partner in the Tamar and Leviathan offshore gas fields,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.
 
B. Compensation
 
Aggregate Compensation of Office Holders
 
The aggregate compensation we paid to our executive officers and directors for the year ended December 31, 2020,2022, was approximately $701,000.$1.3 million. This amount includes approximately $106,000$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 annual report,prospectus, options to purchase 1,333,340 ordinary shares2,472,540 Ordinary Shares granted to our officers and directors were outstanding under our share option planplans at a weighted average exercise price of $0.81$0.62 per share, in addition to 965,303157,790 restricted share units.units with no exercise price.

Individual Compensation of Office Holders
 
The table and summary below outlines the compensation granted to our Chief Executive Officer, Chief Financial Officer, Chief Technologies Officer, and Chief Technology Officer, the Chairmanprevious and current Chairmen of our board of directors, our Deputy Chief Executive Officer and Chief Operating Officer, our Vice President of Research and Development and our former Chief Financial Officer, with respect to the year ended December 31, 2020.2022. 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            120   -   411   -   531 
Mr. Sharon Fima                    
Director, Chief Executive Officer & Chief Technology Officer $169  $20  $129  $37  $355 
Mr. Dan Kozlovski                    
Vice President of Research & Development            128   -   68   2   198 
Mr. Omri Schanin                    
Deputy Chief Executive Officer and Chief Operating Officer  146   -   -   2   148 
Mr. Uri Ben-Or                    
Former Chief Financial Officer(5)          
 $52  $-  $13  $-  $65 
50

Name and Principal Position 
Salary(1)
  
Bonus(2)
  
Equity-Based
Compensation(3)
  
Other
Compensation(4)
  Total 
  
(USD in thousands)
 
Mr. Arik Kaufman               
Chief Executive Officer           $235  $-  $88  $
8  $331 
Mr. Guy Hefer(5)
                    
Chief Financial Officer            210   34   83   -   327 
Mr. Dan Kozlovski                              
Chief Technologies Officer            201   42   51   -   294 
Mr. Yaron Kaiser                    
Chairman of the Board of Directors            161   -   62   8   231 
Mr. Steven H. Levin (6)
                    
Former Chairman of the Board of Directors(5)          
 $57  $-  $108  $
-  $165 



(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 in 2022 with respect to 2020.
2021.
 


(3)
Represents the equity-based compensation expenses, recorded in our consolidated financial statements for the year ended December 31, 2020, 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 Annual Report on Form 20-F.
prospectus.
 


(4)
Represents benefits and perquisites such as car, phone and social benefits.
consulting services provided prior to commencement of the aforementioned current position.
 


(5)
Mr. Ben-Or leftHefer will step down from his position as Chief Financial Officer on March 23, 2023, at which time Mr. Eitan Noah, our current Vice President of Finance, will assume the Company on October 21, 2020.
role of Chief Financial Officer.
 
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(6)Mr. Levin resigned his position as Chairman on January 24, 2022.
 
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 “Item 3. — Key Information — Risk“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. Fima,Kaufman, our Chief Executive Officer and Chief Technical Officer, are as follows: (1) ana gross annual salary of NIS 420,000 (approximately $127,000) in return for 90%564,000 ($160,000); (2) reimbursement of a full-time position; (2) an annual bonus, subject to achievement of objectives set by the board of directors,travel expenses of up to NIS 210,000 (approximately $64,000; and60,000 ($17,000); (3) all employee benefit plans, programs and arrangements, and all fringe benefits and perquisites that are made available to our senior executives. Separate from his holdings as a founding shareholder, we have issued Mr. Fima options to purchase 500,000 ordinary shares atOrdinary 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 2.32 (approximately $0.70) per share282,000 ($80,000), 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 connection withour directors’ and officers’ liability insurance policy, and provision of indemnification, exculpation and exemption undertakings to the fullest extent permitted by the Companies Law.
51


The material terms for Mr. Kaiser, the Chairman of our board of directors, were as follows from his employment, one-thirdappointment in January 2022, until January 24, 2023: (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 vest after oneautomatically increase by an amount equal to seven percent at the end of each year andof 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 rest in eight equal quarterly tranches.
     On March 4, 2020, we entered into adate of his appointment as Chairman, Agreement, or the Chairman Agreement, with Steven H. Lavin, pursuant to which 1/12 will vest every quarter until fully vested, expiring one year following Mr. Lavin agreedKaiser’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 serve as the Chairman$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.
Effective January 24, 2023, pursuant to approvals by our Compensation Committee, Board of Directors and a general meeting of our shareholders, the following amendments to the materials terms for a termMr. Kaiser were adopted: his annual fee was adjusted to $290,000, automatically increased by an amount equal to seven percent at the end of three years. Mr. Lavin is entitledeach year of service commencing from the date of adjustment; his annual bonus shall be equal to receive a monthly fee70% of the bonus awarded to the Chief Executive Officer in the applicable year; he received an allocation of restricted share units (RSUs) vesting into 1,340,000 ordinary shares (currently equivalent to 134,000 ADSs), vesting over three years from the date of adjustment, pursuant to which 1/12 will vest every quarter until fully vested, with no exercise price, issued under the Company’s 2022 Share Incentive Plan and the Capital Gains tax track pursuant to Section 102 of the Israeli Income Tax Ordinance (New Version), 1961 and subject to acceleration upon termination pursuant to either our sale or change in control; and he received an allocation of performance share units (PSUs) vesting into 1,340,000 ordinary shares (currently equivalent to 134,000 ADSs), vesting upon achievement of any one of the following milestones: (i) engagement with a strategic partner / investor (a corporation operating in the field of food, healthcare, pharmaceuticals or printing) for an investment in the company or its subsidiaries, in cash in an amount of $15,000 and was grantednot less than five hundred thousand dollars; (ii) submission of a one-time awardregulatory approval to the U.S. FDA, Singapore Food Agency or European Food Safety Authority, for the commercial sale or distribution of 1,127,057 RSUs. The Chairman Agreement may be terminated by usour products; or Mr. Lavin party upon 90 days’ prior written notice, provided that if it is terminated by(iii) engagement with a strategic partner (as defined above) in a joint development agreement to collaborate to develop technology or products for the company without cause, or by Mr. Lavin for good reason, then all RSUs shall automatically become fully exercisable.purpose of later commercialization.

In addition, we pay fees to certain of our non-executive directors in return for their service on our board of directors, in accordance with our compensation policy.
 
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 “Item 3.—Key Information—Risk“Risk Factors—Risks Related to Our Operations” for a further description of the enforceability of non-competition clauses. We also provide certain of our employees with a company car, which is leased from a leasing company.
 
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 “Item 3.—Key Information—Risk“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.”
 
Equity Incentive2018 Option and RSU Allocation Plan
 
In June 2018, the board of directors of Ophectra adopted our Option and RSU Allocation Plan, as amended, in 2019, or the share option plan, to issue options to purchase our ordinary sharesOrdinary 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 Boardboard of directors or a committee that was designated by the Boardboard of directors for such purpose, or the Administrator.
 
Under the share option plan, we may grant options to purchase ordinary sharesOrdinary 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).
 
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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 sharesOrdinary Shares authorized to be issued under the share option plan will be proportionately adjusted for any increase or decrease in the number of ordinary sharesOrdinary 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 sharesOrdinary Shares or payment of a dividend. We will not issue fractions of ordinary sharesOrdinary Shares and the number of ordinary sharesOrdinary 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 MeaTech 3DSteakholder 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,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 Boardboard of Directors,directors, and subject to receipt of taxation authority approvals, we may allow Grantees to exercise their options on a cashless basis.
 
As2022 Share Incentive Plan
We adopted the 2022 Share Incentive Plan, or the 2022 Plan, on June 10, 2022, and a general meeting of December 31, 2020, our Board of Directors hadshareholders approved the 2022 Plan on March 30, 2023. 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 our incentive plans,the 2022 Plan is equal to the sum of options(i) 8,500,000 Shares, (ii) 1,127,850 Shares, which represents the number of Shares available for issuance under the Option and RSUsRSU 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 purchase 9,505,140the lesser of (A) 5% of the outstanding ordinary shares atof 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).
Any Shares (a) underlying an averageaward 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 $0.81an 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.
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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.
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.
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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.
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.
In the event of termination of a grantee’s employment or service with the Company or any of its affiliates due to such grantee’s death or permanent disability, or in the event of the grantee’s death within the three month period (or such longer period as determined by the Administrator) following his or her termination of service, all vested and exercisable awards held by such grantee as of the date of termination may be exercised by the grantee or the grantee’s legal guardian, estate or by a person who acquired the right to exercise the award by bequest or inheritance, as applicable, within one year after such date of termination, unless otherwise provided by the Administrator, but in no event later than the date of expiration of the award as set forth in the award agreement. Any awards which are unvested as of the date of such termination or which are vested but not then exercised within the one year period following such date, will terminate and the shares covered by such awards shall again be available for issuance under the 2022 Plan.
Notwithstanding any of the foregoing, if a grantee’s employment or services with the Company or any of its affiliates is terminated for “cause” (as defined in the 2022 Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of such termination and the shares covered by such awards shall again be available for issuance under the 2022 Plan.
Any Option that is intended to be an incentive stock option and is exercised later than three (3) months after the grantee ceases to be employed by the Company (or any parent or subsidiary), except in the case of death or “Disability” (as defined in Section 22(e)(3) of the Code), will be deemed a nonqualified stock option. If the grantee ceases to be employed by the Company (or any parent or subsidiary) due to disability, any option that is intended to be an incentive stock option and is exercised later than twelve (12) months after such termination date will be deemed a nonqualified stock option.
Voting Rights. Except with respect to restricted share awards, grantees will not have the rights as a shareholder of the Company with respect to any shares covered by an award until the award has vested and/or the grantee has exercised such award, paid any exercise price for such award and becomes the record holder of the shares. With respect to restricted share awards, grantees will possess all incidents of ownership of the restricted shares, including the right to vote and receive dividends on such shares.
Dividends. Grantees holding restricted share awards will be entitled to receive dividends and other distributions with respect to the shares underlying the restricted share award. Any stock split, stock dividend, combination of shares or similar transaction will be subject to the restrictions of the original restricted share award. Grantees holding RSUs will not be eligible to receive dividend but may be eligible to receive dividend equivalents.
Transactions. In the event of a share split, reverse share split, share dividend, recapitalization, combination or reclassification of the Company’s shares, the Administrator in its sole discretion may, and where required by applicable law shall, without the need for a consent of any holder, make an appropriate adjustment in order to adjust (i) the number and class of shares reserved and available for the outstanding awards, (ii) the number and class of shares covered by outstanding awards, (iii) the exercise price per share.share covered by any award, (iv) the terms and conditions concerning vesting and exercisability and the term and duration of the outstanding awards, (v) the type or class of security, asset or right underlying the award (which need not be only that of the Company, and may be that of the surviving corporation or any affiliate thereof or such other entity party to any of the above transactions), and (vi) any other terms of the award that in the opinion of the Administrator should be adjusted; provided that any fractional shares resulting from such adjustment shall be rounded to the nearest whole share unless otherwise determined by the Administrator. In the event of a distribution of a cash dividend to all shareholders, the Administrator may determine, without the consent of any holder of an award, that the exercise price of an outstanding and unexercised award shall be reduced by an amount equal to the per share gross dividend amount distributed by the Company, subject to applicable law.
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In the event of a merger or consolidation of the Company or a sale of all, or substantially all, of the Company’s shares or assets or other transaction having a similar effect on the Company, or change in the composition of the board of directors, or liquidation or dissolution, or such other transaction or circumstances that our board of directors determines to be a relevant transaction, then without the consent of the grantee, (i) unless otherwise determined by the Administrator, any outstanding award will be assumed or substituted by such successor corporation, or (ii) regardless of whether or not the successor corporation assumes or substitutes the award (a) provide the grantee with the option to exercise the award as to all or part of the shares, and may provide for an acceleration of vesting of unvested awards, (b) cancel the award and pay in cash, shares of the Company, the acquirer or other corporation which is a party to such transaction or other property as determined by the Administrator as fair in the circumstances, or (c) provide that the terms of any award shall be otherwise amended, modified or terminated, as determined by the Administrator to be fair in the circumstances. Changes with respect to awards held by U.S. service providers shall be made in accordance with the requirements of Section 409A of the Code or Section 424 of the Code, as applicable and to the extent necessary to avoid adverse tax consequences under Section 409A of the Code, a transaction or other event will not be deemed a Merger/Sale for purposes of awards granted to U.S. service providers unless the transaction or other event qualifies as a change in control event within the meaning of Section 409A of the Code.
 
C. Board Practices
 
Board of Directors
 
Our board of directors consists of eightfour directors, including two directors whothree of whom are deemed external directors per the requirements of the Companies Law (see “— External directors”). These two directors, as well as two additional directors, qualify as independent directors under the corporate governance standards of the Nasdaq Marketplace Rules and the independence requirements of Rule 10A-3 of the Exchange Act.Act, as well as the standards of the Companies Law.
 
Under our articles of association, our board of directors must consist of no less than three and no more than 11seven directors including(including the external directors, if any), divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one-third of the total number of directors constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on the third annual general meeting following such election or re-election.
Our directors are divided among the three classes as follows:
the Class I directors are Messrs. Eli Arad and David Gerbi and their respective terms will expire at the Company’s annual general meeting of shareholders to be held in 2026;
the Class II director is Ms. Sari Singer and her term will expire at the Company’s annual general meeting of shareholders to be held in 2024; and
the Class III director is Mr. Yaron Kaiser his term will expire at the Company’s annual general meeting of shareholders to be held in 2025.
Pursuant to our articles of association, other than the external directors, for whom special election requirements apply under the Companies Law, the vote general required to appoint a director is a simple majority vote of holders of our voting shares participating and voting at the relevant meeting.meeting, provided that (i) in the event of a contested election, the method of calculation of the votes and the manner in which the resolutions will be presented to our shareholders at the general meeting shall be determined by our board of directors in its discretion, and (ii) in the event that our board of directors does not or is unable to make a determination on such matter, then the directors will be elected by a plurality of the voting power represented at the general meeting in person or by proxy and voting on the election of directors.
Each director will hold office until the annual general meeting of our shareholders for the year in which such director’s term expires, unless the tenure of such director expires earlier pursuant to the Companies Law or unless such director is removed from office. Under our articles of association, the approval of the holders of at least 65% of the total voting power of our shareholders is generally required to remove any of our directors from office.
 
In addition, our articles of association allow our board of directors to appoint new directors to fill vacancies which can occur for any reason or as additional directors, provided that the number of board members shall not exceed the maximum number of directors mentioned above. The appointment of aA director by the board shall be in effectso appointed will hold office until the followingnext annual general meeting of our shareholders for the shareholderselection of the class of directors in respect of which the vacancy was created, or untilin the endcase of his tenurea vacancy due to the number of directors being less than the maximum number of directors stated in accordance with our articles of association.association, until the next annual general meeting of our shareholders for the election of the class of directors to which such director was assigned by our board of directors. Our board of directors may continue to operate for as long as the number of directors is no less than the minimum number of directors mentioned above.
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Our external directors have a term of office of three years under Israeli law and may be elected for up to two additional three-year terms, or more, under the circumstances described below. External directors may be removed from office only under the limited circumstances set forth in the Companies Law. See “— External directors” for a description of the procedure for the election and dismissal of external directors.
 
In addition, under the Companies Law, our board of directors must determine the minimum number of directors who are required to have financial and accounting expertise. Under applicable regulations, a director with financial and accounting expertise is a director who, by reason of his or her education, professional experience and skill, has a high level of proficiency in and understanding of business accounting matters and financial statements. See “— External directors — Qualifications of external directors.” He or she must be able to thoroughly comprehend the financial statements of the company and initiate discussion regarding the manner in which financial information is presented. In determining the number of directors required to have such expertise, the board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that we require at least one director with the requisite financial and accounting expertise and that Eli Arad Shirly Cohen and David Gerbi have such expertise.
 
Alternate Directors
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Our articles of association provide, as allowed by the Companies Law, that any director may, by written notice to us, appoint another person who is qualified to serve as a director to serve as an alternate director. An alternate director has the same rights and responsibilities as a director, except for the right to appoint an alternate director. The appointment of an alternate director does not negate the responsibilities of the appointing director, who will continue to bear responsibility for the actions of the alternate, giving consideration to the circumstances of the appointment. The Companies Law specifies certain qualifications for alternate directors, and provides that one director may not serve as an alternate on the board of directors for another director, nor as an alternate on a committee of which he or she is already a member. As of the date of this Annual Report on Form 20-F, no director has appointed any other person as an alternate director.
External Directors
 
AsThe Companies Law requires a public Israeli company we are required by the Companies Law to have at least two external directors who meet certain independence criteria to ensure that they are unaffiliated with usthe company and ourits controlling shareholder.
An external director must have either financial and accounting expertise or professional qualifications, as defined in the regulations promulgated under the Companies Law, and at least one of the external directors is required to have financial and accounting expertise. An external director is entitled to reimbursement of expenses and compensation as provided in the regulations promulgated under the Companies Law, but is otherwise prohibited from receiving any other compensation from us,the company, directly or indirectly, during his or her term and for two years thereafter.
 
Under the Companies Law, external directors must be elected at a shareholders’ meeting by a simple majority of the votes cast on the matter, provided that such majority includes a majority of the votes cast by non-controlling shareholders and shareholders who do not have a personal interest in the election (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder), unless the votes cast by such shareholders against the election did not exceed 2% of our aggregate voting rights. External directors serve for up to three terms of three years each, and our audit committee and board of directors may nominate them for additional terms under certain circumstances. Even if an external director is not nominated by our board of directors for reelection for a second or third term, shareholders holding at least 1% of our voting rights have the right to nominate the external director for reelection. In such a case, the reelection can be approved by a majority of the votes cast by non-controlling shareholders and shareholders who do not have a personal interest in the election (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder) and the votes cast by such shareholders approving the election exceed 2% of our aggregate voting rights. A term of an external director may be terminated prior to expiration only by a shareholder vote, by the same threshold required for election, or by a court, but in each case only if the external director ceases to meet the statutory qualifications for election or if the external director violates his or her duty of loyalty to us. If at the time of election of an external director all of the members of the board of directors (excluding controlling shareholders or relatives of controlling shareholders) are of the same gender, the external director to be elected must be of the other gender.
Under the Companies Law, each committee of a company’s board of directors that is authorized to exercise powers of the board of directors is required to include at least one external director, and all external directors must be members of the company’s audit committee and compensation committee.
We currently have two external directors: Eli Arad, whose first term commenced on February 21, 2018 and whose second term commenced on March 8, 2021, and David Gerbi, whose first term commenced on August 27, 2019. Our board of directors has determined that our external directors have accounting and financial expertise and/or possess the requisite professional qualifications as required under the Nasdaq Marketplace Rules.
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Pursuant to regulations promulgated under the Companies Law, companiesas a company with shares traded on certain U.S. stock exchanges, including Nasdaq, may, subjectwe have elected no to certain conditions, ‘‘opt out’’ ofcomply with the requirements to appoint external directors and related rules concerning the composition of the audit committee and compensation committee of the board of directors. Such a company willWe are still be subject to the gender diversity rule under the Companies Law, which requires that if, at the time a director is to be elected or appointed, all members of the board of directors are of the same gender, the director to be appointed must be of the other gender. The conditions to the exemptions from the Companies Law requirements are that: (i) the company does not have a “controlling shareholder,” as such term is defined under the Companies Law, (ii) its shares are traded on certain U.S. stock exchanges, including Nasdaq, and (iii) it comply with the director independence requirements and the audit committee and compensation committee composition requirements under U.S. laws, including the rules of the applicable exchange, that are applicable to U.S. domestic issuers. If a company elects to opt out, the former external directors would continue to serve, but as regular directors, for a transition period.
 
CommitteesEmployment 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 ($160,000); (2) reimbursement of annual travel expenses of up to NIS 60,000 ($17,000); (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 ($80,000), 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.
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The material terms for Mr. Kaiser, the Chairman of our board of directors, were as follows from his appointment in January 2022, until January 24, 2023: (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.
Effective January 24, 2023, pursuant to approvals by our Compensation Committee, Board of Directors and a general meeting of our shareholders, the following amendments to the materials terms for Mr. Kaiser were adopted: his annual fee was adjusted to $290,000, automatically increased by an amount equal to seven percent at the end of each year of service commencing from the date of adjustment; his annual bonus shall be equal to 70% of the bonus awarded to the Chief Executive Officer in the applicable year; he received an allocation of restricted share units (RSUs) vesting into 1,340,000 ordinary shares (currently equivalent to 134,000 ADSs), vesting over three years from the date of adjustment, pursuant to which 1/12 will vest every quarter until fully vested, with no exercise price, issued under the Company’s 2022 Share Incentive Plan and the Capital Gains tax track pursuant to Section 102 of the Israeli Income Tax Ordinance (New Version), 1961 and subject to acceleration upon termination pursuant to either our sale or change in control; and he received an allocation of performance share units (PSUs) vesting into 1,340,000 ordinary shares (currently equivalent to 134,000 ADSs), vesting upon achievement of any one of the following milestones: (i) engagement with a strategic partner / investor (a corporation operating in the field of food, healthcare, pharmaceuticals or printing) for an investment in the company or its subsidiaries, in cash in an amount of not less than five hundred thousand dollars; (ii) submission of a regulatory approval to the U.S. FDA, Singapore Food Agency or European Food Safety Authority, for the commercial sale or distribution of our products; or (iii) engagement with a strategic partner (as defined above) in a joint development agreement to collaborate to develop technology or products for the purpose of later commercialization.

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.
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.”
2018 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
We adopted the 2022 Share Incentive Plan, or the 2022 Plan, on June 10, 2022, and a general meeting of our shareholders approved the 2022 Plan on March 30, 2023. 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).
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.
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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.
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.
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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.
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.
In the event of termination of a grantee’s employment or service with the Company or any of its affiliates due to such grantee’s death or permanent disability, or in the event of the grantee’s death within the three month period (or such longer period as determined by the Administrator) following his or her termination of service, all vested and exercisable awards held by such grantee as of the date of termination may be exercised by the grantee or the grantee’s legal guardian, estate or by a person who acquired the right to exercise the award by bequest or inheritance, as applicable, within one year after such date of termination, unless otherwise provided by the Administrator, but in no event later than the date of expiration of the award as set forth in the award agreement. Any awards which are unvested as of the date of such termination or which are vested but not then exercised within the one year period following such date, will terminate and the shares covered by such awards shall again be available for issuance under the 2022 Plan.
Notwithstanding any of the foregoing, if a grantee’s employment or services with the Company or any of its affiliates is terminated for “cause” (as defined in the 2022 Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of such termination and the shares covered by such awards shall again be available for issuance under the 2022 Plan.
Any Option that is intended to be an incentive stock option and is exercised later than three (3) months after the grantee ceases to be employed by the Company (or any parent or subsidiary), except in the case of death or “Disability” (as defined in Section 22(e)(3) of the Code), will be deemed a nonqualified stock option. If the grantee ceases to be employed by the Company (or any parent or subsidiary) due to disability, any option that is intended to be an incentive stock option and is exercised later than twelve (12) months after such termination date will be deemed a nonqualified stock option.
Voting Rights. Except with respect to restricted share awards, grantees will not have the rights as a shareholder of the Company with respect to any shares covered by an award until the award has vested and/or the grantee has exercised such award, paid any exercise price for such award and becomes the record holder of the shares. With respect to restricted share awards, grantees will possess all incidents of ownership of the restricted shares, including the right to vote and receive dividends on such shares.
Dividends. Grantees holding restricted share awards will be entitled to receive dividends and other distributions with respect to the shares underlying the restricted share award. Any stock split, stock dividend, combination of shares or similar transaction will be subject to the restrictions of the original restricted share award. Grantees holding RSUs will not be eligible to receive dividend but may be eligible to receive dividend equivalents.
Transactions. In the event of a share split, reverse share split, share dividend, recapitalization, combination or reclassification of the Company’s shares, the Administrator in its sole discretion may, and where required by applicable law shall, without the need for a consent of any holder, make an appropriate adjustment in order to adjust (i) the number and class of shares reserved and available for the outstanding awards, (ii) the number and class of shares covered by outstanding awards, (iii) the exercise price per share covered by any award, (iv) the terms and conditions concerning vesting and exercisability and the term and duration of the outstanding awards, (v) the type or class of security, asset or right underlying the award (which need not be only that of the Company, and may be that of the surviving corporation or any affiliate thereof or such other entity party to any of the above transactions), and (vi) any other terms of the award that in the opinion of the Administrator should be adjusted; provided that any fractional shares resulting from such adjustment shall be rounded to the nearest whole share unless otherwise determined by the Administrator. In the event of a distribution of a cash dividend to all shareholders, the Administrator may determine, without the consent of any holder of an award, that the exercise price of an outstanding and unexercised award shall be reduced by an amount equal to the per share gross dividend amount distributed by the Company, subject to applicable law.
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In the event of a merger or consolidation of the Company or a sale of all, or substantially all, of the Company’s shares or assets or other transaction having a similar effect on the Company, or change in the composition of the board of directors, or liquidation or dissolution, or such other transaction or circumstances that our board of directors determines to be a relevant transaction, then without the consent of the grantee, (i) unless otherwise determined by the Administrator, any outstanding award will be assumed or substituted by such successor corporation, or (ii) regardless of whether or not the successor corporation assumes or substitutes the award (a) provide the grantee with the option to exercise the award as to all or part of the shares, and may provide for an acceleration of vesting of unvested awards, (b) cancel the award and pay in cash, shares of the Company, the acquirer or other corporation which is a party to such transaction or other property as determined by the Administrator as fair in the circumstances, or (c) provide that the terms of any award shall be otherwise amended, modified or terminated, as determined by the Administrator to be fair in the circumstances. Changes with respect to awards held by U.S. service providers shall be made in accordance with the requirements of Section 409A of the Code or Section 424 of the Code, as applicable and to the extent necessary to avoid adverse tax consequences under Section 409A of the Code, a transaction or other event will not be deemed a Merger/Sale for purposes of awards granted to U.S. service providers unless the transaction or other event qualifies as a change in control event within the meaning of Section 409A of the Code.
C. Board Practices
Board of Directors
 
Our board of directors has establishedconsists of four directors, three of whom are deemed independent directors under the following committees. Each committee operates in accordance with a written charter that sets forthcorporate governance standards of the committee’s structure, operations, membershipNasdaq Marketplace Rules and the independence requirements responsibilities and authority to engage advisors.
Audit Committeeof Rule 10A-3 of the Exchange Act, as well as the standards of the Companies Law.
 
Under our articles of association, our board of directors must consist of no less than three and no more than seven directors (including the Companies Law,external directors, if any), divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one-third of the Exchange Acttotal number of directors constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on the third annual general meeting following such election or re-election.
Our directors are divided among the three classes as follows:
the Class I directors are Messrs. Eli Arad and Nasdaq Marketplace Rules, we areDavid Gerbi and their respective terms will expire at the Company’s annual general meeting of shareholders to be held in 2026;
the Class II director is Ms. Sari Singer and her term will expire at the Company’s annual general meeting of shareholders to be held in 2024; and
the Class III director is Mr. Yaron Kaiser his term will expire at the Company’s annual general meeting of shareholders to be held in 2025.
Pursuant to our articles of association, the vote general required to establish an audit committee.
The responsibilitiesappoint a director is a simple majority vote of an audit committee underholders of our voting shares participating and voting at the Companies Law include identifying and addressing flawsrelevant meeting, provided that (i) in the business managementevent of a contested election, the method of calculation of the company, reviewing and approving related party transactions, establishing whistleblower procedures, overseeing the company’s internal audit systemvotes and the performance of its internal auditor, and assessingmanner in which the scope ofresolutions will be presented to our shareholders at the work and recommending the fees of the company’s independent accounting firm. In addition, the audit committee is required to determine whether certain related party actions and transactions are “material” or “extraordinary” for the purpose of the requisite approval procedures under the Companies Law and to establish procedures for considering proposed transactions with a controlling shareholder.
In accordance with U.S. law and Nasdaq Marketplace Rules, our audit committee is also responsible for the appointment, compensation and oversight of the work of our independent auditors and for assistinggeneral meeting shall be determined by our board of directors in monitoringits discretion, and (ii) in the event that our financial statements,board of directors does not or is unable to make a determination on such matter, then the effectivenessdirectors will be elected by a plurality of the voting power represented at the general meeting in person or by proxy and voting on the election of directors.
Each director will hold office until the annual general meeting of our internal controls and our compliance with legal and regulatory requirements.
Undershareholders for the year in which such director’s term expires, unless the tenure of such director expires earlier pursuant to the Companies Law or unless such director is removed from office. Under our articles of association, the audit committee must consistapproval of the holders of at least three directors who meet certain independence criteria and must include all65% of the company’s external directors. The chairmantotal voting power of our shareholders is generally required to remove any of our directors from office.
In addition, our articles of association allow our board of directors to appoint new directors to fill vacancies which can occur for any reason or as additional directors, provided that the number of board members shall not exceed the maximum number of directors mentioned above. A director so appointed will hold office until the next annual general meeting of our shareholders for the election of the audit committeeclass of directors in respect of which the vacancy was created, or in the case of a vacancy due to the number of directors being less than the maximum number of directors stated in our articles of association, until the next annual general meeting of our shareholders for the election of the class of directors to which such director was assigned by our board of directors. Our board of directors may continue to operate for as long as the number of directors is required to be an external director. Underno less than the Nasdaq Marketplace Rules, weminimum number of directors mentioned above.
In addition, under the Companies Law, our board of directors must determine the minimum number of directors who are required to maintain an audit committee consistinghave financial and accounting expertise. Under applicable regulations, a director with financial and accounting expertise is a director who, by reason of at least three independent directors, allhis or her education, professional experience and skill, has a high level of whom are financially literateproficiency in and oneunderstanding of whom hasbusiness accounting matters and financial statements. He or relatedshe must be able to thoroughly comprehend the financial management expertise. Eachstatements of the memberscompany and initiate discussion regarding the manner in which financial information is presented. In determining the number of directors required to have such expertise, the board of directors must consider, among other things, the type and size of the audit committee is required to be “independent” as such term is defined in Rule 10A-3(b)(1) undercompany and the Exchange Act.
Our audit committee currently consistsscope and complexity of Eli Arad, Shirly Cohen and David Gerbi. A majority of the members are external directors or independent directors as defined in the Companies Law. All of the members are also independent as defined in SEC rules and Nasdaq listing requirements.its operations. Our board of directors has determined that all members of our audit committee meetwe require at least one director with the requirements forrequisite financial literacy under the applicable rules and regulations of the SECaccounting expertise and Nasdaq Marketplace Rules. Our board of directors has determined that Eli Arad and David Gerbi are audit committee financial experts as defined by the SEC rules and have the requisite financial experience as defined by the Nasdaq Marketplace Rules.such expertise.
 
Compensation Committee
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Under both the Companies Law and Nasdaq Marketplace Rules, we are required to establish a compensation committee.
The responsibilities of a compensation committee under the Companies Law include recommending to the board of directors, for ultimate shareholder approval by a special majority, a policy governing the compensation of directors and officers based on specified criteria, reviewing modifications to and implementing such compensation policy from time to time, and approving the actual compensation terms of directors and officers prior to approval by the board of directors.External Directors
 
The Companies Law stipulates that the compensation committee must consist ofrequires a public Israeli company to have at least threetwo external directors who meet certain independence criteria and must include all of the company’s external directors, whoto ensure that they are required to constitute a majority of its members. The chairman of the compensation committee must be an external director. The remaining members are required to meet certain independence criteria and be paid in accordanceunaffiliated with the regulations governing the compensation ofcompany and its controlling shareholder. An external directors.
Under Nasdaq Marketplace Rules, we are required to maintain a compensation committee consisting of at least two independent directors; each of the members of the compensation committee is required to be independent under Nasdaq Marketplace Rules relating to compensation committee members, which are different from the general test for independence of boarddirector must have either financial and committee members.
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Our compensation committee currently consists of Eli Arad, Shirly Cohen and David Gerbi. All members are external directorsaccounting expertise or independent directorsprofessional qualifications, as defined in the regulations promulgated under the Companies Law, and independent as defined in SEC rules and regulations, and Nasdaq Marketplace Rules.
Internal Auditor
Underat least one of the Companies Law, the board ofexternal directors is required to appoint an internal auditor recommended by the audit committee. The rolehave financial and accounting expertise. An external director is entitled to reimbursement of the internal auditor is to examine, among other things, whether the company’s actions comply with applicable lawexpenses and proper business procedures. The internal auditor may not be an interested party, a director or an officer of the company, or a relative of any of the foregoing, nor may the internal auditor be our independent accountant or a representative thereof. Our current internal auditor is Mr. Daniel Spira, CPA, who is Vice President of the Israel Institute of Internal Auditors.
Fiduciary Duties and Approval of Related Party Transactions
Fiduciary duties of directors and officers
Israeli law imposes a duty of care and a duty of loyalty on all directors and officers of a company. The duty of care requires a director or officer to act with the level of care with which a reasonable director or officercompensation as provided in the same position would have actedregulations promulgated under the same circumstances. The duty of care includes, among other things, a duty to use reasonable means, under the circumstances, to obtain information on the advisability of a given action brought for his approval or performed by virtue of his position and other important information pertaining to such action. The duty of loyalty requires the director or officer to act in good faith and for the benefit of the company.
Approval of related party transactions
Under the Companies Law, but is otherwise prohibited from receiving any other compensation from the company, directly or indirectly, during his or her term and for two years thereafter.
Pursuant to regulations promulgated under the Companies Law, as a company with shares traded on Nasdaq, we have elected no to comply with the requirements to appoint external directors and related party transaction may be approved only if it is forrules concerning the benefitcomposition of the company. A transactionaudit committee and compensation committee of the board of directors. We are still subject to the gender diversity rule under the Companies Law, which requires that is not an extraordinary transaction in whichif, at the time a director is to be elected or officer has a personal interest requires the approvalappointed, all members of the board of directors unless the articles of associationare of the company provide otherwise. Ifsame gender, the transaction is an extraordinary transaction, itdirector to be appointed must be approved byof the other gender. The conditions to the exemptions from the Companies Law requirements are that: (i) the company does not have a “controlling shareholder,” as such term is defined under the Companies Law, (ii) its shares are traded on certain U.S. stock exchanges, including Nasdaq, and (iii) it comply with the director independence requirements and the audit committee and the board of directors, and, under certain circumstances, by the shareholders of the company. An “extraordinary transaction” is a transaction other than in the ordinary course of business, other than on market terms or that is likely to have a material impact on the company’s profitability, assets or liabilities.
Pursuant to the Companies Law, extraordinary transactions in which a controlling shareholder has a personal interest require the approval of the audit committee, or the compensation committee if the transaction is in connection with employment or service with the company, the board of directors and the shareholders of the company. The shareholder approval must be by a simple majority of all votes cast, provided that (i) such majority includes a simple majority of the votes cast by non-controlling shareholders having no personal interest in the matter or (ii) the total number of votes of shareholders mentioned in clause (i) above who voted against such transaction does not exceed 2% of the total voting rights in the company.
The Companies Law prohibits any director who has a personal interest in an extraordinary transaction from being present for the discussion and voting pertaining to such transaction in the audit committee or board of directors. Nevertheless, a director who has a personal interest may be present at the meeting and vote on the matter if a majority of the directors or members of the audit committee have a personal interest in the approval of such transaction; in this case, however, the transaction also requires shareholder approval.
Director and officer compensation
Under the Companies Law, we are required to approve, at least once every three years, a compensation policy with respect to our directors and officers. Following the recommendation of our compensation committee, the compensation policy must be approved by our board of directors and our shareholders. The shareholder approval must be by a simple majority of all votes cast, provided that (i) such majority includes a simple majority of the votes cast by non-controlling shareholders having no personal interest in the matter or (ii) the total number of votes of shareholders mentioned in clause (i) above who voted against such transaction does not exceed 2% of the total voting rights in the company. In general, the terms of compensation of directors, the chief executive officer and any employee or service provider who is considered a controlling shareholder must be approved separately by the compensation committee, the board of directors and the shareholders. The compensation terms of other officers who report directly to the chief executive officer require the approval of the compensation committee and the board of directors.
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Directors’ Service Contracts
There are no arrangements or understandings between us and any of our subsidiaries, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their employment or service as directors of our company or any of our subsidiaries.
D. Employees
As of December 31, 2020, we had 26 employees based at our office and laboratory in Ness Ziona, Israel.
Local laborcomposition requirements under U.S. 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 and include 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.
E. Beneficial Ownership of Executive Officers and Directors
The beneficial ownership of our ordinary shares (including ordinary shares represented by ADSs) is determined in accordance withincluding the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. For purposes of the table below, we deem ordinary shares issuable pursuant to options or warrantsapplicable exchange, that are currently exercisable or exercisable within 60 days of the date of this Annual Report on Form 20-F, if any,applicable to be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.U.S. domestic issuers.
 
Unless otherwise noted below, each shareholder’s address is c/o MeaTech 3D Ltd., 18 Einstein St., P.O. Box 4061 Ness Ziona 7414001, Israel.
  Shares Beneficially Owned 
Name of Beneficial Owner Number  Percentage 
Directors and executive officers      
Sharon Fima(1)          
  3,731,067   3.0%
Omri Schanin(2)          
  3,522,733   2.9%
Guy Hefer                
Dan Kozlovski(4)          
  33,340   * 
Steven H. Lavin(5)          
  2,846,856   2.3%
Daniel Ayalon(6)          
  447,776   * 
David Gerbi                
Eli Arad                
Shirly Cohen                
Sari Singer                
         
All directors and executive officers as a group (10 persons)            10,581,772   8.5%
*          Less than one percent (1%).


 (1)
Consists of 3,522,733 ordinary shares and options to purchase 208,334 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 2.32 (approximately $0.71). These options expire on May 17, 2024.

(2)
Consists of ordinary shares.

(3)
Consists of options to purchase 100,000 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 1.90 (approximately $0.58). These options expire on August 5, 2024.

(4)
Consists of options to purchase 33,340 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 1.90 (approximately $0.58). These options expire on August 5, 2024.

(5)
Consists of 2,752,938 ordinary shares and RSUs vesting into 93,918 ordinary shares at a conversion price of NIS 0.30 (approximately $0.09) within 60 days of the date of this annual report. The amounts are based on Mr. Lavin’s 99% ownership of the shares of EL Capital Investments, LLC, described in Footnote 2 above, and his 1/3 ownership of the shares of Silver Road Capital Ltd., which, to the best of our knowledge, holds 1,343,329 of our ordinary shares.

(6)
The amount is based on Mr. Ayalon’s 1/3 ownership of the shares of Silver Road Capital Ltd., which, to the best of our knowledge, holds 1,343,329 of our ordinary shares.

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ITEM 7.          MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders

The following table sets forth certain information regarding the beneficial ownership of our outstanding ordinary shares, including ordinary shares represented by ADSs, as of the date of this Annual Report on Form 20-F, by each person or entity who we know beneficially owns 5% or more of the outstanding ordinary shares. For purposes of the table below, we deem ordinary shares issuable pursuant to options or warrants that are currently exercisable or exercisable within 60 days of the date of this Annual Report on Form 20-F, if any, to be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
None of our shareholders have different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
As of the date of this Annual Report on Form 20-F, there are four shareholders of record of our ordinary shares, of whom one is in the United States. The number of record holders is not representative of the number of beneficial holders of our ordinary shares, as most of the shares we have issued, including those represented by ADSs are currently recorded in the name of our Israeli share registrar, the Tel Aviv Stock Exchange Nominee Co. Ltd. Based upon a review of the information provided to us by The Bank of New York Mellon, the depositary of the ADSs, as of April 14, 2021, there were 22 holders of record of the ADSs on record with the Depository Trust Company. These numbers are not representative of the number of beneficial holders of our ADSs nor is it representative of where such beneficial holders reside, since many of these ADSs were held of record by brokers or other nominees.
  Shares Beneficially Owned 
Name of Beneficial Owner Number  Percentage 
5% or greater shareholders      
Psagot Investment House Ltd. (1)          
  9,952,712   7.8%
Shimon Cohen            6,426,966   5.2%


 (1)
Consists of 5,095,712 ordinary shares held jointly with Pareto Optimum, LP, warrants to purchase 2,428,500 ordinary shares at an exercise price of NIS 5.00 (approximately $1.54) within 60 days of the date of this prospectus, and warrants to purchase 2,428,500 ordinary shares at an exercise price of NIS 6.00 (approximately $1.84) within 60 days of the date of this prospectus. The general partner in Pareto Optimum, LP, is Psagot Hedge Fund Management Ltd., which is owned by Psagot Compass Investments Ltd., a subsidiary of Psagot Investment House Ltd. Psagot Investment House Ltd. is indirectly fully owned by Apax Europe VII-A L.P., Apax Europe VII-B L.P. and Apax Europe VII-1 L.P., or the Apax Europe VII Funds, through Himalaya AP.PS Ltd. and various holding companies which are indirectly controlled, managed and/or advised by Apax Partners Europe Managers Ltd., or APEM. APEM is the investment manager of the Apax Europe VII Funds with respect to various investments, including Psagot Investment House Ltd. APEM is fully owned by Messrs. Martin Halusa and Nico Hansen, and as such, and as such, Messrs. Halusa and Hansen may be deemed to beneficially own the ordinary shares jointly beneficially owned by Psagot Investment House Ltd. and Pareto Optimum, LP. The shareholder’s business address is 14 Ehad Ha’am St., Tel Aviv Israel 6514211.

B. Related Party Transactions
The following is a description of the material transactions we entered into with related parties since we were incorporated in 2018. We believe that we have executed all of our transactions with related parties on terms no less favorable to us than those we could have obtained from unaffiliated third parties.
Upon the consummation of this offering, we will have adopted a related party transaction policy that provides that our Board of Directors, acting through our Audit Committee, is responsible for the review, approval, or ratification of related party transactions between us and related persons. Under Israeli law, related party transactions are subject to special approval requirements, see “Management — Fiduciary duties and approval of specified related party transactions and compensation under Israeli law.”
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 ($160,000); (2) reimbursement of annual travel expenses of up to NIS 60,000 ($17,000); (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 ($80,000), 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.
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The material terms for Mr. Kaiser, the Chairman of our board of directors, were as follows from his appointment in January 2022, until January 24, 2023: (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.
Effective January 24, 2023, pursuant to approvals by our Compensation Committee, Board of Directors and a general meeting of our shareholders, the following amendments to the materials terms for Mr. Kaiser were adopted: his annual fee was adjusted to $290,000, automatically increased by an amount equal to seven percent at the end of each year of service commencing from the date of adjustment; his annual bonus shall be equal to 70% of the bonus awarded to the Chief Executive Officer in the applicable year; he received an allocation of restricted share units (RSUs) vesting into 1,340,000 ordinary shares (currently equivalent to 134,000 ADSs), vesting over three years from the date of adjustment, pursuant to which 1/12 will vest every quarter until fully vested, with no exercise price, issued under the Company’s 2022 Share Incentive Plan and the Capital Gains tax track pursuant to Section 102 of the Israeli Income Tax Ordinance (New Version), 1961 and subject to acceleration upon termination pursuant to either our sale or change in control; and he received an allocation of performance share units (PSUs) vesting into 1,340,000 ordinary shares (currently equivalent to 134,000 ADSs), vesting upon achievement of any one of the following milestones: (i) engagement with a strategic partner / investor (a corporation operating in the field of food, healthcare, pharmaceuticals or printing) for an investment in the company or its subsidiaries, in cash in an amount of not less than five hundred thousand dollars; (ii) submission of a regulatory approval to the U.S. FDA, Singapore Food Agency or European Food Safety Authority, for the commercial sale or distribution of our products; or (iii) engagement with a strategic partner (as defined above) in a joint development agreement to collaborate to develop technology or products for the purpose of later commercialization.

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.
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.”
2018 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
We adopted the 2022 Share Incentive Plan, or the 2022 Plan, on June 10, 2022, and a general meeting of our shareholders approved the 2022 Plan on March 30, 2023. 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).
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.
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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.
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.
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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.
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.
In the event of termination of a grantee’s employment or service with the Company or any of its affiliates due to such grantee’s death or permanent disability, or in the event of the grantee’s death within the three month period (or such longer period as determined by the Administrator) following his or her termination of service, all vested and exercisable awards held by such grantee as of the date of termination may be exercised by the grantee or the grantee’s legal guardian, estate or by a person who acquired the right to exercise the award by bequest or inheritance, as applicable, within one year after such date of termination, unless otherwise provided by the Administrator, but in no event later than the date of expiration of the award as set forth in the award agreement. Any awards which are unvested as of the date of such termination or which are vested but not then exercised within the one year period following such date, will terminate and the shares covered by such awards shall again be available for issuance under the 2022 Plan.
Notwithstanding any of the foregoing, if a grantee’s employment or services with the Company or any of its affiliates is terminated for “cause” (as defined in the 2022 Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of such termination and the shares covered by such awards shall again be available for issuance under the 2022 Plan.
Any Option that is intended to be an incentive stock option and is exercised later than three (3) months after the grantee ceases to be employed by the Company (or any parent or subsidiary), except in the case of death or “Disability” (as defined in Section 22(e)(3) of the Code), will be deemed a nonqualified stock option. If the grantee ceases to be employed by the Company (or any parent or subsidiary) due to disability, any option that is intended to be an incentive stock option and is exercised later than twelve (12) months after such termination date will be deemed a nonqualified stock option.
Voting Rights. Except with respect to restricted share awards, grantees will not have the rights as a shareholder of the Company with respect to any shares covered by an award until the award has vested and/or the grantee has exercised such award, paid any exercise price for such award and becomes the record holder of the shares. With respect to restricted share awards, grantees will possess all incidents of ownership of the restricted shares, including the right to vote and receive dividends on such shares.
Dividends. Grantees holding restricted share awards will be entitled to receive dividends and other distributions with respect to the shares underlying the restricted share award. Any stock split, stock dividend, combination of shares or similar transaction will be subject to the restrictions of the original restricted share award. Grantees holding RSUs will not be eligible to receive dividend but may be eligible to receive dividend equivalents.
Transactions. In the event of a share split, reverse share split, share dividend, recapitalization, combination or reclassification of the Company’s shares, the Administrator in its sole discretion may, and where required by applicable law shall, without the need for a consent of any holder, make an appropriate adjustment in order to adjust (i) the number and class of shares reserved and available for the outstanding awards, (ii) the number and class of shares covered by outstanding awards, (iii) the exercise price per share covered by any award, (iv) the terms and conditions concerning vesting and exercisability and the term and duration of the outstanding awards, (v) the type or class of security, asset or right underlying the award (which need not be only that of the Company, and may be that of the surviving corporation or any affiliate thereof or such other entity party to any of the above transactions), and (vi) any other terms of the award that in the opinion of the Administrator should be adjusted; provided that any fractional shares resulting from such adjustment shall be rounded to the nearest whole share unless otherwise determined by the Administrator. In the event of a distribution of a cash dividend to all shareholders, the Administrator may determine, without the consent of any holder of an award, that the exercise price of an outstanding and unexercised award shall be reduced by an amount equal to the per share gross dividend amount distributed by the Company, subject to applicable law.
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In the event of a merger or consolidation of the Company or a sale of all, or substantially all, of the Company’s shares or assets or other transaction having a similar effect on the Company, or change in the composition of the board of directors, or liquidation or dissolution, or such other transaction or circumstances that our board of directors determines to be a relevant transaction, then without the consent of the grantee, (i) unless otherwise determined by the Administrator, any outstanding award will be assumed or substituted by such successor corporation, or (ii) regardless of whether or not the successor corporation assumes or substitutes the award (a) provide the grantee with the option to exercise the award as to all or part of the shares, and may provide for an acceleration of vesting of unvested awards, (b) cancel the award and pay in cash, shares of the Company, the acquirer or other corporation which is a party to such transaction or other property as determined by the Administrator as fair in the circumstances, or (c) provide that the terms of any award shall be otherwise amended, modified or terminated, as determined by the Administrator to be fair in the circumstances. Changes with respect to awards held by U.S. service providers shall be made in accordance with the requirements of Section 409A of the Code or Section 424 of the Code, as applicable and to the extent necessary to avoid adverse tax consequences under Section 409A of the Code, a transaction or other event will not be deemed a Merger/Sale for purposes of awards granted to U.S. service providers unless the transaction or other event qualifies as a change in control event within the meaning of Section 409A of the Code.
C. Board Practices
Board of Directors
Our board of directors consists of four directors, three of whom are deemed independent directors under the corporate governance standards of the Nasdaq Marketplace Rules and the independence requirements of Rule 10A-3 of the Exchange Act, as well as the standards of the Companies Law.
Under our articles of association, our board of directors must consist of no less than three and no more than seven directors (including the external directors, if any), divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one-third of the total number of directors constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on the third annual general meeting following such election or re-election.
Our directors are divided among the three classes as follows:
the Class I directors are Messrs. Eli Arad and David Gerbi and their respective terms will expire at the Company’s annual general meeting of shareholders to be held in 2026;
the Class II director is Ms. Sari Singer and her term will expire at the Company’s annual general meeting of shareholders to be held in 2024; and
the Class III director is Mr. Yaron Kaiser his term will expire at the Company’s annual general meeting of shareholders to be held in 2025.
Pursuant to our articles of association, the vote general required to appoint a director is a simple majority vote of holders of our voting shares participating and voting at the relevant meeting, provided that (i) in the event of a contested election, the method of calculation of the votes and the manner in which the resolutions will be presented to our shareholders at the general meeting shall be determined by our board of directors in its discretion, and (ii) in the event that our board of directors does not or is unable to make a determination on such matter, then the directors will be elected by a plurality of the voting power represented at the general meeting in person or by proxy and voting on the election of directors.
Each director will hold office until the annual general meeting of our shareholders for the year in which such director’s term expires, unless the tenure of such director expires earlier pursuant to the Companies Law or unless such director is removed from office. Under our articles of association, the approval of the holders of at least 65% of the total voting power of our shareholders is generally required to remove any of our directors from office.
In addition, our articles of association allow our board of directors to appoint new directors to fill vacancies which can occur for any reason or as additional directors, provided that the number of board members shall not exceed the maximum number of directors mentioned above. A director so appointed will hold office until the next annual general meeting of our shareholders for the election of the class of directors in respect of which the vacancy was created, or in the case of a vacancy due to the number of directors being less than the maximum number of directors stated in our articles of association, until the next annual general meeting of our shareholders for the election of the class of directors to which such director was assigned by our board of directors. Our board of directors may continue to operate for as long as the number of directors is no less than the minimum number of directors mentioned above.
In addition, under the Companies Law, our board of directors must determine the minimum number of directors who are required to have financial and accounting expertise. Under applicable regulations, a director with financial and accounting expertise is a director who, by reason of his or her education, professional experience and skill, has a high level of proficiency in and understanding of business accounting matters and financial statements. He or she must be able to thoroughly comprehend the financial statements of the company and initiate discussion regarding the manner in which financial information is presented. In determining the number of directors required to have such expertise, the board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that we require at least one director with the requisite financial and accounting expertise and that Eli Arad and David Gerbi have such expertise.
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External Directors
The Companies Law requires a public Israeli company to have at least two external directors who meet certain independence criteria to ensure that they are unaffiliated with the company and its controlling shareholder. An external director must have either financial and accounting expertise or professional qualifications, as defined in the regulations promulgated under the Companies Law, and at least one of the external directors is required to have financial and accounting expertise. An external director is entitled to reimbursement of expenses and compensation as provided in the regulations promulgated under the Companies Law, but is otherwise prohibited from receiving any other compensation from the company, directly or indirectly, during his or her term and for two years thereafter.
Pursuant to regulations promulgated under the Companies Law, as a company with shares traded on Nasdaq, we have elected no to comply with the requirements to appoint external directors and related rules concerning the composition of the audit committee and compensation committee of the board of directors. We are still subject to the gender diversity rule under the Companies Law, which requires that if, at the time a director is to be elected or appointed, all members of the board of directors are of the same gender, the director to be appointed must be of the other gender. The conditions to the exemptions from the Companies Law requirements are that: (i) the company does not have a “controlling shareholder,” as such term is defined under the Companies Law, (ii) its shares are traded on certain U.S. stock exchanges, including Nasdaq, and (iii) it comply with the director independence requirements and the audit committee and compensation committee composition requirements under U.S. laws, including the rules of the applicable exchange, that are applicable to U.S. domestic issuers.
Committees of the Board of Directors
Our board of directors has established the following committees. Each committee operates in accordance with a written charter that sets forth the committee’s structure, operations, membership requirements, responsibilities and authority to engage advisors.
Audit Committee
Under the Companies Law, the Exchange Act and Nasdaq Marketplace Rules, we are required to maintain an audit committee.
The responsibilities of an audit committee under the Companies Law include identifying and addressing flaws in the business management of the company, reviewing and approving related party transactions, establishing whistleblower procedures, overseeing the company’s internal audit system and the performance of its internal auditor, and assessing the scope of the work and recommending the fees of the company’s independent accounting firm. In addition, the audit committee is required to determine whether certain related party actions and transactions are “material” or “extraordinary” for the purpose of the requisite approval procedures under the Companies Law and to establish procedures for considering proposed transactions with a controlling shareholder.
In accordance with U.S. law and Nasdaq Marketplace Rules, our audit committee is also responsible for the appointment, compensation and oversight of the work of our independent auditors and for assisting our board of directors in monitoring our financial statements, the effectiveness of our internal controls and our compliance with legal and regulatory requirements.
Under the Companies Law, the audit committee must consist of at least three directors who meet certain independence criteria. Under the Nasdaq Marketplace Rules, we are required to maintain an audit committee consisting of at least three independent directors, all of whom are financially literate and one of whom has accounting or related financial management expertise. Each of the members of the audit committee is required to be “independent” as such term is defined in Rule 10A-3(b)(1) under the Exchange Act.
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Our audit committee currently consists of Eli Arad, Sari Singer and David Gerbi. All members are independent directors as defined in the Companies Law, SEC rules and Nasdaq listing requirements. Our board of directors has determined that all members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq Marketplace Rules. Our board of directors has determined that Eli Arad and David Gerbi are audit committee financial experts as defined by the SEC rules and have the requisite financial experience as defined by the Nasdaq Marketplace Rules.
Compensation Committee
Under both the Companies Law and Nasdaq Marketplace Rules, we are required to establish a compensation committee.
The responsibilities of a compensation committee under the Companies Law include recommending to the board of directors, for ultimate shareholder approval by a special majority, a policy governing the compensation of directors and officers based on specified criteria, reviewing modifications to and implementing such compensation policy from time to time, and approving the actual compensation terms of directors and officers prior to approval by the board of directors.
The Companies Law stipulates that the compensation committee must consist of at least three directors who meet certain independence criteria. Under Nasdaq Marketplace Rules, we are required to maintain a compensation committee consisting of at least two independent directors; each of the members of the compensation committee is required to be independent under Nasdaq Marketplace Rules relating to compensation committee members, which are different from the general test for independence of board and committee members.
Our compensation committee currently consists of Eli Arad, Sari Singer and David Gerbi. All members are independent directors as defined in the Companies Law, SEC rules and regulations, and Nasdaq Marketplace Rules.
Director Nominations
We do not have a standing nominating committee. In accordance with Rule 5605(e)(2) of the Nasdaq Rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors. Our board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. As we do not have a standing nominating committee, we will not have a nominating committee charter in place.
Our board of directors will consider candidates for nomination who have a high level of personal and professional integrity, strong ethics and values and the ability to make mature business judgments. In general, in identifying and evaluating nominees for director, our board of directors will also consider experience in corporate management such as serving as an officer or former officer of a publicly held company, experience as a board member of another publicly held company, professional and academic experience relevant to our business, leadership skills, experience in finance and accounting or executive compensation practices, whether candidate has the time required for preparation, participation and attendance at board meetings and committee meetings, if applicable, independence and the ability to represent the best interests of our stockholders.
Internal Auditor
Under the Companies Law, the board of directors is required to appoint an internal auditor recommended by the audit committee. The role of the internal auditor is to examine, among other things, whether the company’s actions comply with applicable law and proper business procedures. The internal auditor may not be an interested party, a director or an officer of the company, or a relative of any of the foregoing, nor may the internal auditor be our independent accountant or a representative thereof. Our current internal auditor is Mr. Daniel Spira, CPA, who is a member of the board of directors of the Institute of Internal Auditors in Israel and Chairman of its Auditing and Knesset Relations Committee.
Fiduciary Duties and Approval of Related Party Transactions
Fiduciary duties of directors and officers
Israeli law imposes a duty of care and a duty of loyalty on all directors and officers of a company. The duty of care requires a director or officer to act with the level of care with which a reasonable director or officer in the same position would have acted under the same circumstances. The duty of care includes, among other things, a duty to use reasonable means, under the circumstances, to obtain information on the advisability of a given action brought for his approval or performed by virtue of his position and other important information pertaining to such action. The duty of loyalty requires the director or officer to act in good faith and for the benefit of the company.
Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions
Under the Companies Law, a company may approve an act specified above which would otherwise constitute a breach of the office holder’s fiduciary duty, provided that the office holder acted in good faith, the act or its approval does not harm the company, and the office holder discloses to the company his or her personal interest in the transaction (including any significant fact or document) a reasonable time before the approval of such act. Any such approval is subject to the terms of the Companies Law, setting forth, among other things, the appropriate bodies of the company required to provide such approval, and the methods of obtaining such approval.
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The Companies Law requires that an office holder promptly disclose to the company any direct or indirect personal interest that he or she may have and all related material information or documents known to him or her relating to any existing or proposed transaction by the company. An interested office holder’s disclosure must be made promptly and, in any event, no later than the first meeting of the board of directors at which the transaction is considered. An office holder is not obliged to disclose such information if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction.
If the transaction is an extraordinary transaction, the office holder must also disclose any personal interest held by:
the office holder’s relatives (spouse, siblings, parents, grandparents, descendants, spouse’s descendants and the spouses of any of these people); or
any company in which the office holder or his or her relatives holds 5% or more of the shares or voting rights, serves as a director or general manager or has the right to appoint at least one director or the general manager.
Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder or with a third party in which the office holder has a personal interest, which is not an extraordinary transaction, requires approval by the board of directors or a committee authorized by the board of directors. If the transaction considered is an extraordinary transaction with an office holder or third party in which the office holder has a personal interest, then audit committee approval is required prior to approval by the board of directors. Under specific circumstances, shareholder approval may also be required. For the approval of compensation arrangements with directors and executive officers, see “Item 6.B. Compensation—Compensation of Directors and Executive Officers.”
Any persons who have a personal interest in the approval of a transaction that is brought before a meeting of the board of directors or the audit committee may not be present at the meeting or vote on the matter. However, if the chairman of the board of directors or the chairman of the audit committee, as applicable, has determined that the presence of an office holder with a personal interest is required, such office holder may be present at the meeting for the purpose of presenting the matter. Notwithstanding the foregoing, a director who has a personal interest may be present at the meeting of the board of directors or the audit committee (as applicable) and vote on the matter if a majority of the members of the board of directors or the audit committee (as applicable) have a personal interest in the approval of such transaction. If a majority of the directors at a board of directors meeting have a personal interest in the transaction, such transaction also generally requires approval of the shareholders of the company.
A “personal interest” is defined under the Companies Law as the personal interest of a person in an action or in a transaction of the company, including the personal interest of such person’s relative or the interest of any other corporate body in which the person and/or such person’s relative is a director or general manager, a 5% shareholder or holds 5% or more of the issued and outstanding share capital of the company or of its voting rights, or has the right to appoint at least one director or the general manager, but excluding a personal interest stemming solely from the fact of holding shares in the company. A personal interest also includes (i) a personal interest of a person who votes according to a proxy of another person, including in the event that the other person has no personal interest, and (ii) a personal interest of a person who gave a proxy to another person to vote on his or her behalf regardless of whether the discretion of how to vote lies with the person voting.
An “extraordinary transaction” is defined under the Companies Law as any of the following:

a transaction other than in the ordinary course of business;
a transaction that is not on market terms; or
a transaction that may have a material impact on the company’s profitability, assets or liabilities.
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Disclosure of Personal Interests of a Controlling Shareholder and Approval of Transactions

Pursuant to the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, and the terms of engagement of the company, directly or indirectly, with a controlling shareholder or a controlling shareholder’s relative (including through a corporation controlled by a controlling shareholder), regarding the company’s receipt of services from the controlling shareholder, and if such controlling shareholder is also an office holder or employee of the company, regarding his or her terms of employment, require the approval of each of (i) the audit committee (or the compensation committee with respect to the terms of the engagement as an office holder or employee, including insurance, indemnification and compensation), (ii) the board of directors and (iii) the shareholders, in that order. In addition, the shareholder approval must fulfill one of the following requirements:
a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or
the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2% of the voting rights in the company.
Such majority determined in accordance with the majority requirement described above is hereinafter referred to as the Compensation Special Majority Requirement.
Any such transaction for which the term is more than three years must be approved in the same manner every three years, unless with respect to certain transactions as permitted by the Companies Law, the audit committee has determined that a longer term is reasonable under the circumstances. In addition, transactions with a controlling shareholder or a controlling shareholder’s relative who serves as an executive officer in a company, directly or indirectly (including through a corporation under his control), involving the receipt of services by a company or their compensation can have a term of five years from the company’s initial public offering under certain circumstances.
The Companies Law requires that every shareholder that participates, in person or by proxy, in a vote regarding a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the vote in question. Failure to so indicate generally results in the invalidation of that shareholder’s vote.
Disclosure of Compensation of Executive Officers
For so long as we qualify as a foreign private issuer, we are not required to comply with the proxy rules applicable to U.S. domestic filers, including the requirement applicable to emerging growth companies to disclose the compensation of our chief executive officer and other two most highly compensated executive officers on an individual, rather than an aggregate, basis. Nevertheless, regulations promulgated under the Companies Law require us to disclose in the proxy statement for the annual general meeting of our shareholders (or to include a reference therein to other previously furnished public disclosure) the annual compensation of our five most highly compensated executive officers on an individual, rather than an aggregate, basis. This disclosure will not be as extensive as that required of a U.S. domestic issuer.
Compensation of Directors and Executive Officers
Directors. Under the Companies Law, the compensation of our directors requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted under regulations promulgated under the Companies Law, the approval of the shareholders at a general meeting. If the compensation of our directors is inconsistent with our compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and board of directors, and provided that shareholder approval is obtained by the Compensation Special Majority Requirement.
Executive Officers (other than the Chief Executive Officer). The Companies Law requires the approval of the compensation of a public company’s executive officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors and (iii) if such compensation arrangement is inconsistent with the company’s compensation policy, the company’s shareholders (the Compensation Special Majority Requirement). However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision.
Chief Executive Officer. The Companies Law requires the approval of the compensation of a public company’s chief executive officer in the following order: (i) the company’s compensation committee, (ii) the company’s board of directors and (iii) the company’s shareholders (the Compensation Special Majority Requirement). However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide a detailed report for their decision. The approval of each of the compensation committee and the board of directors should be in accordance with the company’s compensation policy; however, in special circumstances, they may approve compensation terms of a chief executive officer that are inconsistent with such policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained (by a special majority vote as discussed above with respect to the approval of director compensation). In addition, the compensation committee may waive the shareholder approval requirement with regards to the approval of the engagement terms of a candidate for the chief executive officer position, if the compensation committee determines that the compensation arrangement is consistent with the company’s compensation policy, and that the chief executive officer did not have a prior business relationship with the company or a controlling shareholder of the company and that subjecting the approval of the engagement to a shareholder vote would impede the company’s ability to employ the chief executive officer candidate.
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Compensation Policy
Under the Companies Law, we are required to approve, at least once every three years, a compensation policy with respect to our directors and officers. Following the recommendation of our compensation committee, the compensation policy must be approved by our board of directors and our shareholders. The shareholder approval must be by a simple majority of all votes cast, provided that (i) such majority includes a simple majority of the votes cast by non-controlling shareholders having no personal interest in the matter or (ii) the total number of votes of shareholders mentioned in clause (i) above who voted against such transaction does not exceed 2% of the total voting rights in the company.
Directors’ Service Contracts
There are no arrangements or understandings between us and any of our subsidiaries, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their employment or service as directors of our company or any of our subsidiaries.
Duties of Shareholders
Under the Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an acceptable manner in exercising its rights and performing its obligations to the company and other shareholders, including, among other things, when voting at meetings of shareholders on the following matters:
an amendment to the articles of association;
an increase in the company’s authorized share capital;

a merger; and
the approval of related party transactions and acts of office holders that require shareholder approval.
A shareholder also has a general duty to refrain from discriminating against other shareholders.
The remedies generally available upon a breach of contract also apply to a breach of the shareholder duties mentioned above, and in the event of discrimination against other shareholders, additional remedies may be available to the injured shareholder.
In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or any other power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account.
Exculpation, Insurance and Indemnification of Directors and Officers
Under the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty. An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our articles of association include such a provision. The company may not exculpate in advance a director from liability arising from a breach of his or her duty of care in connection with a prohibited dividend or distribution to shareholders.
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As permitted under the Companies Law, our articles of association provide that we may indemnify an office holder in respect of the following liabilities, payments and expenses incurred for acts performed by him or her as an office holder, either in advance of an event or following an event:
financial liability that was imposed upon him in favor of another person pursuant to a judgment, including a compromise judgment or an arbitrator’s award approved by a court;

reasonable litigation expenses, including attorneys’ fees paid by an officeholder following an investigation or proceeding conducted against him by an authority authorized to conduct such investigation or proceeding, and which ended without the filing of an indictment against him and without any financial obligation being imposed on him as an alternative to a criminal proceeding, or which ended without the filing of an indictment against him but with the imposition of a financial obligation as an alternative to a criminal proceeding for an offense which does not require proof of mens rea or in connection with a financial sanction;
reasonable litigation expenses, including attorneys’ fees paid by the officeholder or which he was required to pay by a court, in a proceeding filed against him by the Company or on its behalf or by another person, or in criminal charges from which he was acquitted, or in criminal charges in which he was convicted of an offense which does not require proof of mens rea;

a financial obligation imposed on the officeholder for the benefit of all of the parties damaged by the violation of an administrative proceeding;
expenses incurred by an officeholder in connection with an Administrative Proceeding conducted in his regard, including reasonable litigation expenses, and including attorneys’ fees;

expenses incurred by an officeholder in connection with a proceeding under the Antitrust Law, 5748-1988 and/or in connection with it (a “Proceeding Under the Antitrust Law”), conducted regarding him, including reasonable litigation expenses, and attorneys' fees; and

any other liability or expense in respect of which it is permitted or shall be permitted by Law to indemnify an officeholder.

As permitted under the Israeli Companies Law, our articles of association provide that we may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder:
Breach of the duty of care to the Company or to any other person;
Breach of the fiduciary duty to the Company, provided that the officeholder acted in good faith and had reasonable grounds to assume that his act would not adversely affect the Company’s best interests;
financial liability imposed upon him in favor of another person;
financial liability imposed on the officeholder for the benefit of all of the parties damaged by the violation of an administrative proceeding;

expenses incurred or to be incurred by an officer in connection with an Administrative Proceeding, including reasonable litigation expenses, and including attorneys’ fees;

Expenses incurred or to be incurred in connection with a proceeding under the Antitrust Law, including reasonable litigation expenses, and including attorneys’ fees; and

any other event in respect of which it is permitted and/or shall be permitted by Law to insure the liability of an officeholder.
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Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:

a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;
an act or omission committed with intent to derive illegal personal benefit; or
a fine, monetary sanction or forfeit levied against the office holder.
Under the Companies Law, exculpation, indemnification and insurance of office holders must be approved by the compensation committee and the board of directors and, with respect to directors or controlling shareholders, their relatives and third parties in which controlling shareholders have a personal interest, also by the shareholders.
Our articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by law. Our office holders are currently covered by a directors’ and officers’ liability insurance policy. As of the date of this annual report, no claims for directors’ and officers’ liability insurance have been filed under this policy and we are not aware of any pending or threatened litigation or proceeding involving any of our office holders, including our directors, in which indemnification is sought.
D. Employees
As of December 31, 2022, we had 49 employees based at our office and laboratory in Rehovot, Israel and Peace of Meat employed 32 employees based at its office and laboratory in Antwerp, Belgium. On March 7, 2023, we announced a strategic restructuring for Peace of Meat, including targeted layoffs in areas of the business that were unrelated to its updated focus, and on April 4, 2023, we announced the expected liquidation of Peace of Meat, as a result of which it will no longer employ employees.
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 and include 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.
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E. Beneficial Ownership of Executive Officers and Directors
The beneficial ownership of our ordinary shares (including ordinary shares represented by ADSs) is determined in accordance with the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. For purposes of the table below, we deem ordinary shares issuable pursuant to options or warrants that are currently exercisable or exercisable within 60 days of the date of this Annual Report on Form 20-F, if any, to be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
Unless otherwise noted below, each shareholder’s address is c/o Steakholder Foods Ltd., 5 David Fikes St., Rehovot 7638205, Israel.
  Shares Beneficially Owned 
Name of Beneficial Owner Number  
Percentage(1)
 
Directors and executive officers      
Arik Kaufman(2)          
  491,600   * 
Guy Hefer(3)          
  333,330   * 
Dan Kozlovski(4)          
  133,340   * 
Yaron Kaiser(5)          
  3,003,610   1.7%
David Gerbi(6)          
  218,510   * 
Eli Arad(7)          
  167,010   * 
Sari Singer(8)          
  168,460   * 
All directors and executive officers as a group (7 persons)  4,515,860   2.6%

*Less than one percent (1%).
(1)Based on 172,071,117 Ordinary Shares outstanding as of March 22, 2023.
(2)Consists of 283,270 Ordinary Shares and options to purchase 208,330 Ordinary Shares exercisable within 60 days of the date of this annual report, with an exercise price of $0.519. These options expire on March 16, 2026.
(3)Consists of options to purchase 187,500 Ordinary Shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 3.49 ($0.96), expiring on March 24, 2025, and options to purchase 145,830 Ordinary Shares exercisable within 60 days of the date of this annual report, with an exercise price of $0.716, expiring on July 20, 2025.
(4)Consists of options to purchase 133,340 Ordinary Shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 1.90 ($0.52). These options expire on August 5, 2024.
 
(5)Consists of 1,435,280 Ordinary Shares based on information provided to us by Mr. Kaiser, options to purchase 116,660 Ordinary Shares exercisable within 60 days of the date of this annual report, with an exercise price of $0.519, expiring on March 16, 2026, restricted share units vesting into 111,670 Ordinary Shares within 60 days of the date of this annual report, and performance share units that may vest into 1,340,000 Ordinary Shares within 60 days of this annual report if their associated performance targets are met during such period.

(6)Consists of 96,450 Ordinary Shares, RSUs vesting into 7,490 Ordinary Shares within 60 days of the date of this annual report and options to purchase 114,570 Ordinary Shares within 60 days of the date of this annual report with an exercise price of $0.716. These options expire on July 20, 2025.
(7)Consists of 44,950 Ordinary Shares, RSUs vesting into 7,490 Ordinary Shares within 60 days of the date of this annual report and options to purchase 114,570 Ordinary Shares within 60 days of the date of this annual report with an exercise price of $0.716. These options expire on July 20, 2025.
(8)
Consists of 44,910 Ordinary Shares, RSUs vesting into 8,980 Ordinary Shares within 60 days of the date of this annual report and options to purchase 114,570 Ordinary Shares within 60 days of the date of this annual report with an exercise price of $0.716. These options expire on July 20, 2025.
F. Action to Recover Erroneously Awarded Compensation
Not applicable.
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ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders
The following table sets forth certain information regarding the beneficial ownership of our outstanding ordinary shares, including ordinary shares represented by ADSs, as of the date of this Annual Report on Form 20-F, by each person or entity who we know beneficially owns 5% or more of the outstanding ordinary shares. For purposes of the table below, we deem ordinary shares issuable pursuant to options or warrants that are currently exercisable or exercisable within 60 days of the date of this Annual Report on Form 20-F, if any, to be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
None of our shareholders have different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
As of the date of this Annual Report on Form 20-F, there are five shareholders of record of our ordinary shares, of whom two are in the United States. The number of record holders is not representative of the number of beneficial holders of our ordinary shares, as most of the shares we have issued, including those represented by ADSs are currently recorded in the name of our ADS registrar, The Bank of New York Mellon. Based upon a review of the information provided to us by The Bank of New York Mellon, as of March 1, 2023, there were 25 holders of record of the ADSs on record with the Depository Trust Company. These numbers are not representative of the number of beneficial holders of our ADSs nor is it representative of where such beneficial holders reside, since many of these ADSs were held of record by brokers or other nominees.
  Ordinary Shares Beneficially Owned 
Name of Beneficial Owner Number  Percentage 
5% or greater shareholders      
Shimon Cohen            12,175,320
(2) 
  7.1%

(1)          Based on 172,071,117 Ordinary Shares outstanding as of March 22, 2023.
(2)         This information is based solely on a Schedule 13D filed with the SEC on September 22, 2022, pursuant to which Shimon Cohen reported that he is the direct and beneficial owner of 12,175,320 Ordinary Shares, which represents (i) 305,616 ADSs held by Mr. Cohen in his individual capacity and (ii) 437,245 ADSs, 222,068 ADSs and 252,603 ADSs held indirectly by Mr. Cohen through S.C. Ma’agarei Enosh Ltd., Reshet Bitachon Ltd. and Ma’agarim Proyektim Ltd., respectively, each of which Mr. Cohen is the sole owner, manager and shareholder. The address for Shimon Cohen is 20 Derech HaShalom, Tel Aviv, 61250 Israel.
B. Related Party Transactions
The following is a description of the material transactions we entered into with related parties since the beginning of 2020. We believe that we have executed all of our transactions with related parties on terms no less favorable to us than those we could have obtained from unaffiliated third parties.
Our Board of Directors, acting through our Audit Committee, is responsible for the review, approval, or ratification of related party transactions between us and related persons. Under Israeli law, related party transactions are subject to special approval requirements, see “Management — Fiduciary duties and approval of specified related party transactions and compensation under Israeli law.”
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. For further information, see “Management - Employment and Consulting Agreements.”
 
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The material employment terms for Sharon Fima, our Chief Executive Officer and Chief Technical Officer, as well as a director, are as follows: (1) an annual salary of NIS 420,000 (approximately $127,000) in return for 90% of a full-time position; (2) an annual bonus, subject to achievement of pre-set objectives, of up to NIS 210,000 (approximately $64,000); and (3) all employee benefit plans, programs and arrangements, and all fringe benefits and perquisites that are made available to our senior executives. Separate from his holdings as a founding shareholder, we have issued Mr. Fima options to purchase 500,000 ordinary shares at an exercise price of NIS 2.32 (approximately $0.70) per share in connection with his employment, one-third of which will vest after one year and the rest in eight equal quarterly tranches.
The material employment terms for Omri Schanin, our Deputy Chief Executive Officer and Chief Operations Officer, as well as a director, are as follows: (1) an annual salary of NIS 414,000 (approximately $125,000) in return for 90% of a full-time position; (2) an annual bonus, subject to achievement of pre-set objectives, of up to NIS 140,000 (approximately $43,000); and (3) all employee benefit plans, programs and arrangements, and all fringe benefits and perquisites that are made available to our senior executives. Separate from his holdings as a founding shareholder, we have issued Mr. Schanin options to purchase 250,000 ordinary shares at an exercise price of NIS 3.49 (approximately $1.06) per share in connection with his employment, one-third of which will vest after one year and the rest in eight equal quarterly tranches.
The material employment terms for Guy Hefer, our Chief Financial Officer, are as follows: (1) an annual salary of NIS 420,000 (approximately $127,000) in return for a full-time position; (2) an annual bonus, subject to achievement of pre-set objectives, of up to NIS 140,000 (approximately $43,000); and (3) all employee benefit plans, programs and arrangements, and all fringe benefits and perquisites that are made available to our senior executives. We have issued Mr. Hefer options to purchase 250,000 ordinary shares at an exercise price of NIS 3.49 (approximately $1.06) per share in connection with his employment, one-third of which will vest after one year and the rest in eight equal quarterly tranches.
On March 4, 2020, we entered into a Chairman Agreement, or the Chairman Agreement, with Steven H. Lavin, pursuant to which Mr. Lavin agreed to serve as the Chairman of the Board of Directors for a term of three years. Mr. Lavin is entitled to receive a monthly fee in the amount of $15,000 and was granted a one-time award of 1,127,057 RSUs. The Chairman Agreement may be terminated by us or Mr. Lavin party upon 90 days’ prior written notice, provided that if it is terminated by the company without cause, or by Mr. Lavin for good reason, then all RSUs shall automatically become fully exercisable.
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. Mr. Danny Ayalon receives a monthly fee of $2,500, while other non-executive directors receive fees set forth in the Israeli Companies Regulations (Rules Regarding External Director Payment and Expenses), 2000.
Directors and Officers Insurance Policy and Indemnification and Exculpation Agreements
 
In accordance with our articles of association, we have obtained Directors and Officers insurance for our executive officers and directors, and provide indemnification, exculpation and exemption undertakings to each of our directors and officers to the fullest extent permitted by the Companies Law.
 
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Private Issuances of Securities
 
In January 2020, following the closing of the merger between MeaTech and Ophectra, we issued former shareholders of MeaTechSteakholder Innovations warrants to receive ordinary shares, including to the following relatedthen-related parties: (1) warrants to receive 1,036,098 ordinary shares each to Sharon Fima, then our Chief Executive Officer and Chief Technical Officer, and Omri Schanin, then our Deputy Chief OperatingExecutive Officer; and (2) warrants to receive 1,291,158 ordinary shares to Liran Damati, then a substantial shareholder. The warrants havehad no exercise price and vestvested upon the achievement of certainpre-defined milestones (for further details, see “Item 4.—Information on the Company—Historyin 2020 and Development of the Company”).2021.
 
In May 2020, pursuant to approvals of our audit committee, board of directors and a general meeting of our shareholders: (1) we issued 1,043,846 ordinary shares and options to purchase 6,030,286 ordinary shares at an exercise price of NIS 3.36 (approximately $1.03)$0.92) per share in return for a private investment of $750,000 by EL Capital Investments LLC, a company controlled by Mr. Steven Lavin, who was concurrently appointed to our board of directors as its chairman; and (2) we issued options to purchase 1,967,327 ordinary shares at an exercise price of NIS 2.49 (approximately $0.76)$0.68) per share and options to purchase 1,967,328 ordinary shares at an exercise price of NIS 3.486 (approximately $1.07)$0.96) to Silver Road Capital Ltd., in return for international investor relation consulting services. Twothe majority of ourwhose shares were owned by directors at the time, Mr. Steven Lavin and Mr. Daniel Ayalon, each own 1/3Ayalon.
Engagement with BlueSoundWaves
On October 6, 2021, we entered into a services and collaboration agreement, or the Services and Collaboration Agreement, with BlueOcean Sustainability Fund, LLC, or BlueSoundWaves, pursuant to which BlueSoundWaves provides us with marketing and promotional services, strategic consulting advice, and partner and investor engagement services in the United States. As consideration for such services, BlueSoundWaves received (i) an option to purchase 6,215,770 ordinary shares, currently equal to 621,577 ADSs, and (ii) 1,243,150 of our ordinary restricted shares, currently equal to 124,315 ADSs.
BlueOcean Sustainability Management Fund LP, a Cayman partnership, and the managing partner of BlueSoundWaves holds all of the outstanding sharesshare capital of Silver Road Capital.BlueOcean Kayomot Ltd., an Israeli company. Messrs. Kaufman and Kaiser are directors of BlueOcean Kayomot Ltd. and founding partners of BlueSoundWaves. Mr. Kaufman also serves as the chief executive officer of BlueOcean Kayomot Ltd. See Item 10.C for additional discussion of the Services and Collaboration Agreement.
 
C. Interests of Experts and Counsel
 
Not applicable.
 
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ITEM 8.
FINANCIAL INFORMATION
 
A. Consolidated Statements and other Financial Information
 
See “Item 18.—Financial Statements” in this Annual Report on Form 20-F.
 
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.
 
In November 2020, the ISA initiated an administrative proceeding 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 February 2021, the trustee of the settlement fund informed us that the ISA views us as a party to this proceeding, notwithstanding the settlement and establishment of the settlement fund. This proceeding is of an administrative nature and carries a potential penalty in the form of a monetary fine which, under applicable Israeli law, could be as high as NIS 5 million.  We were advised that the maximum fine likely to be imposed in this case, if any, is $0.26 million (NIS 0.85 million). In April 2021, following negotiations with the ISA, we agreed to settle the matter for $0.21 million (NIS 0.7 million). The settlement is subject to approval of the ISA’s Enforcement Committee.
In February 2021, a civil claim was lodged for which the settlement fund is a respondent, relating to Ophectra's activities prior to establishment of the settlement fund, in an amount of USD 0.8 million (NIS 2.5 million). We believe that there is a low probability of a final judgment against the settlement fund. against the settlement fund, relating to Ophectra's activities prior to establishment of the settlement fund, in an amount of $0.75 million (NIS 2.5 million). As described in “Item 4.—Information on the Company—History and Development of the Company” above, we do not bear any liability for such claims beyond the exercise value of the Therapin asset, which was the sole asset we retained from Ophectra in the merger.
Dividend Distributions
 
We have never declared or paid cash dividends to our shareholders. Currently we do not intend to pay cash dividends. We currently intend to reinvest any future earnings in developing and expanding our business. Any future determination relating to our dividend policy will be at the discretion of our Board of Directors and will depend on a number of factors, including future earnings, our financial condition, operating results, contractual restrictions, capital requirements, business prospects, applicable Israeli law and other factors our Board of Directors may deem relevant.
 
B. Significant Changes
 
Since December 31, 2020,2022, the following significant changes have occurred:
 
PeaceFundraising Round
On January 9, 2023, we consummated an underwritten public offering of Meat Acquisition

For information on our acquisition1,550,000 American Depositary Shares (“ADSs”) at a price of Peace$1.00 per ADS and pre-funded warrants to purchase 4,950,000 ADSs at a purchase price of Meat in February 2021, see “Item 4.—Information on the Company—History$0.9999 per warrant and Developmentan exercise price of $0.0001 per warrant, for total immediate gross proceeds of approximately $6.5 million. As part of the Company—Peaceoffering, we issued warrants to purchase 6,500,000 ADSs, exercisable immediately for a period of Meat Acquisition.”five years, with an exercise price of $1.00 per ADS. Underwriting discounts and other offering expenses totaled approximately $0.7 million. In addition, we granted the underwriters a 45-day option to purchase up to an additional 975,000 ADSs and/or warrants at the public offering price, less discounts and commissions, solely to cover over-allotments, if any, which was not exercised.

Initial Public Offering
 
In March 2021,connection with the offering, we sold 2,721,271 ADSs, each representing ten ordinary shares, no par value,entered into an agreement with an existing investor to reduce the exercise price of outstanding warrants to purchase up to 1,857,143 ADS which were issued in our U.S. initial publicJuly 2022 registered direct offering at a public offering price of $10.30(the “Prior Warrants”) from $3.50 per ADS for aggregate gross proceeds of $28 million. The net proceeds to us, after deducting underwriting discounts$1.00 per ADS, and commissions and estimated offering expenses payable by us, were approximately $24.7 million. The effective dateto extend the term of the registration statement on Form F-1 (File No. 333-229155)Prior Warrants until January 10, 2028.
Appointment of Chief Financial Officer
On March 2, 2023, we announced that our Vice President of Finance, Mr. Eitan Noah, will be assuming the position of Chief Financial Officer, as our current Chief Financial Officer, Guy Hefer, has decided to step down from his role for personal reasons, all effective April 5, 2023.
Eitan Noah, B.A., CPA, has been our U.S. initial public offeringVice President of ADSsFinance since January 2021. He is an integral member of our finance team, demonstrating exceptional leadership and financial acumen during his tenure, with a deep understanding of our operations, financials, and strategic priorities. Before joining us, Mr. Noah was March 11, 2021. H.C. Wainwright & Co.Director of Finance at Inception XR, Inc. acted as, and Controller and FP&A Manager at Fluence Corp. Ltd. Prior to that, he was a senior associate at PwC Israel. He holds a Bachelor’s degree in Economics from the sole underwriterBen-Gurion University of the Negev, Israel, and is a certified practicing accountant in the offering.Israel.

 
ITEM 9.
THE OFFER AND LISTING
 
A. Offer and Listing Details
 
ADSs
 
The ADSs, representing our ordinary shares, have been tradingtraded on Nasdaq under the symbol “MITC” sincebetween March 12, 2021. Prior to that date, there was no public trading market for2021 and August 2, 2022, and have traded under the ADSs.symbol “STKH” since then.

5467


 Ordinary Shares
 
Our ordinary shares have been tradingwere traded on the TASE sincebetween January 26, 2020.2020 and August 3, 2021, when we voluntarily de-listed them from trade on the TASE. Our ordinary shares were traded under the symbol “MEAT” until March 2021, whenand thereafter under the symbol was changed to “MITC.” No trading market currently exists forSome of our ordinary shares inare traded over the United States.counter under the symbol MTTCF.

B. Plan of Distribution
 
Not applicable.
 
C. Markets
 
For a description of our publicly-traded ADSs, see “Item 9.— Offer and Listing Details —ADSs.” For a description of our publicly-traded ordinary shares, see “Item 9.— Offer and Listing Details —Ordinary Shares.”
 
D. Selling Shareholders
 
Not applicable.
 
E. Dilution
 
Not applicable.
 
F. Expenses of the Issue
 
Not applicable.
 
 
ITEM 10.
ADDITIONAL INFORMATION
 
A. Share Capital
 
Not applicable.
 
B. Articles of Association
 
The information set forth in our prospectus dated March 12, 2021,January 9, 2023, filed with the SEC pursuant to Rule 424(b), under the headings “Description of Share Capital” is incorporated herein by reference.
 
C. Material Contracts
 
On October 6, 2021, we entered into the Services and Collaboration Agreement with BlueSoundWaves, a sustainability focused fund led by led by Ashton Kutcher, Guy Oseary and Effie Epstein. Pursuant to the Services and Collaboration Agreement, BlueSoundWaves provides us marketing and promotional services, strategic consulting advice, and partner and investor engagement services in the United States.
As consideration for such services, BlueSoundWaves received (i) an option to purchase 6,215,770 ordinary shares, currently equal to 621,577 ADSs, and (ii) 1,243,150 of our ordinary restricted shares, currently equal to 124,315 ADSs. The exercise price per ordinary share of the ordinary share option and restricted ordinary share option is the greater of (a) the closing price per ADS on October 5, 2021 ($6.65) divided by the number of ordinary shares represented by the ADS and (b) the closing price per ADS on the day prior to the exercise of the options less a discount ranging from 25% to 75% depending on how much higher the exercise price is compared to the price determined under subsection (a) of this paragraph. The options granted pursuant to this agreement will vest over a three-year period, with one-third vesting on the first anniversary of the Services and Collaboration Agreement with the remaining amount vesting in equal quarterly installments for the remaining period. If either party provides notice to terminate the agreement, the quarterly vesting will be cancelled. A percentage of the options described above will immediately vest and be exercisable upon the occurrence of certain trading milestones, investment milestones or change of control event. We have also agreed to reimburse BlueSoundWaves its reasonable out of pocket expenses which have been previously approved.
The Services and Collaboration Agreement will remain in effect until terminated in accordance with its terms. Each party has the right to terminate upon 60 days prior written notice after the 12-month anniversary of the effective date. Either party may also terminate the Services and Collaboration Agreement upon the occurrence of a material breach which remains uncured 30 days after the breaching party has received notice of the breach. Any portion of the vested options to purchase ordinary shares or restricted ordinary shares will expire on the second anniversary of the termination of the Services and Collaboration Agreement, or otherwise expire on the 10th anniversary.
For other agreements with related parties, see “Item 7.—Major Shareholders and Related Party Transactions—Related Party Transactions.”
 
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D. Exchange Controls
 
Non-residents of Israel who purchase our ordinary shares outside of Israel with U.S. dollars or other foreign currency will be able to convert dividends (if any) thereon, and any amounts payable upon the dissolution, liquidation or winding up of the affairs of the Company, as well as the proceeds of any sale in Israel of the ordinary shares to an Israeli resident, into freely repatriable dollars, at a rate of exchange prevailing at the time of conversion, pursuant to regulations issued under the Currency Control Law, 1978, provided that Israeli income tax has been withheld by the Company with respect to such amounts.
 
E. Taxation
 
The following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of our ordinary shares or ADSs. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

55

 Israeli tax considerations and government programs

The following is a summary of the current tax regime in the State of Israel, which applies to us and to persons who hold our ordinary shares or ADSs.
 
This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of this kind of investor include traders in securities or persons who do not hold our ordinary shares or ADSs as a capital asset. Some parts of this discussion are based on a new tax legislation which has not been subject to judicial or administrative interpretation. The discussion should not be construed as legal or professional tax advice and does not cover all possible tax considerations.
 
HOLDERS AND POTENTIAL INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE ISRAELI OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES OR ADSs, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY FOREIGN, STATE OR LOCAL TAXES.

General corporate tax structure in Israel
Israeli resident companies are generally subject to corporate tax on both ordinary income and capital gains, currently at the rate of 23% of a company’s taxable income. Capital gains derived by an Israeli resident company are subject to tax at the prevailing corporate tax rate.

Taxation of our shareholders
Capital gains
 
Capital gains tax is generally imposed on the disposal of capital assets by an Israeli resident, and on the disposal of capital assets by a non-resident of Israelnon-Israeli resident if those assets (i) are located in Israel, (ii) are shares or a right to shares in an Israeli resident corporation, (iii) represent, directly or indirectly, rights to assets located in Israel, or (iv) a right in a foreign resident corporation, which in its essence is the owner of a direct or indirect right to property located in Israel (with respect to the portion of the gain attributed to the property located in Israel)., unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The ITO distinguishes between “Real Capital Gain” and “Inflationary Surplus.” Real Capital Gain is the excess of the total capital gain over Inflationary Surplus. The Inflationary Surplus is a portion of the total capital gain which is equivalent to the increase of the relevant asset’s price that is attributable to the increase in the Israeli consumer price index or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. Inflationary Surplus is not currently subject to tax in Israel under certain conditions.Israel.
 
Real Capital Gain accrued by individuals on the sale of our ordinary shares or ADSs will be taxed at the rate of up to 25%. However, if the individual shareholder is a “Substantial Shareholder” (i.e., a person who holds, directly or indirectly, alone or together with another, 10% or more of one of the Israeli resident company’s means of control) at the time of sale or at any time during the preceding 12-month period, such gain will be taxed at the rate of 30%. In addition, capital gains generated by an individual claiming deduction of financing expenses in respect of such gain will be taxed at the rate of up to 30%.
 
Individual and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable to business income in 2020,2022, a tax rate of 23% for corporations and a marginal tax rate of up to 47% for individuals.individuals, unless contrary provisions in a relevant tax treaty applies. In addition, a 3% excess tax (as discussed below) is levied on individuals whose total taxable income in Israel in 2020 exceeds2022 exceeded NIS 651,601 ($192,000).663,240.
 
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Notwithstanding the foregoing, generally, capital gain derived from the sale of our ordinary shares or ADSs by a shareholder who is a non-resident of Israel maynon-Israeli resident (whether an individual or a corporation) should be exempt from Israeli taxation,capital gain tax, provided, that all of the following conditions are met: among others, that:(i) the ordinary shares or ADSs were purchased upon or after the listing of the securities on the stock exchange, and (ii) the seller does not have a permanent establishment in Israel to which the derived capital gain is attributable, (iii)attributable. However, non-Israeli entities (including corporations) will not be entitled to the foregoing exemption if the seller isIsraeli residents, whether directly or indirectly: (i) have a corporation, nocontrolling interest of more than 25% in such non-Israeli entity or (ii) are the beneficiaries of, its means of controlor are held, directly and indirectly, by shareholders who are Israeli residents, and (iv) if the seller is a corporation, there are no Israeli residents that are directly or indirectly entitled to, 25% or more of the revenues or profits of such non-Israeli entity. In addition, such exemption is not applicable to a person whose gains from selling or otherwise disposing of the corporation.shares or ADSs are deemed to be business income. In addition, the sale of ordinary shares or ADSs may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, the U.S.-Israel Tax Treaty, or the Treaty, generally exempts U.S. residents (for purposes of the U.S.-Israel Treaty) holding the shares as a capital asset from Israeli capital gains tax in connection with such sale, providedexchange or disposition unless either (i) the U.S. treaty resident did not own,owns, directly or indirectly, 10% or more of the Israeli resident company’s voting powerrights at any time within the 12-month period preceding such sale;sale, exchange or disposition; (ii) the seller, if an individual, ishas been present in Israel for less thana period or periods aggregating to 183 days or more during the relevant taxable year; and (iii) the capital gain from the sale, exchange or disposition was not derived through a permanent establishment of the U.S. resident in Israel.Israel; (iv) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel, or (v) the capital gains arising from such sale, exchange or disposition is  attributed to royalties. In any such case, the sale, exchange or disposition of such shares or ADSs would be subject to Israeli tax, to the extent applicable; however, under the U.S.-Israel Treaty, a U.S. resident would be permitted to claim a credit for the Israeli tax against the U.S. federal income tax imposed with respect to the sale, exchange or disposition, subject to the limitations in U.S. laws applicable to foreign tax credits. The U.S.-Israel Treaty does not provide such credit against any U.S. state or local taxes.
 
       UponIn some instances where our shareholders may be liable for Israeli tax on the sale of securities,their shares or ADSs, the payment of the consideration may be subject to withholding tax at source in Israel. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding tax at source at the time of sale. Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise, the Israel Tax Authority may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by this authority or obtain a specific exemption from the Israel Tax Authority to confirm their status as non-Israeli residents, and, in the absence of such declarations or exemptions, may require the purchaser the Israeli stockbroker or the Israeli financial institution through whichof the shares are held is obligated, subject to the above exemptions, to withhold tax from the Real Gain at the rate of 25% or 23% in respect of an individual or corporation, respectively.source.
 
Upon the sale of securities traded on a stock exchange, a detailed return, including a computation of the tax due, must be filed and an advance payment must be made on January 31 and July 31 of every tax year, in respect of sales of securities made within the previous six months by Israeli residents for whom tax has not already been deducted. However, if all tax due was withheld at source according to applicable provisions of the ITO and the regulations promulgated thereunder, there is no need to file a return and no advance payment must be paid.paid, provided that (i) such income was not generated from business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed and an advance payment does not need to be made, and (iii) the taxpayer is not obligated to pay excess tax (as further explained below). Capital gains are also reportable on the annual income tax return.
 
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Dividends
 
       A shareholderIsraeli residents who is an Israeli resident individualare individuals are generally will be subject to Israeli income tax for dividends paid (other than bonus shares or share dividends) at a rate of 25% on dividends we pay. However, a, or 30% tax rate will apply if the recipient of such dividend recipient is a Substantial Shareholder, as defined above, at the time of distribution or at any time during the preceding 12 month12-month period. If the recipient of the dividend is an Israeli resident corporation, such dividendcorporations are generally will not be included inexempt from Israeli corporate tax on the company's taxable income, provided that the sourcereceipt of the dividend is income that was derived or accrued within Israel.dividends paid on shares of Israeli resident corporations.
 
       Dividends distributed by an Israeli resident company to a non-resident of Israel (either individualNon-Israeli residents (whether individuals or corporation)corporations) are generally subject to Israeli income tax on the receipt of dividends paid on ordinary shares at the rate of 25% (30% ifor 30% (if the dividend recipient is a Substantial Shareholder at the time of distribution or at any time during the preceding 12-month period). These rates may beSuch dividends are generally subject to Israeli withholding tax at a rate of 25% so long as the shares are registered with a nominee company (whether the recipient is a Substantial Shareholder or not), unless a reduced rate is provided under the provisions of an applicable tax treaty.treaty (subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate). Under the U.S.- Israel Treaty and subject to the followingeligibility to the benefits under such treaty, the maximum rate of tax rates will applywithheld at source in respectIsrael on dividends paid to a holder of our ordinary shares who is a U.S. resident (for purposes of the U.S.-Israel Treaty) is 25%. However, for dividends distributednot generated by an Israeli resident companyApproved Enterprise, Benefited Enterprise or Preferred Enterprises (which are benefitted tax regimes under the Law for Encouragement of Capital Investments-1959) and paid to a U.S. resident: (i) if, during that portion of the taxable year which precedes the payment of the dividend and during the whole of its prior taxable year (if any), the U.S. resident is a corporation that holds at leastholding 10% or more of the outstanding voting sharescapital throughout the tax year in which the dividend is distributed as well as during the previous tax year, the maximum rate of the Israeli corporation andwithholding tax is generally 12.5%, provided that not more than 25% of the gross income of the Israeli resident paying corporation for such prior taxablepreceding year (if any) consists of certain types of interestdividends and interest. Notwithstanding the foregoing, dividends distributed from income attributed to an Approved Enterprise, Benefited Enterprise or dividends,Preferred Enterprise are not entitled to such reduction under such tax treaty but are subject to withholding tax at the tax rate is 12.5%; (ii) if bothof 15% or 20% for such a United States corporate shareholder, provided that the conditions mentionedrelated to the holding of 10% of our voting capital and to our gross income for the previous year (as set forth in section (i) abovethe previous sentence) are met and the dividend is paid from an Israeli resident company’s income that was entitled to a reduced tax rate applicable to a Benefited or Privileged Enterprise under the Encouragement Law the tax rate is 15%; and (iii) in all other cases, the tax rate is 25%.met. The reducedaforementioned rates under the U.S.-Israel Treaty willwould not apply if the dividend income is attributable toderived through a permanent establishment of the U.S. treaty resident in Israel. We are obligated to withhold tax upon the distribution of dividends.
 
       Foreign exchange regulations
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    Non-residentsIf the dividend is attributable partly to income derived from an Approved Enterprise, Benefited Enterprise or Preferred Enterprise, and partly to other sources of Israelincome, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. U.S. residents (for purposes of the U.S.-Israel Treaty) who hold our ordinary sharesare subject to Israeli withholding tax on a dividend may be entitled to a credit or ADSs are able to receive any dividends, and any amounts payable upon the dissolution, liquidation and winding up of our affairs, in non-Israeli currency at the prevailing rate of exchange. However, Israelideduction for United States federal income tax is generally requiredpurposes up to have been paid orthe amount of the taxes withheld, on these amounts. In addition, the statutory framework for the potential imposition of currency exchange control has not been eliminated, and these controls may be restored at any time by administrative action.subject to detailed rules contained in U.S. tax law.
 
A non-Israeli resident who receives dividends from which tax was withheld is generally exempt from the obligation to file tax returns in Israel in respect of such income, provided, inter alia, that (i) such income was not derived from a business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed and (iii) the taxpayer is not obliged to pay excess tax (as further explained below).
Excess Tax
Individuals who are subject to tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) are also subject to an additional tax at a rate of 3% on annual income exceeding NIS 663,240 for 2022 (which amount is linked to the annual change in the Israeli consumer price index), including, but not limited to, dividends, interest and capital gain.
Estate and gift tax
 
Israeli law presently does not impose estate or gift taxes.
 
Material United States federal income tax considerations

The following discussion describes material United States federal income tax considerations relating to the acquisition, ownership, and disposition of shares or ADSs by a U.S. Holder (as defined below) that acquires our shares or ADSs in this offering and holds them as a capital asset. This discussion is based on the tax laws of the United States, including the Code, Treasury regulations promulgated or proposed thereunder, and administrative and judicial interpretations thereof, all as in effect on the date hereof. These tax laws are subject to change, possibly with retroactive effect, and subject to differing interpretations that could affect the tax consequences described herein. In addition, this section is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreements will be performed in accordance with its terms. This discussion does not address the tax consequences to a U.S. Holder under the laws of any state, local or foreign taxing jurisdiction.
 
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our shares or ADSs that, for United States federal income tax purposes, is:
 
an individual who is a citizen or resident of the United States,
 
a domestic corporation (or other entity taxable as a corporation);
 
an estate the income of which is subject to United States federal income taxation regardless of its source; or
 
a trust if (1) a court within the United States is able to exercise primary supervision over the trust’s administration and one or more United States persons have the authority to control all substantial decisions of the trust or (2) a valid election under the Treasury regulations is in effect for the trust to be treated as a United States person.

A “Non-U.S. Holder” is a beneficial owner of our ordinary shares that is neither a U.S. Holder nor a partnership (or other entity treated as a partnership for United States federal income tax purposes).

This discussion does not address all aspects of United States federal income taxation that may be applicable to U.S. Holders in light of their particular circumstances or status (including, for example, banks and other financial institutions, insurance companies, broker and dealers in securities or currencies, traders that have elected to mark securities to market, regulated investment companies, real estate investment trusts, partnerships or other pass-through entities, corporations that accumulate earnings to avoid U.S. federal income tax, tax-exempt organizations, pension plans, persons that hold our shares as part of a straddle, hedge or other integrated investment, persons subject to alternative minimum tax or whose “functional currency” is not the U.S. dollar).
 
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If a partnership (including any entity or arrangement treated as a partnership for United States federal income tax purposes) holds our shares or ADSs, the tax treatment of a person treated as a partner in the partnership for United States federal income tax purposes generally will depend on the status of the partner and the activities of the partnership. Partnerships (and other entities or arrangements so treated for United States federal income tax purposes) and their partners should consult their own tax advisors.
 
In general, and taking into account the earlier assumptions, for United States federal income and Israeli tax purposes, a holder that holds ADRs evidencing ADSs will be treated as the owner of the shares represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to United States federal income or Israeli tax.
This discussion addresses only U.S. Holders and does not discuss any tax considerations other than United States federal income tax considerations. Prospective investors are urged to consult their own tax advisors regarding the United States federal, state, and local, and non-United States tax consequences of the purchase, ownership, and disposition of our shares or ADSs.


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Dividends
Dividends

We do not expect to make any distribution with respect to our shares or ADSs. However, if we make any such distribution, under the United States federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules discussed below, the gross amount of any dividend we pay out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes) will be includible in income for a U.S. Holder and subject to United States federal income taxation. Dividends paid to a noncorporate U.S. Holder that constitute qualified dividend income will be taxable at a preferential tax rate applicable to long-term capital gains of, currently, 20 percent, provided that the U.S. Holder holds the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meets other holding period requirements. If we are treated as a PFIC, dividends paid to a U.S. Holder will not be treated as qualified dividend income. If we are not treated as a PFIC, dividends we pay with respect to the shares or ADSs generally willmay be qualified dividend income, provided that the holding period requirements are satisfied by the U.S. Holder.
 
A U.S. Holder must include any Israeli tax withheld from the dividend payment in the gross amount of the dividend even though the holder does not in fact receive it. The dividend is taxable to the holder when the holder, in the case of shares, or the Depositary, in the case of ADSs, receives the dividend, actually or constructively. Because we are not a United States corporation, the dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution includible in a U.S. Holder’s income will be the U.S. dollar value of the NIS payments made, determined at the spot NIS/U.S. dollar rate on the date the dividend distribution is includible in income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included in income to the date the payment is converted into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.
 
Dividends paid with respect to our ordinary shares or ADSs will be treated as foreign source income, which may be relevant in calculating the holder’s foreign tax credit limitation. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends that we distribute generally should constitute “passive category income,” or, in the case of certain U.S. Holders, “general category income.” A foreign tax credit for foreign taxes imposed on distributions may be denied if holders do not satisfy certain minimum holding period requirements. The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisor to determine whether and to what extent you will be entitled to this credit.
 
To the extent a distribution with respect to our shares or ADSs exceeds our current or accumulated earnings and profits, as determined under United States federal income tax principles, the distribution will be treated, first, as a tax-free return of the U.S. Holder’s investment, up to the holder’s adjusted tax basis in its shares or ADSs, and, thereafter, as capital gain, which is subject to the tax treatment described below in “—Gain on Sale, Exchange or Other Taxable Disposition.”
 
Subject to certain limitations, the Israeli tax withheld in accordance with the Treaty and paid over to Israel will be creditable or deductible against a U.S. Holder’s United States federal income tax liability.
 
Subject to the discussion below under “Information reporting and backup withholding,” if you are a Non-U.S. Holder, you generally will not be subject to United States federal income (or withholding) tax on dividends received by you on your ordinary shares, unless you conduct a trade or business in the United States and such income is effectively connected with that trade or business (or, if required by an applicable income tax treaty, the dividends are attributable to a permanent establishment or fixed base that such holder maintains in the United States).


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Gain on sale, exchange or other taxable disposition


Subject to the PFIC rules described below under “Passive Foreign InvestmentCompany Considerations,” a U.S. Holder that sells, exchanges or otherwise disposes of shares or ADSs in a taxable disposition generally will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. Dollar value of the amount realized and the holder’s tax basis, determined in U.S. Dollars, in the shares or ADSs. Gain or loss recognized on such a sale, exchange or other disposition of shares or ADSs generally will be long-term capital gain if the U.S. Holder’s holding period in the shares or ADSs exceeds one year. Long-term capital gains of non-corporate U.S. Holders are generally taxed at preferential rates. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. A U.S. Holder’s ability to deduct capital losses is subject to limitations.
 
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Subject to the discussion below under “Information reporting and backup withholding,” if you are a Non-U.S. Holder, you generally will not be subject to United States federal income or withholding tax on any gain realized on the sale or exchange of such ordinary shares unless:
 
such gain is effectively connected with your conduct of a trade or business in the United States (or, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base that such holder maintains in the United States); or
 
you are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met.
 
For a cash basis taxpayer, units of foreign currency paid or received are translated into U.S. dollars at the spot rate on the settlement date of the purchase or sale. In that case, no foreign currency exchange gain or loss will result from currency fluctuations between the trade date and the settlement date of such a purchase or sale. An accrual basis taxpayer, however, may elect the same treatment required of cash basis taxpayers with respect to purchases and sales of our ordinary shares that are traded on an established securities market, provided the election is applied consistently from year to year. Such election may not be changed without the consent of the IRS. An accrual basis taxpayer who does not make such election may recognize exchange gain or loss based on currency fluctuations between the trade date and the settlement date. Any foreign currency gain or loss a U.S. Holder realizes will be U.S. source ordinary income or loss.
 
The determination of whether the ADSs or ordinary shares are traded on an established securities market is not entirely clear under current U.S. federal income tax law. Please consult your tax advisor regarding the proper treatment of foreign currency gains or losses with respect to a sale or other disposition of our ordinary shares.
 
Passive foreign investment company considerations


Based on our income and assets, we believe that we shouldmay 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 treated as 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 for the current or future taxable years. If we were classified as a PFIC in any taxable year, a U.S. Holder would be subject to special rules with respect to distributions on and sales, exchanges and other dispositions of the shares or ADSs. We will be treated as a PFIC for any taxable year in which at least 75 percent of our gross income is “passive income” or at least 50 percent of the average percentage of our gross assets during the taxable year, assuming we were not a controlled foreign corporation, or CFC, for the year being tested, 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. 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 are not considered passive income for purposes of the PFIC test. In determining whether we are a PFIC, a pro rata portion of the income and assets of each corporation in which we own, directly or indirectly, at least a 25% interest (by value) is taken into account.
 
Excess distribution rules
 
If we were a PFIC with respect to a U.S. Holder, then unless the holder makes one of the elections described below, a special tax regime would apply to the U.S. Holder with respect to (a) any “excess distribution” (generally, aggregate distributions in any year that are greater than 125% of the average annual distribution received by the holder in the shorter of the three preceding years or the holder’s holding period for the shares or ADSs) and (b) any gain realized on the sale or other disposition of the shares or ADSs. Under this regime, any excess distribution and realized gain will be treated as ordinary income and will be subject to tax as if (a) the excess distribution or gain had been realized ratably over the U.S. Holder’s holding period, (b) the amount deemed realized in each year had been subject to tax in each year of that holding period at the highest marginal rate for such year (other than income allocated to the current period or any taxable period before we became a PFIC, which would be subject to tax at the U.S. Holder’s regular ordinary income rate for the current year and would not be subject to the interest charge discussed below), and (c) the interest charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those years. If we were determined to be a PFIC, this tax treatment for U.S. Holders would apply also to indirect distributions and gains deemed realized by U.S. Holders in respect of stock of any of our subsidiaries determined to be PFICs. In addition, dividend distributions would not qualify for the lower rates of taxation applicable to long-term capital gains discussed above under “Dividends”.
 
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A U.S. Holder that holds the shares or ADSs at any time during a taxable year in which we are classified as a PFIC generally will continue to treat such shares or ADSs as shares or ADSs in a PFIC, even if we no longer satisfy the income and asset tests described above, unless the U.S. Holder elects to recognize gain, which will be taxed under the excess distribution rules as if such shares or ADSs had been sold on the last day of the last taxable year for which we were a PFIC.
 
Certain elections by a U.S. Holder would alleviate some of the adverse consequences of PFIC status and would result in an alternative treatment of the shares or ADSs, as described below. However, we do not currently intend to provide the information necessary for U.S. Holders to make “QEF elections,” as described below, and the availability of a “mark-to-market election” with respect to the shares or ADSs is a factual determination that will depend on the manner and quantity of trading of our shares or ADSs, as described below. A mark-to-market election cannot be made with respect to the stock of any of our subsidiaries.
 
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QEF election
 
If we were a PFIC, the rules above would not apply to a U.S. Holder that makes an election to treat our shares or ADSs as stock of a “qualified electing fund” or QEF. A U.S. Holder that makes a QEF election is required to include in income its pro rata share of our ordinary earnings and net capital gain as ordinary income and long-term capital gain, respectively, subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. A U.S. Holder makes a QEF election generally by attaching a completed IRS Form 8621 to a timely filed United States federal income tax return for the year beginning with which the QEF election is to be effective (taking into account any extensions). A QEF election can be revoked only with the consent of the IRS. In order for a U.S. Holder to make a valid QEF election, we must annually provide or make available to the holder certain information. WhileWe cannot provide any assurances that we intend towill provide to U.S. Holders the information required to make a valid QEF election, we cannot provide any assurances that we will in fact provide such information.election.
 
Mark-to-market election
 
If we were a PFIC, the rules above also would not apply to a U.S. Holder that makes a “mark-to-market” election with respect to the shares or ADSs, but this election will be available with respect to the shares or ADSs only if they meet certain minimum trading requirements to be considered “marketable stock” for purposes of the PFIC rules. In addition, a mark-to-market election generally could not be made with respect to the stock of any of our subsidiaries unless that stock were itself marketable stock, and the election may therefore be of limited benefit to a U.S. Holder that wants to avoid the excess distribution rules described above. Shares or ADSs will be marketable stock if they are regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission or on a non-U.S. exchange or market that meets certain requirements under the Treasury regulations. Shares or ADSs generally will be considered regularly traded during any calendar year during which they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded.
 
A U.S. Holder that makes a valid mark-to-market election for the first tax year in which the holder holds (or is deemed to hold) our shares or ADSs and for which we are a PFIC will be required to include each year an amount equal to the excess, if any, of the fair market value of such shares or ADSs the holder owns as of the close of the taxable year over the holder’s adjusted tax basis in such shares or ADSs. The U.S. Holder will be entitled to a deduction for the excess, if any, of the holder’s adjusted tax basis in the shares or ADSs over the fair market value of such shares or ADSs as of the close of the taxable year, but only to the extent of any net mark-to-market gains with respect to such shares or ADSs included by the U.S. Holder under the election for prior taxable years. The U.S. Holder’s basis in such shares or ADSs will be adjusted to reflect the amounts included or deducted pursuant to the election. Amounts included in income pursuant to a mark-to-market election, as well as gain on the sale, exchange or other taxable disposition of such shares or ADSs, will be treated as ordinary income. The deductible portion of any mark-to-market loss, as well as loss on a sale, exchange or other disposition of our shares or ADSs to the extent that the amount of such loss does not exceed net mark-to-market gains previously included in income, will be treated as ordinary loss.
 
The mark-to-market election applies to the taxable year for which the election is made and all subsequent taxable years, unless the shares cease to be treated as marketable stock for purposes of the PFIC rules or the IRS consents to its revocation. The excess distribution rules described above generally will not apply to a U.S. Holder for tax years for which a mark-to-market election is in effect. However, if we were a PFIC for any year in which the U.S. Holder owns the shares or ADSs but before a mark-to-market election is made, the interest charge rules described above would apply to any mark-to-market gain recognized in the year the election is made.
 
PFIC reporting obligations
 
A U.S. Holder of PFIC shares must generally file an annual information return on IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) containing such information as the U.S. Treasury Department may require. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax.
 
U.S. Holders are urged to consult their tax advisors as to our status as a PFIC, and the tax consequences to them if we were a PFIC, including the reporting requirements and the desirability of making, and the availability of, a QEF election or a mark-to-market election with respect to the shares or ADSs.


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Medicare tax


Non-corporate U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition of shares or ADSs. A United States person that is an individual, estate or trust is encouraged to consult its tax advisors regarding the applicability of this Medicare tax to its income and gains in respect of any investment in our shares or ADSs.

Information reporting with respect to foreign financial assets

Individual U.S. Holders may be subject to certain reporting obligations on IRS Form 8938 (Statement of Specified Foreign Financial Asset) with respect to the shares or ADSs for any taxable year during which the U.S. Holder’s aggregate value of these and certain other “specified foreign financial assets” exceed a threshold amount that varies with the filing status of the individual. This reporting obligation also applies to domestic entities formed or availed of to hold, directly or indirectly, specified foreign financial assets, including the shares or ADSs. Significant penalties can apply if U.S. Holders are required to make this disclosure and fail to do so.
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Information reporting and backup withholding
In general, information reporting, on IRS Form 1099, will apply to dividends in respect of shares or ADSs and the proceeds from the sale, exchange or redemption of shares of ADSs that are paid to a holder of shares or ADSs within the United States (and in certain cases, outside the United States), unless such holder is an exempt recipient such as a corporation. Backup withholding (currently at a 24% rate) may apply to such payments if a holder of shares or ADSs fails to provide a taxpayer identification number (generally on an IRS Form W-9) or certification of other exempt status or fails to report in full dividend and interest income.
 
Backup withholding is not an additional tax. A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed the U.S. Holder’s income tax liability by filing a refund claim with the Internal Revenue Service.
 
F. Dividends and Paying Agents
 
Not applicable
 
G. Statement by Experts
 
Not applicable.
 
H. Documents on Display
 
We are subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers and under those requirements will file reports with the SEC. Those reports may be inspected without charge at the locations described below. As a foreign private issuer, we are exempt from the rules 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. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act.  
 
We maintain a corporate website at www.meatech3d.com.www.steakholderfoods.com. We intend to post our Annual Report on Form 20-F on our website promptly following it being filed with the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report on Form 20-F. We have included our website address in this Annual Report on Form 20-F solely as an inactive textual reference.
 
Our SEC filings are available to you on the SEC’s website at http://www.sec.gov. This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The information on that website is not part of this Annual Report on Form 20-F.
 
With respect to references made in this Annual Report on Form 20-F to any contract or other document of MeaTech,Steakholder Foods, such references are not necessarily complete and you should refer to the exhibits attached or incorporated by reference to this Annual Report on Form 20-F for copies of the actual contract or document.
 
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I. Subsidiary Information
Not applicable.
J. Annual Report to Security Holders
 
Not applicable.
 
 
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ON MARKET RISK
 
For quantitative and qualitative information regarding our market risk, see “Item 5 — Operating and Financial Review and Prospects — Liquidity and Capital Resources — Quantitative and Qualitative Disclosures About Market Risk” and Note 2223 to our financial statements.
 
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ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 
A. Debt Securities
 
Not applicable.
 
B. Warrants and Rights

Not applicable.

C. Other Securities
 
Not applicable.

D. American Depositary Shares
 
The Bank of New York Mellon is the depositary of the ADSs. Each ADS represents ten ordinary shares (or a right to receive ten ordinary shares) deposited with Bank Leumi, as custodian for the depositary in Israel.. Each ADS will also represent any other securities, cash or other property which may be held by the depositary. The depositary’s office at which the ADSs are administered and its principal executive office are located at 240 Greenwich Street, New York, New York 10286.
 
A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs. A copy of the deposit agreement has beenwas filed as Exhibit 4.1 to our amended registration statement on Form F-1 filed with the SEC on March 5, 2021 and is incorporated by reference herein.
 
6276


Fees and Expenses
 
Pursuant to the terms of the deposit agreement, the holders of the ADSs will be required to pay the following fees:
 
Persons depositing or withdrawing ordinary

shares or ADS holders must pay
 For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) Issuance of ADSs, including issuances resulting from a distribution of ordinary shares or rights or other property Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
   
 $.05 (or less) per ADS Any cash distribution to ADS holders
   
A fee equivalent to the fee that would be payable if securities distributed to you had been ordinary shares and the ordinary shares had been deposited for issuance of ADSs Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
   
$.05 (or less) per ADS per calendar year Depositary services
   
Registration or transfer fees Transfer and registration of ordinary shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw ordinary shares
   
Expenses of the depositary Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)

Converting foreign currency to U.S. dollars
   
Taxes and other governmental charges the depositary or the custodian have to pay on any ADSs or ordinary shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes As necessary
   
Any charges incurred by the depositary or its agents for servicing the deposited securities As necessary
 
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing ordinary shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
 
From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.
 
The depositary may convert foreign currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as an agent, fiduciary or broker on behalf of any other person and earns revenue, including, without limitation, fees and spreads that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be most favorable to ADS holders, subject to its obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request.
 
6377


PART II
 
 
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
 
Not applicable.
 
 
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 
Initial Public Offering
 
In March 2021, we sold 2,721,271 ADSs, each representing ten ordinary shares, no par value, in our U.S. initial public offering at a public offering price of $10.30 per ADS.  Gross proceeds, including proceeds generated from the partial exercise of the underwriter’s option to purchase additional ADSs, were $28 million. Net proceeds to us, after deducting underwriting discounts and commissions and estimated offering expenses payable by us were approximately $24.7 million. The effective date of the registration statement on Form F-1 (File No. 333-253257) for our U.S. initial public offering of ADSs was March 11, 2021. The offering closed on March 17, 2021. H.C. Wainwright, Inc. acted as the sole underwriter in the offering.
 
The net proceeds from our initial public offering are held in cash and cash equivalents and we expect they will meet our capital requirements until December,the fourth quarter of 2022. 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. None of the net proceeds of our initial public offering were paid directly or indirectly to any director, officer, general partner of ours or to their associates, persons owning ten percent or more of any class of our equity securities, or to any of our affiliates.
 
 
ITEM 15.
CONTROLS AND PROCEDURES

A.Disclosure Controls and Procedures 
 
We have performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that the material financial and non-financial information required to be disclosed to the SEC is recorded, processed, summarized and reported timely. Based on our evaluation, our management, including our chief executive officer and chief financial officer, has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report are effective. Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in our reports.
 
This Annual Report on Form 20-F does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

B.Management’s Annual Report on Internal Control over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Exchange Act. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
 
Our management assessed our internal control over financial reporting as of December 31, 2022, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies and our overall control environment.
Based on its assessment, our management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with International Financial Reporting Standards. We reviewed the results of our management’s assessment with the Audit Committee of our Board of Directors.


C. Attestation Report of the Registered Public Accounting Firm
This Annual Report on Form 20-F does not include an attestation report of the company’s registered public accounting firm as the company is considered an emerging growth company.
78


D.Changes in Internal Control over Financing Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this Annual Report on Form 20-F that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
 
 
ITEM 16.
[RESERVED]
 
 
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
 
Our board of directors has determined that all members of our audit committee are financially literate as determined in accordance with Nasdaq rules and that Messrs. Eli Arad and David Gerbi are qualified to serve as “audit committee financial experts” as defined by SEC rules. The audit committee financial experts are independent directors.
 
64


 
ITEM 16B.
CODE OF ETHICS
 
We have adopted an Unethicala Code of Business Conduct Reporting Procedureand Ethics (the “Code of Conduct”Ethics”) that is applicable to all of theour directors, executives and other employees, and independent contractorsthose of the Company.our affiliates. A copy of the Code of Conduct is available on our website at www.meatech3d.com. Thewww.steakholderfoods.com. Any waivers of the Code of Ethics for directors and officers require the approval of the audit committee of our board of directors is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for directors and officers.directors. We expect that any amendments to the Code of Conduct will be disclosed on our website.
 
79

 
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
Fees Paid to Independent Registered Public Accounting Firm
 
Our auditors for the years ended December 31, 2020 and 2019 were
Somekh Chaikin, Registered Public Accounting Firm, a member firm of KPMG International. We expect that Somekh Chaikin will serveInternational, located in Tel Aviv, Israel (PCAOB ID 1057), has served as our auditorsindependent registered public accounting firm for fiscal year2022 and 2021. AllFollowing are Somekh Chaikin’s fees for professional services in each of the services described in the following fee table were pre-approved by the audit committee.respective fiscal years:

  Year ended December 31, 
  2020  2019 
  USD, in thousands 
    
Audit fees(1)
  145   65 
Audit-related fees(2)
  -   - 
Tax fees(3)
  10   - 
Other fees(4)
  -   - 
Total  155   65 
 
  Year ended December 31, 
  2022  2021 
  USD, in thousands 
    
Audit fees(1)
  295   336 
Tax fees(2)
  25   3 
Total  320   339 
 
(1)Audit fees consist of fees billed or expected to be billed for the annual audit services engagement and other audit services, which are those services that only the external auditor can reasonably provide, and include the Company audit; statutory audits; comfort letters and consents; attest services; and assistance with and review of documents filed with the TASE and SEC.
  
(2)Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements or that are traditionally performed by the external auditor, and include consultations concerning financial accounting and reporting standards; internal control reviews of new systems, programs and projects; review of security controls and operational effectiveness of systems; review of plans and control for shared service centers, due diligence related to acquisitions; accounting assistance and audits in connection with proposed or completed acquisitions; and employee benefit plan audits.
(3)Tax fees include fees billed for tax compliance services that were rendered during the most recent fiscal year, including the preparation of original and amended tax returns and claims for refund; tax consultations, such as assistance and representation in connection with tax audits and appeals, tax advice related to mergers and acquisitions, transfer pricing, and requests for rulings or technical advice from taxing authority; tax planning services; and expatriate tax planning and services.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Our Audit Committee has the sole authority to approve the scope of the audit and any audit-related services, as well as all audit fees and terms. The Audit Committee must pre-approve any audit and non-audit services provided by our independent registered public accounting firm. The Audit Committee will not approve the engagement of the independent registered public accounting firm to perform any services that the independent registered public accounting firm would be prohibited from providing under applicable laws, rules and regulations, including those of self-regulating organizations. The Audit Committee reviews and pre-approves the statutory audit fees that can be provided by the independent registered public accounting firm on an annual basis.
 
(4)ITEM 16D.
No other fees were billed by the Company’s auditors to the Company during the years ended December 31, 2020 and 2019.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
          
ITEM 16D.         EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESNot applicable.

ITEM 16E. 
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
 
Not applicable.
 
ITEM 16E.         PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F.          CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.
 
6580

ITEM 16G.
CORPORATE GOVERNANCE


ITEM 16G.        CORPORATE GOVERNANCE
Nasdaq Listing Rules and Home Country Practices
 
The Sarbanes-Oxley Act, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, such as us, to comply with various corporate governance practices. As a foreign private issuer, we are permitted to follow certain Israeli corporate governance practices instead of Nasdaq rules, provided that we disclose which requirements we are not following and the equivalent Israeli requirements. Pursuant to the “foreign private issuer exemption”:
We are not required to haveBelow is a nominating committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. Our board of directors currently nominates director candidates, in compliance with the Companies Law.
We are not required to comply with specifications regarding the composition of our compensation committee under SEC and Nasdaq rules nor the requirement that it adopts a written charter addressing the committee’s purpose and responsibilities. Although we have adopted a formal written charter for our compensation committee, there is no requirement under the Companies Law to do so and the charters as adopted may not specify allconcise summary of the items enumeratedsignificant ways in which our corporate governance practices differ from the applicablecorporate governance requirements of Nasdaq Marketplace Rules.
We are not required to adopt a code of conduct applicable to all directors, officers and employees, and the Companies Law does not require us to do so. Although we have adopted a code of conduct, there is no requirement under the Companies Law to do so and the code as adopted may not specify all of the items enumerated in the applicable Nasdaq Marketplace Rules.
domestic U.S. listed companies:
 


TheQuorum. As permitted under the Companies Law, pursuant to our articles of association, the quorum required for aan ordinary meeting of our shareholders will beconsists of at least two shareholders present in person or by proxy or by a voting instrument, who hold in the aggregateor represent between them at least 25% of the voting power of our shares (and, with respect to an adjourned meeting, generally one or more shareholders who hold or represent any number of shares), instead of 33 1/3% of the issued share capital (and in an adjourned meeting, with some exceptions, any number of shareholders) instead of 331∕3% of our issued share capital as requiredprovided under applicable Nasdaq Marketplace Rules.Listing Rule 5260(c).
 

Shareholder Approval. Although the Nasdaq Listing Rules generally require shareholder approval of equity compensation plans and material amendments thereto, we follow Israeli practice, which is to have such plans and amendments approved only by the board of directors, unless such arrangements are for the compensation of chief executive officer or directors, in which case they also require the approval of the compensation committee and the shareholders. In addition, rather than follow the Nasdaq Listing Rules requiring shareholder approval for the issuance of securities in certain circumstances, we follow Israeli law, under which a private placement of securities requires approval by our board of directors and shareholders if it will cause a person to become a controlling shareholder (generally presumed at 25% ownership) or if: (a) the securities issued amount to 20% or more of our outstanding voting rights before the issuance; (b) some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and (c) transaction will increase the relative holdings of a shareholder that holds 5% or more of our outstanding share capital or voting rights or will cause any person to become, as a result of the issuance, a holder of more than 5% of our outstanding share capital or voting rights.

Executive Sessions. While the Nasdaq Listing Rules require that “independent directors,” as defined in the Nasdaq Listing 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.
We intend to seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, including (i) in connection with equity-based compensation to officers and directors; and (ii) 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), rather than seeking approval for corporate actions in accordance with the applicable Nasdaq Marketplace Rules.
ITEM 16H.
MINE SAFETY DISCLOSURE
         
Not applicable.
 
As permitted by the Companies law, our Board is not comprised of a majority of independent directors as would be required in accordance with applicable Nasdaq Marketplace Rules.
As permitted by the Companies law, our Board has not adopted a policy of conducting regularly scheduled meetings at which only our independent directors are present in accordance with applicable Nasdaq Marketplace Rules.
As opposed to making periodic reports to shareholders and proxy solicitation materials available to shareholders in a manner specified by the SEC and Nasdaq Marketplace Rules, the generally accepted practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. We intend to mail such reports to shareholders only upon request.

In all other respects, we intend to comply with the rules generally applicable to U.S. domestic companies listed on Nasdaq. We may in the future decide to use the foreign private issuer exemption with respect to some or all of the other Nasdaq Capital Market corporate governance rules. Following the closing of this offering, we will also comply with Israeli corporate governance requirements under the Companies Law applicable to public companies. Accordingly, our shareholders may not be afforded the same protections as provided under Nasdaq Marketplace Rules.
ITEM 16H.         MINE SAFETY DISCLOSURE
ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
 
Not applicable.
 
6681


PART III
 
ITEM 17.           FINANCIAL STATEMENTS
ITEM 17.FINANCIAL STATEMENTS
       
The Registrant has responded to Item 18 in lieu of responding to this Item.
 
ITEM 18.           FINANCIAL STATEMENTS
ITEM 18.
FINANCIAL STATEMENTS
      
See the financial statements beginning on page F-1. The following financial statements and financial statement schedules are filed as part of this Annual Report on Form 20-F together with the report of the independent registered public accounting firm.
 
6782


image00001.jpg

Steakholder Foods Ltd. (formerly known as MeaTech 3D Ltd.)
Index to Consolidated Financial Statements

Financial InformationStatements of MeaTech 3DSteakholder Foods Ltd.
Page
  
F-2
  
Consolidated Financial Statements:
 
F-3
F-4
F-5
F-6
F-7


F - 1

MeaTech 3D Ltd.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
MeaTech 3DSteakholder Foods Ltd.

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of MeaTech 3DSteakholder Foods Ltd. (“the Company”) as of December 31, 20202022 and 2019,2021, the related consolidated statements of incomeoperations and comprehensive loss, changes in capital (deficit),equity, and cash flows for each of the years in the two yearthree-year period ended December 31, 2020, and for the eight month period ended December 31, 2018,2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the years in the two yearthree-year period ended December 31, 2020, and for the eight month period ended December 31, 2018,2022, in conformity with International Financial Reporting Standards, as issued by the International Accounting Standards Board.

Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1c to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1c. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Somekh Chaikin
Somekh Chaikin

Member Firm of KPMG International

We have served as the Company’s auditor since 2020.

Tel Aviv, Israel
April 21, 20214, 2023

F - 2


MeaTech 3D Ltd.
Steakholder Foods Ltd


Consolidated Statements of Financial Position

     
December 31
  
December 31
 
     
2022
  
2021
 
     
USD thousands
  
USD thousands
 
Current assets
         
          
Cash and cash equivalents
 
4
   
6,284
   
19,176
 
Other investment
 
6
   
136
   
154
 
Restricted deposits
     
24
   
-
 
Receivables
 
5
   
670
   
2,782
 
Total current assets
     
7,114
   
22,112
 
            
Non-current assets
           
            
Restricted deposits
     
331
   
405
 
Other investment
 
6
   
1,156
   
1,355
 
Right-of-use asset
 
19
   
3,400
   
407
 
Intangible assets
 
16
   
-
   
13,453
 
Fixed assets, net
 
7
   
3,315
   
2,922
 
            
Total non-current assets
     
8,202
   
18,542
 
            
Total Assets
     
15,316
   
40,654
 
            
Current liabilities
           
            
Trade payables
     
745
   
382
 
Other payables
 
8
   
2,303
   
2,239
 
Current maturities of lease liabilities
 
19
   
394
   
165
 
Derivative instrument
 
9B
   
882
   
-
 
            
Total current liabilities
     
4,324
   
2,786
 
            
Non-current liabilities
           
            
Long-term lease liabilities
 
19
   
3,109
   
246
 
            
Total non-current liabilities
     
3,109
   
246
 
            
Capital
           
            
Share capital and premium on shares
     
73,234
   
69,610
 
Capital reserves
     
3,811
   
3,708
 
Currency translation differences reserve
     
(1,424
)
  
1,275
 
Accumulated deficit
     
(67,738
)
  
(36,971
)
            
Total capital
     
7,883
   
37,622
 
Total liabilities and capital
     
15,316
   
40,654
 

     December 31  
December 31
 
     2020  2019 
  Note  USD thousands  USD thousands 
Current assets
         
          
Cash and cash equivalents 4   13,556   1,274 
Receivables for the issue of capital     -   222 
Loans provided     -   87 
Other investment 5   149   - 
Receivables 6   131   
38
 
Total current assets     13,836   
1,621
 
            
Non-current assets
           
            
Restricted deposits 22   51   42 
Other investment 5   2,513     
Right-of-use asset 17   168   197 
Fixed assets, net 7   906   
127
 
            
Total non-current assets     3,638   
366
 
            
Total Assets     17,474   
1,987
 
            
Current liabilities
           
            
Trade payables     351   69 
Other payables 8   996   226 
Current maturities of lease liabilities 17   180   109 
Derivative instrument 9B
  316   
-
 
            
Total current liabilities     1,843   
404
 
            
Non-current liabilities
           
            
Long-term lease liabilities 18   -   92 
            
Total non-current liabilities     -   92 
            
Capital
 9         
            
Share capital and premium on shares     30,481   1,880 
Capital reserves     3,319   14 
Currency translation differences reserve     780   22 
Accumulated deficit     (18,949)  
(425
)
            
Total capital     15,631   
1,491
 
Total liabilities and capital     17,474   
1,987
 

The accompanying Notes are an integral part of the financial statements.

F - 3


MeaTech 3D Ltd.
Steakholder Foods Ltd

Consolidated Statements of IncomeOperations and of Comprehensive Loss
 
     
Year ended
December 31,
  
Year ended
December 31,
  
Eight months ended
December 31,
 
     2020  2019  2018 
  Note  USD thousands, except share data  USD thousands, except share data  USD thousands, except share data 
             
  Revenues     -   
-
   
51
 
  Gross Profit     -   -   51 
                
 Research and development expenses 11   2,491   166     
  Marketing Expenses 12   506   -     
  General and administrative expenses 13   5,380   256   53 
  Public Listing Expenses 1A
  10,164   
-
     
  Operating loss     18,541   
422
   
2
 
                
Financing expenses (income), net 14   (17)  
1
   
-
 
                
  Loss for the period     18,524   
423
   
2
 
                
Capital reserve for financial assets at fair value that will not be transferred to profit or loss 5   334   -   - 
Currency translation differences loss (income) that will not be transferred to profit or loss     (758)  (22)  - 
                
Total comprehensive loss for the period     18,100   401   2 
                
  Loss per ordinary share, no par value (USD)               
                
  Basic and diluted loss per share (USD)     0.308   
0.022
   
0
 
                
  Weighted-average number of shares outstanding - basic and diluted (shares) 20   60,112,197   19,484,478   14,919,810 

The accompanying notes are an integral part of these financial statements.
     
Year ended
December 31,
  
Year ended
December 31,
  
Year ended
December 31,
 
     
2022
  
2021
  
2020
 
     
USD thousands, except share data
  
USD thousands, except share data
  
USD thousands, except share data
 
             
Research and development expenses
 
11
   
9,801
   
7,594
   
2,491
 
Marketing expenses
 
12
   
3,044
   
1,628
   
506
 
General and administrative expenses
 
13
   
6,937
   
8,010
   
5,380
 

Impairment loss

 
16
   
15,577
   
-
   
-
 
Public listing expenses
     
-
   
-
   
10,164
 
                
Operating loss
     
35,359
   
17,232
   
18,541
 
                
Financing income
 
14
   
(4,878
)
  
(509
)
  
(110
)
Financing expenses
 
14
   
286
   
1,299
   
93
 
Total financing (income) expenses
     
(4,592
)
  
790
   
(17
)
                
Loss for the period
     
30,767
   
18,022
   
18,524
 
                
Capital reserve for financial assets at fair value that will not be transferred to profit or loss
     
-
   
-
   
334
 
Currency translation differences loss (income) that might be transferred to profit or loss over ILS
     
2,131
   
(1,942
)
  
(758
)
Currency translation differences loss (income) that might be transferred to profit or loss over EUR
     
568
   
1,447
   
-
 
                
Total comprehensive loss for the period
     
33,466
   
17,527
   
18,100
 
                
Loss per ordinary share, no par value (USD)
               
Basic and diluted loss per share (USD)
     
0.226
   
0.155
   
0.308
 
                
Weighted-average number of shares outstanding - basic and diluted
 
21
   
135,900,869
   
115,954,501
   
60,112,197
 
 

F - 4


MeaTech 3D Ltd.
Steakholder Foods Ltd


Consolidated Statements of Changes in Equity (Deficit)
 
 Share and capital premium  
Fair value of
financial assets
reserve
  
Transactions
with related
parties reserve
  
Currency
translation
differences
reserve
  
Share-based
payments
reserve
  Accumulated deficit  Total  
Share
capital
and
premium on shares
  
Fair value
of
financial assets
reserve
  
Transactions
with related
parties
reserve
  
Currency
translation
differences
reserve
  
 
Share-based
payments
reserve
  
Accumulated
deficit
  
Total
 
 USD thousands  
USD thousands
 
                                          
Year ended December 31                     
2020                     
Balance as at January 1, 2022
 
69,610
  
(334
)
 
14
  
1,275
  
4,028
  
(36,971
)
 
37,622
 
                     
Share-based payments
 
-
  
-
  
-
  
-
  
1,146
  
-
  
1,146
 
Issuance of shares and warrants, net
 
2,528
  
-
  
-
  
-
  
-
  
-
  
2,528
 
Exercise of options
 
1,096
           
(1,043
)
    
53
 
Other comprehensive loss
 
-
  
-
  
-
  
(2,699
)
 
-
  
-
  
(2,699
)
Loss for the period
  
-
   
-
   
-
   
-
   
-
   
(30,767
)
  
(30,767
)
                     
Balance as at December 31, 2022
  
73,234
   
(334
)
  
14
   
(1,424
)
  
4,131
   
(67,738
)
  
7,883
 
                     
Balance as at January 1, 2021
 
30,481
  
(334
)
 
14
  
780
  
3,639
  
(18,949
)
 
15,631
 
                     
Share-Based Payment
 
-
  
-
  
-
  
-
  
3,965
  
-
  
3,965
 
Issuance of shares and warrants, net
 
32,330
  
-
  
-
  
-
  
-
  
-
  
32,330
 
Exercise of options
 
6,799
           
(3,576
)
    
3,223
 
Other comprehensive income
 
-
  
-
  
-
  
495
  
-
  
-
  
495
 
Loss for the period
  
-
   
-
   
-
   
-
   
-
   
(18,022
)
  
(18,022
)
                     
Balance as at December 31, 2021
  
69,610
   
(334
)
  
14
   
1,275
   
4,028
   
(36,971
)
  
37,622
 
                                          
Balance as at January 1, 2020
 1,880  -  14  22  -  (425) 1,491   
1,880
   
-
   
14
   
22
   
-
   
(425
)
  
1,491
 
                                                 
Share-based payments -  -  -  -  3,958  -  3,958 
Reverse acquisition - see Note 1 11,439  -  -  -  -  -  11,439 
Share-Based Payment
  
-
   
-
   
-
   
-
   
3,958
   
-
   
3,958
 
Reverse acquisition
  
11,439
   
-
   
-
   
-
   
-
   
-
   
11,439
 
Issuance of shares and warrants, net 14,067  -  -  -  -  -  14,067   
14,067
   
-
   
-
   
-
   
-
   
-
   
14,067
 
Exercise of options - Investors 2,753  -  -  -  -  -  2,753   
2,753
   
-
   
-
   
-
   
-
   
-
   
2,753
 
Exercise of options – Share-Based Payment 342           (319)    23   
342
               
(319
)
      
23
 
Other comprehensive income (loss) -  (334) -  758  -  -  424   
-
   
(334
)
  
-
   
758
   
-
   
-
   
424
 
Loss for the period  -   -   -   -   -   (18,524)  (18,524)
Loss for the year
  
-
   
-
   
-
   
-
   
-
   
(18,524
)
  
(18,524
)
                                                 
Balance as at December 31, 2020
  30,481   (334)  14   780   3,639   (18,949)  15,631   
30,481
   
(334
)
  
14
   
780
   
3,639
   
(18,949
)
  
15,631
 
                     
Year ended December 31                     
2019                     
                     
Balance as at January 1, 2019
 -  -  -  -  -  (2) (2)
                     
Issuance of shares and warrants, net 1,880  -  -  -  -  -  1,880 
Other comprehensive income    -  -  22  -     22 
Transaction with a related party -  -  14  -  -  -  14 
Loss for the period  -   -   -   -   -   (423)  (423)
                     
Balance as at December 31, 2019
  1,880   -   14   22   -   (425)  1,491 
                     
Eight months ended December 31, 2018                     
                     
Balance as at May 1, 2018
(establishment of the Company)
 -  
-
  -  -  
-
  -  - 
                     
Loss for the period  -   -   -   -   -   (2)  (2)
                     
Balance as at December 31, 2018
 -  -  -  -  -  (2) (2)

The accompanying notes are an integral part of the financial statements.
 

F - 5


MeaTech 3D Ltd.
Steakholder Foods Ltd


Consolidated Statements of Cash Flows
 
  
Year ended
December 31,
2020
  
Year ended
December 31,
2019
  
Eight months ended
December 31,
2018
 
  
USD
thousands
  
USD
thousands
  
USD
thousands
 
Cash flows - operating activities
         
Net Loss for the period  (18,524)  (423)  (2)
             
Adjustments:            
Depreciation and amortization  213   21   - 
Transaction with a related party  -   14   - 
Change in fair value of derivative  (36)  -   - 
Change in fair value of other investment  (74)  -   - 
Expenses for share-based payments  3,958   -   - 
Expenses for public listing  10,164   -   - 
Changes in asset and liability items:            
Increase in receivables  5   (36)  (1)
Increase in trade payables  126   66   1 
Increase in other payables  
336
   
185
   
36
 
Net cash from (used in) operating activities  
(3,832
)
  
(173
)
  
34
 
             
Cash flows - investment activities            
Acquisition of fixed assets  (681)  (126)  (3)
Decrease (increase) of restricted deposit  (6)  (41)  - 
Acquisition of other investments  (1,188)  -   - 
Loan provided  
-
   
(86
)
  
-
 
             
Net cash used in investing activities  
(1,875
)
  
(253
)
  
(3
)
             
Cash flows - financing activities            
Proceeds from issuance of shares and warrants  14,887   1,670   - 
Issuance costs  (819)  (8)  - 
Repayment of liability for lease  (140)  (14)  - 
Proceeds on account of other investment  71   -   - 
Proceeds on account of capital issuance  222   -   - 
Proceeds with regard to derivative  348   -   - 
Proceeds from exercise of share options  2,776   -   - 
           
 
Net cash from financing activities  17,345   1,648   - 
             
Increase in cash and cash equivalents  
11,638
   
1,222
   
31
 
Effect of exchange differences on cash and cash equivalents  644   21   - 
Cash and cash equivalents at the beginning of the period:  1,274   31   - 
             
Cash balance and cash equivalents at end of period  13,556   1,274   31 
             
Non cash activities            
Purchase of fixed assets  
143
   
1
   
-
 
Issue of shares and options against receivables  
-
   
222
   
-
 

  
Year ended
December 31, 2022
  
Year ended
December 31, 2021
  
Year ended
December 31, 2020
 
  
USD thousands
  
USD thousands
  
USD thousands
 
Cash flows - operating activities
         
Net Loss for the period
  
(30,767
)
  
(18,022
)
  
(18,524
)
             
Adjustments:
            
Depreciation and amortization
  
1,519
   
680
   
213
 
Change in fair value of derivative
  
(3,800
)
  
(316
)
  
(36
)
Change in fair value of other investment
  
(102
)
  
(193
)
  
(74
)
Changes in net foreign exchange expenses
  
(891
)
  
1,279
   
-
 
Interest expense over lease liabilities
  
266
   
9
   
5
 
Interest income over short term deposits
  
(85
)
  
-
   
-
 
Share-based payment expenses
  
1,146
   
3,965
   
3,958
 
Impairment loss on intangible asset
  
14,367
   
-
   
-
 
Impairment loss on fixed asset
  
1,210
   
-
   
-
 
Public listing expenses
  
-
   
-
   
10,164
 
Changes in asset and liability items:
            
Decrease (increase) in receivables
  
1,885
   
(2,351
)
  
5
 
Increase (decrease) in trade payables
  
444
   
(97
)
  
126
 
Increase in other payables
  
495
   
1,095
   
336
 
Net cash used in operating activities
  
(14,313
)
  
(13,951
)
  
(3,827
)
             
Cash flows - investment activities
            
Acquisition of fixed assets
  
(2,928
)
  
(1,828
)
  
(681
)
Increase in restricted deposit
  
5
   
(337
)
  
(6
)
Loan provided
  
-
   
(367
)
  
-
 
Proceeds on account of other investment*
  
143
   
149
   
71
 
Interest received over short term deposits
  
85
   
-
   
-
 
Acquisition of other investments, net of cash acquired
  
(838
)
  
(6,808
)
  
(1,188
)
             
Net cash used in investing activities
  
(3,533
)
  
(9,191
)
  
(1,804
)
             
Cash flows - financing activities
            
Proceeds from issuance of shares and warrants
  
2,006
   
29,281
   
14,887
 
Issuance costs
  
(202
)
  
(3,283
)
  
(819
)
Repayment of liability for lease
  
(514
)
  
(346
)
  
(140
)
Repayment of interest over liability of lease
  
(266
)
  
(9
)
  
(5
)
Proceeds on account of capital issuance
  
-
   
-
   
222
 
Proceeds from exercise of share options
  
53
   
3,222
   
2,776
 
Proceeds with regard to derivative
  
4,495
   
-
   
348
 
Net cash from financing activities
  
5,572
   
28,865
   
17,269
 
             
Increase (decrease) in cash and cash equivalents
  
(12,274
)
  
5,723
   
11,638
 
Effect of exchange differences on cash and cash equivalents
  
(618
)
  
(103
)
  
644
 
Cash and cash equivalents at the beginning of the period:
  
19,176
   
13,556
   
1,274
 
             
Cash balance and cash equivalents at end of period
  
6,284
   
19,176
   
13,556
 
Non-cash activities
            
Purchase of fixed assets yet to be paid
  
7
   
57
   
1
 
Issue of shares and options against intangible asset
  
724
   
6,332
   
222
 
*Reclassified from financing activities to investment activities

F - 6



MeaTech 3D Ltd.

Steakholder Foods Ltd

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020
2022


Note 1 – General


 
A.
MeaTech 3D Ltd. (formerly Ophectra Real Estate and Investments Ltd. and Mea-Tech 3D Ltd.) (the “Company”) was incorporated in Israel on July 22, 1992 as a private company limited by shares in accordance with the Companies Ordinance, 1983. The Company’s official address is 18 Einstein Street, Ness Ziona, Israel. The Company is an Israeli company engaged in the food-tech industry. The Company develops methods, advanced unique technologies and machinery for growing, cultivating, producing and printing cultured meat, without raising and killing animals, using stem cell printing technology in a 3D printer.Reporting entity
 
The Company is developing two technologies:Steakholder Foods Ltd. (formerly Ophectra Real Estate and Investments Ltd., Meat-Tech 3D Ltd. and MeaTech 3D Ltd.) (the “Company”) was incorporated in Israel on July 22, 1992 as a bio-ink printing technologyprivate company limited by shares in accordance with the Companies Ordinance, 1983, and later a high-yield tissue growing technology. To date, Meat-Tech has filed patent applications in its field.
On August 29, 1994, the Company became a publicpublicly-traded company whose ordinary shares are currentlywere listed for trade on the Tel Aviv Stock Exchange under the symbol “MITC”(TASE).
On In March 17, 2021, the Company closed its U.S.completed an initial public offering of 2,721,271 ADSs, each representing ten ordinary shares of the Company (in total, 27,212,710 ordinary shares), at a public offering price of $10.30 per ADS, resulting in gross proceeds of $28 million and net proceeds of $24.7 million. The ADSs trade on the Nasdaq Capital Market, listing American Depositary Shares (ADSs) for trade under the symbol “MITC.”ticker STKH, and later voluntarily de-listed its ordinary shares from the TASE. The Company’s official address is 5 David Fikes St., Rehovot, Israel. In August 2022, the Company changed its name from MeaTech 3D Ltd. to Steakholder Foods Ltd.
 
Execution of Merger with MeaTech MT Ltd. (formerly MeaTech Ltd.):
On January 26, 2020, the Company executedThe Company’s foodtech activities were commenced in July 2019 by a merger with MeaTech MT Ltd. (then known ascompany called MeaTech Ltd., or “MeaTech”), by way of an exchange of shares between the Company and the shareholders of MeaTech (the “Merger”). Under the Merger agreement, the Company allotted MeaTech shareholders 30,525,506 ordinary shares ofwhich merged with the Company in exchange for the transfer of their entire holdings in MeaTech, so that at the time the Merger was closed, MeaTech shareholders held approximately 60% of the issuedJanuary 2020 and paid-up share capital of the Company.
Under the Merger agreement, the Company allotted non-tradable share rights to MeaTech shareholders, exercisable into 12,718,961 Company shares ("Founders’ Rights"), subject to compliance with milestones, as set out below. The total share rights reflected, assuming full conversion, an additional 8% holding in the Company and would have expired if not vested after a period of 60 months from the date of allotment. In accordance with the terms of the Founders’ Rights, such rights would vest upon satisfaction of the following milestones: (1) 50% upon completion of development of a prototype to create a layer of stem cells using 3D printing technology; (2) 50% upon completion of a taste test of cultured meat tissue weighing at least 100 grams printed using the 3D printer to be developed by the Company; and (3) full acceleration in the event that securities of the Company or MeaTech are listed for trading on a foreign stock exchange in the United States, United Kingdom, Australia, the Netherlands, Germany or China.
In August 2020, 50% of the Founders’ Rights vested upon successful completion of a significant milestone, namely printing a uniform, thin, slaughter-free meat tissue produced from stem cells. The remaining Founders’ Rights vested upon the Company’s Nasdaq IPO in March 2021.
Following the Merger, MeaTech became a wholly-ownedfully-owned subsidiary, of the Company. In March 2021, its name was changed to MeaTech MTnow called Steakholder Innovation Ltd.
F - 7

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 1 – General (cont.)

Appointment of directors and termination of office of serving directors:
At the date of completion of the Merger, three Ophectra directors resigned from the Company’s board of directors, and three directors, including MeaTech’s Chief Executive Officer and Chief Technology Officer, Mr. Sharon Fima, were either appointed to the Company’s board or were requested to remain because of their business experience or financial expertise and to maintain sound corporate governance. In addition, Mr. Fima was appointed as CEO & CTO of the Company. Shortly after the Merger, following additional changes to director composition, the Company’s board of directors was composed of four directors appointed by the post-merger Company or requested to remain, and two external directors with financial expertise not involved in the business of either Ophectra or MeaTech.

Settlement pursuant to Section 350 of the Companies Law and Section 322 of the Insolvency and Rehabilitation Law:
Under the Merger agreement, the Company made a court-approved arrangement, pursuant to Section 350 of the Companies Law and Section 322 of the Insolvency and Rehabilitation Law, to hand over the Company's existing operations to a trustee to settle the Company's debts and liabilities, with the exception of the Company's investment in shares of Therapin Ltd. (“Therapin”), so that after the completion of the Merger, the Company’s sole operations were those of MeaTech and its holdings in Therapin.

The proposed settlement under the arrangement included the following key components:


1.
Repayment in full of the Company’s debts and liabilities, by transferring the asset balance of the Company’s previous operations to a trustee that will act to sell them, with recourse to the value of the Therapin asset, if so needed.

2.
With the approval of the settlement, all of the Company's assets were transferred to a settlement fund, other than the Company's shareholding in Therapin.

3.
The Company undertook to provide a total amount of up to approximately USD 376 thousand (NIS 1,300 thousand) for the settlement fund, which will serve as an additional source for repayment of the settlement fund's liabilities to the Company's creditors. This amount includes a loan from MeaTech to the Company (prior to the closing of the Merger), in the amount of USD 87 thousand outstanding as of December 31, 2019.

4.
The settlement fund assets (including the value of the aforementioned Therapin asset) will serve as the only source for repayment of liabilities to the Company's creditors, whose cause of action preceded the date of approval of the settlement.
These consolidated financial statements are comprised of the financial statements of the Company and MeaTech. Although legally As the Company was the acquirer of allsurviving entity of the outstanding sharesmerger, and continued the pre-merger business operations, utilizing the pre-merger management and employees of MeaTech as described above,Ltd., the shareholders of MeaTech received the majority of the voting rights in the Company and the ability to determine its financial and operational policy, the management of MeaTech continues to serve as the management of the Company, and at the time of completion of the Merger, MeaTech 3D Ltd. (then Ophectra) was a shell company without significant business operations, it was determined that the Merger did not constitute a business acquisition as defined in IFRS 3, and that MeaTech was the acquirer of the business for accounting purposes. Therefore, the Mergertransaction was treated as a reverse acquisition that does not constitute a business combination. Accordingly,
The Company is developing a suite of advanced high-throughput manufacturing technologies to produce cell-based alternative protein products for cultivated, sustainable meat production, and focused on developing premium, center-of-plate meat products, including development of high-throughput bioprinting systems.
B.
Material events in the reporting period
(1)
On July 5, 2022, the Company consummated a securities purchase agreement. For details, see Note 9A.
(2)
Change in interest curves and inflation expectations
As from 2021 inflation rates in Israel and the world have been rising – in 2021 the rate of change in the Consumer Price Index in Israel increased, an increase that continued also in 2022. Along with the worldwide rise in prices, central banks around the world decided to raise interest rates with the aim of curbing rising prices. The changes in interest rates and the rise in inflation rates had an effect on items in the financial statements of the Company reflect the financial statements of MeaTech until the Merger and the Company and Subsidiary thereafter, and hence the comparative information presentedas described in these reports is that of MeaTech, other than the comparative information concerning earnings per share, which is presented according to the equity information of the Company as the acquiring company for legal purposes.Note 19 on leases.
 

F - 8

7


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 1 - General (cont.)

Based on the reverse acquisition method, the assets and liabilities of MeaTech (the accounting acquirer in the merger) were recognized in the financial statements at their book value at the date of closing of the merger. The acquisition consideration, in the amount of USD 11,439 thousand, was set based on the closing price of the Company's shares on the Tel Aviv Stock Exchange on the date of closing of the merger, while  any surplus proceeds of the acquisition over the fair value of the Company’s net assets (excluding its net assets that were transferred to a settlement fund as stated above) were recognized in profit or loss as public listing expenses in the amount of USD 10,164 thousand, that did not affect cashflow.
 
B.C.
In March 2020, the World Health Organization declared the coronavirus (COVID-19) outbreak a global pandemic. To date, the impact of the pandemic on the Company’s operations has been mainly limited to a temporary facility closure in the context of a government-mandated general lockdown, which temporary delayed certain development activities. The Company estimates that as of the date of approval of the financial statements, the COVID-19 pandemic is not expected to affect the Company's operations. However, the Company is unable to assess with certainty the extent of future impact, in part due to the uncertainty regarding the duration of the COVID-19 pandemic, its force and its effects on the markets in which the Company operates and the effects of possible government measures to prevent the spread of the virus.
C.
Definitions:Going Concern
 
Since inception, the Company has incurred significant losses and negative cash flows from operations and as of December 31, 2022 has an accumulated deficit of USD 67.7 million. The Company has financed its operations mainly through fundraising from various investors.

The Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for the foreseeable future. On January 9, 2023, the Company consummated a securities purchase agreement with gross proceeds of approximately USD 6.5 million. Management is of the opinion that its existing cash will be sufficient to fund operations until Q3 2023. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
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 the Company needs them on terms that are acceptable to it, or at all. If the Company is unsuccessful securing sufficient financing, it may need to cease operations.
The financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern.
D.
Definitions:
In these financial statements:
 
(1) The Company - MeaTech 3D
(1)
The Company - Steakholder Foods Ltd.
 
(2) The Subsidiary – MeaTech MT Ltd., formerly
(2)
The Group – The Company and its subsidiaries, Steakholder Innovation Ltd. (formerly known as MeaTech Ltd.), Steakholder Foods Europe BV, Peace of Meat BV (hereafter “Peace Of Meat”) and Steakholder Foods USA, Inc.
 
(3) Related Party - as defined in IAS 24 (revised)
(3)
Related Party - Within its meaning in IAS 24 (2009), “Related Party Disclosures”.
 
(4)
(4)
USD - United States Dollar
 
(5)
(5)
NIS – New Israeli Shekel
 
(6)
EUR – Euro
(7)
ADS – American Depositary Shares
(8)
GBP - British Pound Sterling
(9)
CPI – Consumer price index

F - 9

8


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 2 - Basis of Preparationpreparation of the Financial Statements
 
A.
Statement of Compliancecompliance with IFRS
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

The financial statements were authorized for issue by the company’s board of directors on April 4, 2023.

 
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
B.
Functional currency and presentation currency
The New Israeli Shekel ("NIS") is the currency that represents the primary economic environment in which the Company and its Israeli subsidiary operate, and is therefore the functional currency of their operations. The Euro is the currency that represents the primary economic environment in which the Company’s European subsidiaries operate, and is therefore the functional currency of their operations. Nonetheless, for reporting purposes, the consolidated financial statements, which were prepared on the basis of the functional currencies, were translated into US Dollars, which the Company selected as its presentation currency, as its securities are traded on the Nasdaq Capital Markets, and in order to make the Company’s financial statements more accessible to U.S.-based investors.
Assets and liabilities were translated at the exchange rate of the end of the period; expenses and income were translated at the exchange rate at the time they were generated. Exchange rate differentials generated due to such translation are attributed to the Currency translation differences reserve.
 
The financial statements were authorized for issue by the Company’s Board of Directors on April 18, 2021.
B.
Functional Currency and Presentation Currency
The New Israeli Shekel (“NIS”) is the currency that represents the principal economic environment in which the Company operates and is thus its functional currency. However, for financial reporting purposes, these financial statements, which are prepared on the basis of the functional currency, were translated into a different presentation currency, the U.S. dollar, for all periods presented, in order to make these results more accessible to U.S. investors.
Currency
 
USD - ILS
  
USD - EUR
 
Period
 
2022
  
2021
  
2020
  
2022
  
2021
 
December 31
  
3.519
   
3.110
   
3.215
   
0.938
   
0.883
 
Year Average
  
3.359
   
3.230
   
3.479
   
0.950
   
0.845
 
 
Assets and liabilities are translated at the exchange rates at the balance sheet date; expenses and income are translated at the exchange rate at the time they are generated. Exchange rate differentials generated due to such translation are attributed to the capital reserve.
C.
Basis of Measurement:
 
The financial statements have been prepared on the historical cost basis except for provisions.
For further information regarding the measurement of these liabilities, see Note 3 regarding significant accounting policies.
 
For further information regarding the measurement of these liabilities, see Note 3 regarding significant accounting policies.
D.
Operating Cycle:
 
D.
Operating Cycle
The Company’s operating cycle is one year.
The Company’s operating cycle is one year.
E.
Use of estimates and judgments:
 
E.
Classification
The Company’s operating cycle is one year.
Use of Expenses Recognizedestimates.
The preparation of financial statements in conformity with IFRS requires the StatementCompany’s management to make judgments, estimates and assumptions that affect the application of Incomeaccounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Classification of expenses recognized in the statement of income is based on the nature of the expense. In the opinion of the Company's management, such classification is appropriate for understanding the Company's business.
F.
Use of Estimates and Judgments
Use of estimates
The preparation of financial statements in conformity with IFRS requires the Company’s management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The preparation of accounting estimates used in the preparation of the Company’s financial statements requires that the Company’s management makes assumptions regarding circumstances and events that involve considerable uncertainty. The Company’s management prepares the estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

F - 10

9


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 2 - Basis of Preparation of the Financial Statements (cont.)
E.
Use of estimates and judgments (cont.):
The preparation of accounting estimates used in the preparation of the Company’s financial statements requires that the Company’s management makes assumptions regarding circumstances and events that involve considerable uncertainty. The Company’s management prepares the estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Further information about the assumptions that were used to determine fair value is included in the following notes:
 
F.
Use of Estimates and Judgments (cont.)Note 6, on other investments;
Note 9B, on derivative instrument;
Note 10, on share-based payments;
Note 16, on subsidiaries;
Note 19, on leases;
 
Determination of fair value
Preparation of the financial statements requires the Company to determine the fair value of certain assets and liabilities.
When determining the fair value of an asset or liability, the Company uses observable market data as much as possible. There are three levels of fair value measurements in the fair value hierarchy that are based on the data used in the measurement, as follows:

Preparation of the financial statements requires the Company to determine the fair value of certain assets and liabilities.

When determining the fair value of an asset or liability, the Company uses observable market data as much as possible. There are three levels of fair value measurements in the fair value hierarchy that are based on the data used in the measurement, as follows:

•           Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
•           Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly
•           Level 3: inputs that are not based on observable market data (unobservable inputs).


G.
Initial application of new standards, amendments to standards and interpretations
Amendment to IFRS 3, Business Combinations

This amendment clarifies when a transaction to acquire an operation is the acquisition of a "business" and when it is the acquisition of a group of assets that according to the standard is not considered the acquisition of a "business". For the purpose of this examination, the amendment added an optional concentration test so that if substantially all of the fair value of the acquired assets is attributable to a group of similar identifiable assets or to a single identifiable asset, this will not be the acquisition of a business. In addition, the minimum requirements for definition as a business have been clarified, and examples illustrating the aforesaid examination were added, such as, for example, the requirement that the acquired processes be substantive so that in order for it to be a business, the operation shall include at least one input element and one substantive process, which together significantly contribute to the ability to create outputs. Furthermore, the amendment narrows the reference to the outputs element required in order to meet the definition of a business and added examples illustrating the aforesaid examination.

The amendment is effective for transactions to acquire an asset or business for which the acquisition date on or after January 1, 2020.

Amendment to IAS 1, Presentation of Financial Statements Classification of Liabilities as Current or Non-Current

This amendment replaces certain requirements for classifying liabilities as current or non-current. For example, according to the amendment, a liability will be classified as non-current when the entity has the right to defer settlement for at least 12 months after the reporting period, and it "has substance" and is in existence at the end of the reporting period, replacing the requirement that there be an "unconditional" right. According to the amendment, a right is in existence at the reporting date only if the entity complies with conditions for deferring settlement at that date. Furthermore, the amendment clarifies that the conversion option of a liability will affect its classification as current or non-current, other than when the conversion option is recognized as equity.

The amendment is effective for reporting periods beginning on or after January 1, 2022 with earlier application being permitted. The amendment is applicable retrospectively, including an amendment to comparative data.

The Company has not yet commenced examining the effects of applying the amendment on the financial statements.

F - 11

10



Steakholder Foods Ltd


MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 3 - Significant Accounting Policies

A.
Financial Instruments:
A.(1)
Financial Instruments:Non-derivative financial assets
 

(1)Non-derivative financial assets
Initial recognition and measurement of financial assets
 
The Company initially recognizes trade receivables and debt instruments issued on the date that they are created. All other financial assets are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Receivables originating from contract assets are initially measured at the carrying amount of the contract assets on the date classification was changed from contract asset to receivables.
 
Derecognition of financial assets
 
Financial assets are derecognized when the contractual rights of the Company to the cash flows from the asset expire, or the Company transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset were transferred. When the Company retains substantially all of the risks and rewards of ownership of the financial asset, it continues to recognize the financial asset.
 
Classification of financial assets into categories and the accounting treatment of each category
 
Financial assets are classified at initial recognition to one of the following measurement categories: amortized cost; fair value through other comprehensive income – investments in debt instruments; fair value through other comprehensive income – investments in equity instruments; or fair value through profit or loss.
 
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at fair value through profit or loss:
 

-
It is held within a business model whose objective is to hold assets so as to collect contractual cash flows; and
 

-
The contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates.
 

(2)
Non-derivative financial liabilities
 
Non-derivative financial liabilities include finance lease liabilities, trade and other payables.
 
Initial recognition of financial liabilities
The Company initially recognizes financial liabilities on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
 
Subsequent measurement of financial liabilities
Financial liabilities (other than financial liabilities at fair value through profit or loss) are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.
 
Derecognition of financial liabilities
Financial liabilities are derecognized when the obligation of the Company, as specified in the agreement, expires or when it is discharged or cancelled.
 

F - 12

11


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 3 – Significant Accounting Policies (cont.)
 
Financial Instruments (cont.)

A.
Financial Instruments (cont.):

(3)
Share capital
 
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
 

(4)
Issuance of securities
 
The consideration received from the issuance of securities is attributed initially to financial liabilities that are measured each period at fair value through profit or loss, and then to financial liabilities that are measured only upon initial recognition at fair value. The remaining amount is the value of the equity component.
 
Direct issuance costs are attributed to the specific securities in respect of which they were incurred, whereas joint issuance costs are attributed to the securities on a proportionate basis according to the allocation of the consideration from the issuance of the securities .securities.
 
B.(5)
ImpairmentMeasurement of derivative financial instruments
 
Non-financial assetsDerivatives are recognized initially at fair value, attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value. The changes in fair value of these derivatives are recognized in profit or loss, as financing income or expense. The company implements the said accounting treatment to changes in the fair value of the warrants which exercise price were determined in USD and has a limited cashless mechanism.
 
B.
Impairment
Non-financial assets
Timing of impairment testing
 
The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
 
Once a year and on the same date, or more frequently if there are indications of impairment, the Group estimates the recoverable amount of each cash-generating unit that contains goodwill, or intangible assets that have indefinite useful lives or are unavailable for use.
Measurement of recoverable amount
 
The recoverable amount of an asset is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the assessments of market participants regarding the time value of money and the risks specific to the asset, for which the estimated future cash flows from the asset were not adjusted. See Note 16.
 
Recognition of impairment loss
 
An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.
 
Non-derivative financial assets
See Note 6.

F - 12


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 3 – Significant Accounting Policies (cont.)

C.
Financing income and expenses
 
Financing income derives from changes in fair value of financial instruments mandatorily measured at fair value through profit or loss.
 
Financing expenses comprise mainly from bank fee expenses and leasinglease liabilities interest expenses, which are recognized in profit or loss.
 
In the statements of cash flows, interest received is presented as part of cash flows from investing activities. Interest income or expensepaid is recognized using the effective interest method.presented as part of cash flows from financing activities.

D.
Income tax expenseLoss per share
Income tax comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that they relate to a business combination, or are recognized directly in equity or in other comprehensive income to the extent they relate to items recognized directly in equity or in other comprehensive income.
 
F - 13

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 3 – Significant Accounting Policies (cont.)
Income tax expense (cont.)
Current tax
Current tax is the expected tax payable (or receivable) on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. As at reporting date, the Company has no taxable income and accordingly no current tax expenses have been recognized.
Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
E.
Loss per share
The Company presents basic and diluted earnings or loss per share data for its ordinary shares. Basic earnings or loss per share is calculated by dividing the earnings or loss attributable to ordinary shareholders of the Company by the weighted-average number of ordinary shares outstanding during the year.year including pre-funded warrants. Diluted earnings or loss per share is determined by adjusting the profit or loss attributable to ordinary shareholders of the Company and the weighted average-number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares, which comprise share options.
 
F.
E.
Research and developmentIntangible Assets
 
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss when incurred.
 
Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company has the intention and sufficient resources to complete development and to use or sell the asset. As the Company’s development activities do not meet the standards for capitalization, research and development expenditure is recognized through profit or loss.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Other intangible assets
Other intangible assets, that are acquired by the Company, are measured at cost less accumulated amortization and accumulated impairment losses. See Note 16.
 
G.
F.
Provisions
 
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
 
A provision for claims is recognized if, as a result of a past event, the Company has a present legal or constructive obligation and it is more likely than not that an outflow of economic benefits will be required to settle the obligation and the amount of obligation can be estimated reliably. When the value of time is material, the provision is measured at its present value.

F - 14

13


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 3 – Significant Accounting Policies (cont.)
G.
Fixed assets
 
H.(1)
Fixed assets

(1)
Recognition and measurement
 
Fixed asset items are measured at cost less accumulated depreciation and accumulated impairment losses.
 
The cost of a fixed asset includes expenditures that are directly attributable to the acquisition of the asset.
 

(2)
Depreciation
 
Depreciation is a systematic allocation of the depreciable amount of an asset over its estimated useful life. The depreciable amount is the cost of the asset or other amount that replaces the cost, less its residual value.
 
An asset is depreciated from the date it is ready for use, namely, the date on which it reaches the location and condition required for it to operate in the manner intended by Management.
 
Depreciation is recognized in the statement of income on a straight-line basis over the estimated useful lives of each part of the fixed-asset item, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
 
The estimated useful lives for the current and comparative periods are as follows:
 

●          Computers
3 years


● Computers
3 years
Leasehold improvements
2-8 years
Laboratory equipment
7
5-7 years
● Machinery and Equipment
6-10 years
● Office furniture, equipment and accessories
14 years
 

●          Leasehold improvements
2 years
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate.

H.
Leases
 
I.
Leases
Determining whether an arrangement contains a lease
 
On the inception date of the lease, the Company determines whether the arrangement is a lease or contains a lease, while examining if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use of an identified asset, the Company assesses whether it has the following two rights throughout the lease term:
 

(a)
(a)          The right to obtain substantially all the economic benefits from use of the identified asset; and

(b)
The right to direct the identified asset’s use.
 
(b)          The right to direct the identified asset’s use.
For lease contracts that contain non-lease components, such as services or maintenance, that are related to a lease component, the Companycompany elected to account for the contract as a single lease component without separating the components.
 

F - 15

14


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 3 – Significant Accounting Policies (cont.)

H.
Leases (cont.)
Leased assets and lease liabilities
 
Contracts that award the Company control over the use of a leased asset for a period of time in exchange for consideration, are accounted for as leases. Upon initial recognition, the Company recognizes a liability at the present value of the balance of future lease payments (these payments do not include certain variable lease payments), and concurrently recognizes a right-of-use asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments.
 
Since the interest rate implicit in the Company's leases is not readily determinable, the incremental borrowing rate of the lessee is used. Subsequent to initial recognition, the right-of-use asset is accounted for using the cost model and depreciated over the shorter of the lease term or useful life of the asset.
 
The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the lessee will or will not exercise the option, respectively.
 
Depreciation of right-of-use asset

After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over the shorter of the useful life or contractual lease period. The Company’s
Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rate existing at the commencement of its officethe lease and laboratory spaceare included in the measurement of the lease liability. When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability is depreciatedadjusted against the right-of-use asset.
Depreciation of right-of-use asset
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over athe useful life or contractual lease period, of two years.whichever earlier.

I.
Employee benefits
 
J.(1)
Employee benefits

(1)
Post-employment benefits
 
The Company has a post-employment benefit plan, financed by deposits with insurance companies or with funds managed by a trustee, and classified as a defined contribution plan, under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an expense in profit or loss in the periods during which related services are rendered by employees.
 

(2)
Short-term benefits
 
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided or upon the actual absence of the employee when the benefit is not accumulated.

A liability is recognized for the amount expected to be paid under short-term cash bonus if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on when the Company expects the benefits to be wholly settled.

F - 15


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 3 – Significant Accounting Policies (cont.)
 
K.
J.
Share-based compensation
 
Share-based compensation expense related to share awards is recognized based on the fair value of the awards granted. The fair value of each option award is estimated on the grant date using the binomial and Monte Carlo option pricing model. The option pricing model requires the input of highly subjective assumptions, including the expected term of the option, the expected volatility of the price of the Company’s ordinary shares and the expected dividend yield of ordinary shares. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The Company recognizes compensation costs for awards conditioned only on continued service that have a graded vesting schedule using the accelerated method based on the multiple-option award approach. Forfeitures are accounted for as they occur.
 
K.
Basis of Consolidation
Acquisition of a subsidiary
Upon the acquisition of a subsidiary, the Company exercises discretion when examining whether the transaction constitutes the acquisition of a business or acquisition of an asset, for the purpose of determining the accounting treatment of the transaction. Transactions in which the acquired company is not considered a business are accounted for as the acquisition of a group of assets and liabilities. In such transactions, the cost of acquisition, which includes transaction costs, is allocated proportionately to the acquired identifiable assets and liabilities, based on their proportionate fair value on the acquisition date. Furthermore, no goodwill is recognized and no deferred taxes are recognized in respect of the temporary differences existing on the acquisition date.
Consideration paid partly in the form of equity instruments, based on the quoted share price. Any additional consideration will be capitalized upon the achievement of defined milestones, which constitutes the variable consideration.
 
When the variable consideration depends on performance conditions, the Company has elected not to recognize the contingent consideration at the time of purchase, but rather if and when the contingent conditions occur and when the consideration is transferred or obliged to be transferred.
IFRS 3 includes a distinction between a transaction to acquire an operation is the acquisition of a "business" and the acquisition of a group of assets that according to the standard is not considered the acquisition of a "business". The aforementioned standard offers the optional concentration test so that if substantially all of the fair value of the acquired assets is attributable to a group of similar identifiable assets or to a single identifiable asset, this will not be the acquisition of a business.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

F - 16


Steakholder Foods Ltd


MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 43Cash and Cash Equivalents

  
December 31,
 
  
2020
  
2019
 
  
USD thousand
  
USD thousand
 
Cash in USD  1,021   - 
Cash in NIS  7,627   1,274 
Cash in Euro  
4,908
   
-
 
Total cash and cash equivalents  
13,556
   
1,274
 

Note 5 – Other Investments

December 31,Significant Accounting Policies (cont.)
2020
USD thousand
Separation Agreement from Therapin (A) (1)
1,414
Investment in Peace of Meat (B)
1,248
Total Other Investments
2,662


(1)
USD 149 thousand are classified as a current asset.
A.
Separation Agreement from Therapin
On May 26, 2020, following the approval of the Company's board of directors, the Company engaged in a separation agreement with Therapin, in which the Company had held 14.74% of the issued and paid-up share capital. Pursuant to the separation agreement, the investment agreement under which the Company invested in Therapin an amount of USD 2.1 million (NIS 7.25 million) in return for allotment of shares and warrants of Therapin (the “Payment Amount”) was canceled, and replaced with a debt arrangement as follows:

1.
Therapin committed to pay the Company an amount of USD 11 thousand (NIS 40 thousand) per month, thereafter as of August 1, 2020 over a period of 119 months (the “Payment Period”), for an aggregate total amount of USD 1.4 million (NIS 4.8 million). During the first two years from the date of the separation agreement, 50% of the payments from Therapin will be transferred to a restricted deposit and form an additional resource of the Merger settlement fund. After two years, the contents of the restricted deposit, will be released to the Company, subject to court approval.

2.
The rest of the Payment Amount will be paid to the Company if, during the Payment Period, Therapin or a subsidiary completes an exit event, including listing on a stock exchange pursuant to a merger or IPO, and the Company will be given the option to receive shares in such merged company/issue, or payment of the balance in cash.

3.
During the Payment Period, if Therapin has not completed one of the transactions as set out in Section 2, then in the event that Therapin generates a distributable surplus, Therapin will pay the Company an amount equivalent to 14.74% of the surplus balance as repayment on account of the outstanding balance (but in any case no more than the outstanding balance).
 
L.
Transactions with controlling shareholder
Assets and liabilities included in a transaction with a controlling shareholder are measured at fair value on the date of the transaction. As the transaction is on the equity level, the Company includes the difference between the fair value and the consideration from the transaction in its equity.
M.
Government grants
Government grants are recognized initially at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Unconditional government grants are recognized when the Group is entitled to receive them. Grants that compensate the Group for expenses incurred are presented as a deduction from the corresponding expense. Grants that compensate the Group for the cost of an asset are presented as a deduction from the related assets and are recognized in profit or loss on a systematic basis over the useful life of the asset.

F - 17


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 4 – Cash and Cash Equivalents
  
December 31
  
December 31
 
  
2022
  
2021
 
  
USD thousands
  
USD thousands
 
       
Cash in USD
  
4,060
   
15,596
 
Cash in NIS
  
1,116
   
1,688
 
Cash in Euro
  
1,106
   
1,892
 
Cash in GBP
  
2
   
-
 
Total cash and cash equivalents
  
6,284
   
19,176
 

Note 5 – Receivables
 
  
December 31
  
December 31
 
  
2022
  
2021
 
  
USD thousands
  
USD thousands
 
       
Institutions
  
247
   
301
 
Prepaid expenses
  
423
   
743
 
Other
  
-
   
1,738
 
   
670
   
2,782
 

Note 6 – Other Investments (cont.)Investment

4.
In the event that, during or subsequent to the end of the Payment Period, Therapin distributes a dividend to its shareholders, and on that date there is a remaining outstanding balance of the Payment Amount, Therapin will pay the Company an amount equivalent to 14.74% of the dividend distributed to shareholders as repayment on account of the outstanding balance (but in any case no more than the outstanding balance).

5.
As a result of the separation agreement, the Company is no longer a shareholder in Therapin, but rather a debtholder.
 
The engagement in the separation agreement was decided in light of the Company’s change in direction to focus on the development of cultured meat technology, using three-dimensional printing.
Developments in Other Investment
USD thousands
As at January 1, 2022
1,509
Proceeds from Therapin asset
(143
)
Profit from increase in fair value
102
Effect of changes in exchange rates
(176
)
As at December 31, 2022(1)
1,292
 
In the valuation determined by the Company’s board of directors in consultation with an external consultant, at the date of the(1) USD 136 thousand are classified as a current asset.
Separation Agreement from Therapin
The Company entered into a separation agreement with Therapin on May 26, 2020, where it cancelled its previous investment agreement with Therapin and replaced it with a debt arrangement. Therapin committed to paying the Company NIS 40 thousand (approximately USD 11 thousand) per month for 119 months for a total of NIS 4.8 million (approximately USD 1.4 million) plus NIS 2.45 million (approximately USD 0.7 million) to be paid upon an exit event. If Therapin completes an exit event during the payment period, the Company will have the option to receive shares or payment in cash for the remaining balance. If Therapin generates a distributable surplus or distributes a dividend, the Company will receive a portion of it as repayment. During 2022, the Company received USD 143 thousand and recorded USD 102 thousand as re-valuation financing income.
The Company re-measured the asset using a level 3 fair value of the investment in Therapin was estimatedmeasurement at approximately USD 1.3 million (NIS 4.5 million). The fair value was assessed by capitalization of future cash flows (proceeds) at interest rates that reflect the level of risk (based on the duration of the debt) of these proceeds and were classified as Level 3 in the fair value hierarchy.
The revaluation was accounted for in other comprehensive income in the amount of USD 0.3 million (NIS 1.2 million). As of the separation date, when the investment in Therapin became debt rather than equity, fair value changes will be recognized through profit or loss.
The fair value was measured using discount rates that reflect the risks in the projected repayments. The estimated capitalization interest was based on Therapin's financial statements, cash balances and liabilities, repayment dates and analysis of the market in which Therapin operates. The expected additional payment event is 5 years, and the interest rate for capitalization of the debt is 6%-18.4%.
Developments in the Therapin asset:
USD thousands

As at January 1, 2020-
Investment in shares1,652
Revaluation of investment
(334
)
Balance as at May 26, 20201,318
Proceeds from Therapin asset(71)
Profit from increase in fair value74
Effect of changes in exchange rates
93
As at December 31, 2020(1)
1,414


(1)
     USD 149 thousand are classified as a current asset.
B.
Investment in Peace Of Meat (‘POM’)
In October 2020, the Company announced that it had made an initial investment in Peace of Meat BV (POM), a leading developer of cultured fat products, in the amount of EUR 1 million (approximately USD 1.2 million) in return for approximately 5.65% of the outstanding equity of POM, post-allocation, as part of its planned full acquisition of POM, which was completed on February 10, 2021. For further details, see Note 23(A).
 
Peace of Meat was established in Belgium in 2019 and is developing cultured avian fat directly from animal cells without the need to grow or kill animals. Peace of Meat has entered into a number of scientific and commercial collaborations, and has conducted taste tests for its avian fat products.

F - 18

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 6 – Receivables

  December 31, 
  2020  2019 
  USD thousand  USD thousand 
       
Institutions  102   36 
Prepaid expenses  20   2 
Other  9   - 
         
   131   
38
 

As at December 31, 2020, all receivables are linked to the NIS.
F - 19

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 7 – Fixed Assets

  
Computers
  
Leasehold improvements
  
Laboratory equipment
  
Machinery
and
equipment
  
Office
furniture,
equipment and
accessories
  
Total
 
  USD thousands 
Cost                  
Balance as at January 1, 2019  2   -   -   -   1   3 
Additions during the year  27   11   89   -   -   127 
                         
Balance as at December 31, 2019  29   11   89   -   1   130 
                         
Accumulated depreciation                        
Balance as at January 1, 2019  -   -   -   -   -   - 
Depreciation during the year  2   -   1   -   -   3 
                         
Balance as at December 31, 2019  2   -   1   -   -   3 
                         
Amortized balance as at December 31, 2019  27   11   88   -   1   127 
                         
Balance as at January 1, 2020  29   11   89   -   1   130 
Additions during the year  43   46   466   243   27   825 
Effect of changes in exchange rates  2   1   18   -   1   22 
Dispositions in the year  
-
   
-
   
-
       
1
   
1
 
                         
Balance as at December 31, 2020  
74
   
58
   
573
   
243
   
28
   
976
 
                         
Accumulated depreciation                        
Balance as at January 1, 2020  2   -   1           3 
Depreciation during the year  15   10   37   4   1   67 
Dispositions in the year  
-
   
-
   
-
           
-
 
                         
Balance as at December 31, 2020  
17
   
10
   
38
   
4
   
1
   
70
 
                         
Amortized balance as at December 31, 2020  
57
   
48
   
535
   
239
   
27
   
906
 

The fixed assets item as at December 31, 2019 includes advances in the amount of USD 31 thousand (NIS 109 thousand) that were paid on account of fixed assets.

The fixed assets item as at December 31, 2020 includes Suppliers balances in the amount of USD 143 thousand (NIS 461 thousand) that were yet to be paid on account of fixed assets.
F - 20

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 8 – Other Payables

     December 31, 
     2020  2019 
     USD thousands  USD thousands 
          
Accrued expenses     263   68 
Employee benefits     503   149 
Contingent liability 18   217   - 
Others     13   9 
            
      996   226 
Note 9 – Capital and Reserves

A.Share capital of MeaTech 3D Ltd.

  
Thousands of Ordinary Shares
 
  
2020
  
2019
  
2018
 
Issued and paid-in share capital as at the beginning of the period  19,870   15,447   11,805 
Issued in reverse merger  30,526   -   - 
Exercise of share options during the period – Investor-related  11,302   2,255   681 
Exercise of share options during the period – Share-Based Payment-related  294   -   - 
Issued for cash during the period  
17,874
   
2,168
   
2,961
 
             
Issued and paid-in share capital as at December 31  
79,866
   
19,870
   
15,447
 
             
Authorized share capital  
1,000,000
   
1,000,000
   
1,000,000
 


1.
On May 7, 2020, the Company completed a capital raising round with Mr. Steve H. Lavin, through EL Capital Investments, LLC (a company controlled by Mr. Lavin) together with MD Premium Issuances Ltd., in a total amount of USD 1 million at a price per ordinary share of NIS 2.49. In return, the investors received an aggregate amount of 1,391,794 ordinary shares and warrants to purchase 8,040,382 ordinary shares at an exercise price of NIS 3.36 per share, for a period of 13 months, with an acceleration mechanism in the event that the Company’s securities are listed on a leading foreign stock exchange.
The investment agreement included a price protection mechanism, which would be nullified immediately upon the Company listing on a leading foreign stock exchange or alternatively, if the Company's shares are traded at a price 70% higher than the share price at investment date (i.e. NIS 4.23) for a period of 30 consecutive trading days with an average turnover of no less than USD 57 thousand (NIS 200 thousand) per day.
F - 21

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 9 – Capital and Reserves (cont.)

When the liability in respect of this protection mechanism was recognized, the fair value of the mechanism was estimated at USD 75 thousand (NIS 262 thousand). In July 2020, the Company announced that the share price trading conditions for canceling the price protection mechanism had been met, and the mechanism was therefore canceled.

2.
On May 7, 2020, the Company completed a capital raising round of approximately USD 2.4 million (NIS 8.35 million), by way of private placement to a number of offerees, under which the Company allotted the offerees a total of 4,398,570 ordinary shares at a price per share of NIS 1.90, as well as 4,398,570 non-tradable warrants, exercisable into a total of 4,398,570 ordinary shares at an exercise price of NIS 3.03 per ordinary share. In addition, the investors received a price protection mechanism, whereby they would receive additional shares based on the number of shares they still hold, upon an allocation to investors at a price per share lower than NIS 1.90 within two years or an earlier listing of the Company’s securities on the Nasdaq. The mechanism did not cover additional securities, such as convertible debt, options or other rights. Therefore, the fair value of this mechanism was deemed to not be material, based on the terms under which the mechanism would be canceled, and the ability of the Company to raise funds in a manner that does not activate the mechanism. The mechanism was canceled upon the Company’s Nasdaq listing, subsequent to the balance sheet date.

3.
In August 2020, the Company completed a capital raising round in which a number of investors, including institutional investors and Israeli and foreign private investment bodies, led by Rami Levy Shivuk Hashikma and the Adom Group (“Adom”), invested a gross total of approximately USD 5.8 million (NIS 20 million). Part of the investment, a total of approximately USD 4.6 million (NIS 16 million), was invested immediately against the allotment of 5,292,160 ordinary shares with no par value of the Company, and unlisted warrants exercisable into 7,409,021 ordinary shares of the Company at an exercise price of NIS 3.95 per share. Some investors committed to invest the remaining USD 1.2 million (NIS 4.1 million) upon the listing of the Company’s securities on a leading foreign stock exchange, in return for 1,374,998 additional ordinary shares of the Company with no par value at a price of NIS 3.00 each, as well as additional warrants exercisable into 1,925,000 shares at an exercise price of NIS 3.95 per share. This part of the investment was completed upon the Company’s Nasdaq listing, subsequent to the balance sheet date.
As part of the investment, the investors received a price protection mechanism, whereby they would receive additional shares based on the number of shares they still hold, upon an allocation to investors at a price per share lower than NIS 3.00 within two years or an earlier listing of the Company’s securities on the Nasdaq. The mechanism was canceled upon the Company’s Nasdaq listing, subsequent to the balance sheet date. When the liability in respect of this protection mechanism was recognized, the fair value of the mechanism was estimated at USD 81 thousand (NIS 259 thousand).
The Company also engaged in a consulting agreement with Adom, under which Adom serves as a consultant for the development of the Company's operations in cultured meat production industry, and will assist it in penetrating the markets in which Adom operates in Europe and South America. In return for its services, the Company granted Adom options to purchase 2.1 million ordinary shares, in lieu of a cash payment, at an exercise price of NIS 3.95 per share, for a period of three years, with a vesting period of six quarters.
F - 22

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 9 – Capital and Reserves (cont.)

Under the agreement, the Company granted Adom first refusal rights for establishing a production plant using the technology that the Company will develop in the future, in one of the target countries including Israel, Poland, Argentina and Brazil, according to which if Adom finds a leading local producer in the meat industry in a target country that invests in the Company a minimum of USD 1 million and engages with the Company to establish a production plant, the Company will grant Adom first refusal rights for production in such country together with the said franchisee. This right is conditional upon Adom investing a cumulative amount of USD 3.1 million (NIS 10 million) in the Company, directly or through investors on its behalf, of which USD 2.5 million (NIS 8 million) has already been invested by Adom and investors on its behalf under the aforementioned investment agreement. Notwithstanding the foregoing, the Company reserves the right to notify Adom, at any time, of cancellation of the foregoing first refusal right, in exchange for a payment to Adom of approximately USD 0.7 million (NIS 2.5 million).
The Adom Group started providing consulting services in July 2020.

4.
In December 2020, the Company completed a capital raising round in which a number of investors invested an aggregate total of approximately USD 7.3 million (NIS 23.8 million), in return for 6,791,600 ordinary shares of the Company and warrants to purchase 6,791,600 ordinary shares, half with an exercise price of 5.00 per warrant, for a period of 24 months and half with an exercise price of 6.00, for a period of 30 months. In addition, the investors received a price protection mechanism, whereby they would receive additional shares based on the number of shares they still hold, upon an allocation to investors at a price per share lower than NIS 3.50 within two years or an earlier listing of the Company’s securities on the Nasdaq. The mechanism was canceled upon the Company’s Nasdaq listing, subsequent to the balance sheet date. When the liability in respect of this protection mechanism was recognized, the fair value of the mechanism was estimated at USD 192 thousand (NIS 618 thousand).
B.Derivative instrument – Price protection mechanism

December 31,
2020
USD thousand
Grant date price protection mechanism recognition348
Changes in fair value through profit or loss(36)
Effect of changes in exchange rate
4
Price protection mechanism as of December 31, 2020
316

F - 23

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 9 – Capital and Reserves (cont.)

Information on measurement of fair value of price protection mechanism

The fair value at the date the price protection mechanisms were awarded was estimated using a Monte Carlo pricing model.
Breakdown of the parameters used for measuring fair value of the price protection mechanisms:

investor warrants:
 
Parameters taken into account in the fair value calculation:
 
   Share price (at date evaluated) NIS
Discount rate
2.62-5.02
11.63%-11.84%
   Risk free rate0.03%-0.14%
   Volatility78%-107%
Expected term
1.45-2 years
   Probability*10%

additional payment event
*The terms of all price protection mechanisms included expiration upon a Nasdaq listing. Management’s assessment was that the probability of a Nasdaq listing as of December 31, 2020 is 90%. See Note 1(A).
C.Pre – merger share issuances


1.
In March and June 2019, MeaTech allotted, free of charge, 5,851 and 12,465 ordinary shares, respectively, to its founders.3.7 years


2.
In September and October 2019, MeaTech allotted 19,681 shares to 24 separate investors at a price of USD 95.94 (NIS 345.45) per share, in exchange for a total investment of approximately USD 1,888 thousand (NIS 6,650 thousand). In addition, the investors were granted 9,839 warrants exercisable for shares for 12 months from their date of issue at an exercise price of USD 353 (NIS 1,242) each.
Under the terms of the warrants, in the event that MeaTech would engage in an agreement to be merged into or acquired by another company, perform a public offering of its shares, sell off most of its assets or a controlling interest in it, or allocate shares that would constitute a majority of all of its shares, the warrant holders would have 48 hours to exercise the warrants, after which unexercised warrants would expire. In view of the fact that the warrants could be exercised for shares at the holder’s discretion, where the number of shares to be issued in exchange and their exercise price are fixed, the warrants were classified as capital, together with the premium paid on the shares issued. Following the execution of the merger agreement, as described in Note 1B, all the aforementioned warrants vested and later expired unexercised. The issue costs in the amount of USD 8 thousand (NIS 29 thousand) were recognized as a deduction from equity.
As at December 31, 2019, MeaTech had received USD 1,666 thousand (NIS 5,882 thousand) of the investment, and the balance in the amount of USD 222 thousand (NIS 768 thousand) was subsequently received in full.
In 2019, MeaTech received legal services from a related party, free of charge. The financial value of these services were recognized in profit or loss against transactions with related parties reserve.

F - 24

18


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020
2022

Note 7 – Fixed Assets, net
 

  
Computers
  
Leasehold improvements
  
Laboratory equipment
  
Machinery
and
equipment
  
Office
furniture,
equipment and
accessories
  
Total
 
  
USD thousands
 
Cost
                  
Balance as at January 1, 2021
  
74
   
58
   
573
   
243
   
28
   
976
 
Additions through acquisition of a subsidiary
  
14
   
3
   
556
   
-
   
-
   
573
 
Additions during the year
  
98
   
75
   
1,608
   
77
   
27
   
1,885
 
Effect of changes in exchange rates
  
2
   
(1
)
  
(56
)
  
13
   
2
   
(40
)
                         
Cost as at December 31, 2021
  
188
   
135
   
2,681
   
333
   
57
   
3,394
 
                         
Accumulated depreciation
                        
Balance as at January 1, 2021
  
17
   
10
   
38
   
4
   
1
   
70
 
Depreciation during the year
  
42
   
22
   
296
   
31
   
3
   
394
 
Dispositions in the year
  
2
   
1
   
4
   
1
   
-
   
8
 
                         
Accumulated depreciation as at December 31, 2021
  61   33   338   36   4   472 
                         
Depreciated balance as at December 31, 2021
  127   102   2,343   297   53   2,922 
                         

Cost

                        
Balance as at January 1, 2022
  
188
   
135
   
2,681
   
333
   
57
   
3,394
 
Additions during the year
  
128
   
663
   
1,759
   
45
   
283
   
2,878
 
Dispositions in the year
  
-
   
(75
)
  
-
   
(3
)
  
(42
)
  
(120
)
Effect of changes in exchange rates
  
(24
)  
(70
)
  
(233
)
  
(47
)
  
(16
)
  
(390
)
                         
Cost as at December 31, 2022
  
292
   
653
   
4,207
   
328
   
282
   
5,762
 
                         
Accumulated depreciation
                        
Balance as at January 1, 2022
  
61
   
33
   
338
   
36
   
4
   
472
 
Depreciation during the year
  
73
   
113
   
617
   
35
   
62
   
900
 
Dispositions in the year
  
-
   
(75
)
  
-
   
(3
)
  
(42
)
  
(120
)
Impairment (see Note 16)
  
80
   
31
   
1,059
   
4
   
36
   
1,210
 
Effect of changes in exchange rates
  
(9
)
  
1
   
(4
)
  
(6
)
  
3
   
(15
)
                         
Accumulated depreciation as at December 31, 2022
  205   103   2,010   66   63   2,447 
                         
Depreciated balance as at December 31, 2022
  87   550   2,197   262   219   3,315 
During the year ended December 31, 2022, the Company acquired fixed assets on credit in the amount of USD 7 thousand (USD 57 thousand in 2021). The cost of acquisition had not yet been paid at the reporting date.

F - 19


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 8 – Other Payables
  
December 31
  
December 31
 
  
2022
  
2021
 
  
USD thousands
  
USD thousands
 
       
Accrued expenses
  
604
   
459
 
Employee benefits
  
1,175
   
1,122
 
Provision - see note 17
  
199
   
217
 
Subsidiary government grant advances
  
314
   
218
 
Others
  
11
   
223
 
   
2,303
   
2,239
 

F - 20


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 9 – Capital and Capital Reserves
A.
Share capital of Steakholder Foods Ltd. (in thousands of shares of USD 1 par value)
  
Number of Ordinary Shares (thousand)
 
  
2022
  
2021
  
2020
 
Issued and paid-in share capital as at January 1
  
125,770
   
79,866
   
19,870
 
Issued in reverse merger
  
-
   
-
   
30,526
 
Exercise of share options during the period – Investor-related
  
-
   
3,010
   
11,302
 
Exercise of share options during the period – Share-Based Payment-related
  1,108   2,218   294 
Issued not for cash during the period (1)
  
1,023
   
12,088
   
-
 
Issued for cash during the period (2)
  
18,571
   
28,588
   
17,874
 
Issued and paid-in share capital as at December 31
  
146,472
   
125,770
   
79,866
 
             
Authorized share capital
  
1,000,000
   
1,000,000
   
1,000,000
 
(1)
In February 2021, the Company completed a purchase of all of the outstanding share capital not yet owned by the Company, of Belgian cultured fat developer Peace of Meat BV. See Note 16 for information regarding the issuance of shares as part of the consideration in 2022.

(2)
On July 5, 2022, the Company consummated a securities purchase agreement with a single U.S. institutional investor for the purchase and sale of 600,000 American Depositary Shares (“ADSs”), each representing ten (10) ordinary shares of no par value, at a price of USD 3.50 per ADS, pre-funded warrants to purchase 1,257,143 ADSs at a price of USD 3.4999 (that was already paid) with an exercise price of USD 0.0001 per ADS to be paid once exercised, classified as equity, and warrants to purchase 1,857,143 ADSs for five years with an exercise price of USD 3.50 per ADS. The warrants include net exercise mechanism, and were therefore classified as a derivative (see Note 9B). The securities were offered in the framework of a registered direct offering. The gross proceeds were approximately USD 6.5 million, and the net proceeds were approximately USD 5.8 million. All pre-funded warrants were exercised through December 31, 2022. Issuance costs were allocated pro rata between equity and profit or loss according to the equity and derivative ratio.

F - 21


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 9 – Capital and Capital Reserves (cont.)
B.
Derivative instrument – Investor Warrants
December 31,
2022
USD thousand
Grant date price investor warrants
4,495
Changes in fair value through profit or loss
(3,800
)
Effect of changes in exchange rate
187
Investor warrants as of December 31, 2022
882
Information on measurement of fair value of investor warrant derivative
The value at the date the investor warrants were awarded was estimated using a Black and Scholes pricing model.
Breakdown of the parameters used for measuring level 3 fair value of the investor warrants:
 
Parameters taken into account in the fair value calculation:
ADS price, USD (at date evaluated)
1.02-3.31
Risk free rate
2.86%-4.09%
Volatility
89.6%-96.47%
Expected term
4.51 - 5 years
Exercise price per warrant, USD
3.5
Dividend rate
0%

F - 22


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 10 – Share-based payments


 
New allotments during the periodyear ended December 31, 2022 that remain outstanding are set out below:below. All granted options and restricted stock units (RSUs)(RSU) are non-tradable and are settled by way of equity: physically-settled:
 
Date of grant and eligible employees
recipients
 
Terms of the instrument
 
No. of ordinary shares (thousands)
 
Vesting Conditions
 
Contractual
Contractual duration of the optionsinstrument (years)
RSUs
Options awarded to consultantsCEO and the chairman of the Company's boardChairman on May 7, 2020March 15, 2022
 The RSUs are
Options exercisable for a payment of NIS 0.30 per shareordinary shares
 1,503
850
 
12 quarterly tranches
 3 years
RSUs awarded to an employee on May 7, 2020The RSUs are exercisable without exercise price10030% immediately and the balance in 5 quarterly tranches
4 years
         
Options awarded to consultantsemployees of the Company on May 7, 2020
March 24, 2022
 Each option can be exercised
Options exercisable for an ordinary share for NIS 2.49-3.49 per shareshares
 3,987
775
 6
1/3 after one year and the balance in 8 quarterly tranches
 
4 years
         
Options awarded to consultantsemployees of the Company on May 7, 2020June 10, 2022
 Each option can be exercised
Options exercisable for an ordinary share for NIS 1.90 per shareshares
 80
2,180
 Immediate
1/3 after one year and the balance in 8 quarterly tranches
 
4 years
         
Options awarded to employees of the CEOCompany on May 7, 2020November 24, 2022
 Each option can be exercised
Options exercisable for an ordinary share for NIS 2.32 per shareshares
 500
1,695
 
1/3 after one year and the balance in 8 quarterly tranches
 
4 years
         
Options awarded to employees of the Company on May 7, 2020Each option can be exercised for an ordinary share for NIS 1.90 per share
1,550
1/3 after one year and the balance in 8 quarterly tranches4 years
Options awarded to consultants of the Company on August 4, 2020Each option can be exercised for an ordinary share for NIS 3.95 per share2,080Immediate3 years
Total options exercisable into shares   
9,8005,500
    

F - 25

23


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 10 – Share-based payments (cont.)

On May 7, 2020, the Company's board of directors approved the allotment of options to employees, directors and service providers, and the allotment of RSUs to an employee of the Company, in accordance with the Company’s options and RSU plan. Thus, as part of the allotment to employees, the Company allotted 1,630,000 options (unregistered) exercisable for 1,630,000 ordinary shares of the Company to 12 employees and four service providers at additional exercise price of 1.90 NIS per option and 100,000 RSUs with no exercise price. The exercise period is until the end of 4 years from the date of allotment of the options (the date on which the options are actually allotted). Options that are not exercised by the exercise deadline will expire, will be null and void and will not grant their holders any right whatsoever against the Company.
 
In addition, on May 7, 2020 service providers of the Company were awarded options to purchase 3,987,000 ordinary shares with a vesting period of six equal quarterly tranches and a term of 4 years.
In May 2020, the Chief Executive Officer, Mr. Sharon Fima, was allotted options to purchase 500,000 shares in accordance with the terms of his office and employment.
In May 2020, the chairman of the board of directors of the Company was allotted 1,127,000 RSUs vesting over a period of 3 years, a consultant of the Company was also awarded 376,000 RSUs, for a total of 1,503,000 RSUs.
On August 4, 2020 service providers of the Company were awarded options to purchase 2,080,000 ordinary shares , with immediate vesting and a term of 4 years.

A.
Number and weighted average exercise prices of options and RSUs

The number and weighted average exercise prices of options and RSUs are as follows:
 
  
Number of options and RSUs
  
Weighted average exercise price
  
Number of options and RSUs
  
Weighted average exercise price
 
  
2022
  
2022
  
2021
  
2021
 
     
USD
     
USD
 
Outstanding at January 1
  
19,035,257
   
0.71
   
9,505,140
   
0.84
 
Granted during the year
  
5,500,000
   
0.35
   
14,559,520
   
0.66
 
Forfeited during the year
  
3,390,640
   
1.17
   
194,673
   
0.52
 
Exercised during the year(1)
  
1,107,735
   
0.04
   
4,834,730
   
0.82
 
Outstanding at December 31
  
20,036,882
   
0.53
   
19,035,257
   
0.71
 
Exercisable at December 31
  
4,925,184
   
1.67
   
3,562,192
   
0.99
 
 

 
Number of options
and RSU’s
  
Weighted average
exercise price
 
  
2020
  
2020
 
     NIS 
Outstanding at January 1  -   - 
Granted during the year  9,799,590   2.53 
Exercised during the year  
294,450
   
0.26
 
Outstanding at December 31  
9,505,140
   
2.60
 
Exercisable at December 31  
6,605,136
   
3.20
 

(1)
Partly executed through cashless mechanism
Besides incentive options and RSUs, as of the balance sheet date the Company has issued securities exercisable into 35,595,831 ordinary shares to investors, former shareholders of Peace of Meat (see Note 16) and former Ophectra Real Estate and Investments Ltd. employees prior to the reverse merger (see Note 1A), including investor warrants exercisable into 35,395,831 ordinary shares with exercise prices between USD 0.35 and USD 1.71 and prior Ophectra Real Estate and Investments Ltd. employees options exercisable into 200,000 ordinary shares with exercise price of USD 0.49.

F - 26

24



Steakholder Foods Ltd


MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 10 – Share-based payments (cont.)

B.
Information on measurement of fair value of share-based payment plans

TheThe fair value at the datedates the options and RSUs were awarded was estimated using a Black & Scholesbinomial option pricing model.
 
Breakdown of the parameters used for measuring fair value at the date the share-based payment plans were awarded:
 
Options for shares plan
Fair value at date awardedNIS 19,209
USD 1,331 thousand
  
   Parameters taken into account in the fair value calculation:
 
   Share price (at(USD at date evaluated)awarded)
2.62-4.65
0.21-0.51
   Exercise price (NIS(USD unlinked)
0-3.49
0.20-0.52
   Expected fluctuationsvolatility (weighted average)
77%-95%
91.25%-100.74%
   Expected useful
   Exercise life (weighted average)
1.25- 4
2.0-2.8 years
   Risk-free interest rate
0.1%-0.3%
2.03%-4.04%
   Expected rate of dividend
0%

The expected volatility (standard deviation) was determined on the basis of share price volatility in similar companies, asdue to the Company’s short operating historylimited historic share price performance since the Mergerdate of the merger in January 2020 is insufficient to develop a reliable volatility calculation. The simplified method was used for estimating the expected life of the employee stock options.described in Note 1A above. The estimated life of the optionsexercise coefficient for consultantsexecutive and officersnon-executive is the full contractual life of the option.approximately 2.8 and 2.0, respectively. The risk-free interest rate was based on NIS-linked Israeli governmentUS bonds, with time to maturity equivalent to the expected useful life of the options. Share price was used according to quoted share prices on Nasdaq.

The total expenditure overexpense recorded during the twelve monthsyears ended December 31, 2022, 2021 and 2020, amounted to approximately USD 41.1 million (NIS 3.8 million), USD 4.0 million (NIS 12.7 million) and USD 4.0 million (NIS 13.1 million)., respectively.

F - 27

25


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 11 – Research and Development Expenses


 
  
Year ended
December 31,
  
Year ended
December 31,
  
Eight months
ended
December 31,
 
  2020  2019  2018 
  USD thousands  USD thousands  USD thousands 
          
Salaries, wages and related expenses(1)
  1,369   117   - 
Share-based payment(1)
  476   -   - 
Materials  319   20   - 
Professional services  89   13   - 
Registration, drafting and filing of patents  25   10   - 
Maintenance, office and software fees  116   -   - 
Depreciation and amortization  59   -   - 
 Others  38   
6
   
-
 
             
   2,491   
166
   
-
 

(1)Including expenses in respect of related parties - see Note 16(B).
  
Year ended
December 31,
  
Year ended
December 31,
  
Year ended
December 31,
 
  
2022
  
2021
  
2020
 
  
USD thousands
  
USD thousands
  
USD thousands
 
          
Salaries, wages and related expenses(1)
  
4,937
   
3,425
   
1,369
 
Share-based payment(1)
  
564
   
911
   
476
 
Materials
  
1,983
   
1,875
   
319
 
Professional services
  
432
   
403
   
89
 
Maintenance, office and software fees
  
389
   
145
   
116
 
Depreciation and amortization
  
1,067
   
400
   
59
 
D&O insurance
  
189
   
332
   
-
 
Others
  
240
   
103
   
63
 
Total Research and Development Expenses
  
9,801
   
7,594
   
2,491
 

(1)    Including expenses in respect of related parties - see Note 18.

Note 12 – Marketing Expenses


 
  
Year ended
December 31,
  
Year ended
December 31,
  
Eight months
ended
December 31,
 
  2020  2019  2018 
  USD thousand  USD thousand  USD thousands 
          
Salaries, wages and related expenses  255   -   - 
Share-based payment  139   -   - 
 PR and advertisement  91   -   - 
 Maintenance, office and software fees  13   -   - 
 Depreciation and amortization  3   -   - 
 Other  5   
-
   
-
 
             
   506   
-
   
-
 
  
Year ended
December 31,
  
Year ended
December 31,
  
Year ended
December 31,
 
  
2022
  
2021
  
2020
 
  
USD thousands
  
USD thousands
  
USD thousands
 
          
Salaries, wages and related expenses(1)
  
821
   
494
   
255
 
Share-based payment(1)
  
149
   
570
   
139
 
PR and advertisement
  
1,772
   
507
   
91
 
Maintenance, office and software fees
  
59
   
22
   
13
 
Depreciation and amortization
  
84
   
17
   
3
 
D&O insurance
  
82
   
-
   
-
 
Others
  
77
   
18
   
5
 
Total Marketing Expenses
  
3,044
   
1628
   
506
 
 
(1)    Including expenses in respect of related parties - see Note 18.

F - 28

26



MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 13 – General and Administrative Expenses


 

  
Year ended
December 31,
  
Year ended
December 31,
  
Eight months
ended
December 31,
 
  2020  2019  2018 
  USD thousand  USD thousand  USD thousands 
          
Salaries, wages and related expenses(1)
  556   107   31 
Share-based payment(1)
  3,343   -   - 
Legal and professional services(1)
  991   112   8 
Contingent liability expenses  217   -   - 
 Corporate costs  60   -   - 
 Maintenance, office and software fees  38   10   7 
 Depreciation and amortization  151   20   - 
 Others  24   
7
   
7
 
             
   5,380   
256
   
53
 

  
Year ended
December 31,
  
Year ended
December 31,
  
Year ended
December 31,
 
  
2022
  
2021
  
2020
 
  
USD thousands
  
USD thousands
  
USD thousands
 
          
Salaries, wages and related expenses(1)
  
1,796
   
1,328
   
556
 
Share-based payment(1)
  
433
   
2,484
   
3,343
 
Legal and professional services(1)
  
2,476
   
1,499
   
991
 
Contingent liability expenses
  
-
   
-
   
217
 
D&O insurance
  
1,038
   
1,837
   
-
 
Corporate costs
  
217
   
343
   
60
 
Maintenance, office and software fees
  
320
   
149
   
38
 
Depreciation and amortization
  
368
   
263
   
151
 
Others
  
289
   
107
   
24
 
Total General and Administrative Expenses
  
6,937
   
8,010
   
5,380
 

(1)
Including expenses in respect of related parties - see Note 16(B).

(1)Including expenses in respect of related parties - see Note 18.
 
Note 14 – Financing Income and Expenses

  
Year ended
December 31,
  
Year ended
December 31,
  
Eight months
ended
December 31,
 
  2020  2019  2018 
  USD thousand  USD thousand  USD thousands 
Financial Income         
Net change in fair value of financial instruments mandatorily measured at fair value through profit or loss(1)
  110   -   - 
Financial Expenses      -   - 
Net foreign exchange loss  85   -   - 
Interest expense on lease liabilities  5   1   - 
Bank interest and commission expenses  3   
-
   
-
 
Total Financial expenses  93   
1
   
-
 
           - 
Net financing expenses (income) recognized in profit or loss  (17)  
1
   - 

(1)Including expenses in respect of derivative instrument and Therapin loan reevaluation - Note 5(A).

 
  
Year ended
December 31,
  
Year ended
December 31,
  
Year ended
December 31,
 
  
2022
  
2021
  
2020
 
  
USD thousands
  
USD thousands
  
USD thousands
 
Financial Income
         
Net change in fair value of financial instruments mandatorily measured at fair value through profit or loss
  
3,902
   
509
   
110
 
Interest income in cash and cash equivalents
  
85
   
-
   
-
 
Net foreign exchange income
  
891
   
-
   
-
 
Total Financial Income
  
4,878
   
509
   
110
 
             
Financial Expenses
            
Net foreign exchange loss
  
-
   
1,279
   
85
 
Interest expense on lease liabilities
  
266
   
9
   
5
 
Bank interest and commission expenses
  
20
   
11
   
3
 
Total Financial Expenses
  
286
   
1,299
   
93
 
             
Net financing expenses (income) recognized in profit or loss
  
(4,592
)
  
790
   
(17
)

F - 29

27


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 15 – Income Tax


 
A.
Details regarding the tax environment of the Company

(1)Corporate tax rate
 
(1)
Corporate tax rate
The tax rates applicable to the Companycompanies operating in Israel for the years 2019-20202020-2022 are 23%.
The tax rates applicable to the companies operating in Belgium for the years 2020-2022 are 25%.
B.
Tax Assessments

The Company has final tax assessments through 2012.2013.
 
C.
Unrecognized transfercarryforward losses and deferred taxes

As at December 31, 2020,2022, the CompanyGroup has estimated business losses carried forward in the amount of approximately USD 3.5 million (NIS 11.2 million).23.6 million. Under current tax legislation in Israel and Belgium, tax losses do not expire. Deferred tax assets in the amount of approximately USD 5.6 million have not been recognized in respect of these items, nor in respect of timing differences for research and development expenses carried forward in the amount of USD 0.8 million (NIS 2.6 million), since the Company has not yet established the probability that future taxable profit will be available against which the Company can utilize the benefits.
Note 16 - Subsidiaries
In February 2021, the Company completed a purchase of all of the outstanding share capital not yet owned by the Company of Belgian cultured fat developer Peace of Meat BV for total consideration of up to EUR 16.3 million (USD 19.9 million). The total consideration payable by the Company in the acquisition consisted of both cash and equity instruments to be paid to Peace of Meat shareholders and in legal and finder’s fees. The total consideration was paid as part of the closing of the acquisition and part upon the achievement of the defined milestones and sub-milestones. Substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset or group of similar identifiable assets (the “intangible asset” or “IPR&D”), thus the subsidiary is not considered a business and the acquisition is accounted as an asset acquisition. Contingent consideration, dependent upon the achievement of technological milestones was recognized at the time of the achievement of each milestone on the basis of the shares and cash that are payable.
 
Note 16 – Related Party TransactionsThe following summarizes the major classes of consideration at the acquisition date:

Total consideration
USD thousands
Cash consideration at closing date
4,799
Initial cash investment in acquiree
1,223
Equity instruments issued (4,070,766 ordinary shares) (1)
4,359
Acquisition-related costs (2)
254
Total consideration as of consolidation date
10,635
Contingent consideration (3)
9,308
Total consideration subject to achievement of all milestones
19,943
(1)
The fair value of the ordinary shares issued was based on the share price of the Company at the closing date (February 10, 2021) of NIS 3.986 per share.
(2)
Acquisition-related costs include legal expenses and finder’s fees.
A.(3)
BalancesContingent consideration

The Company agreed to pay the selling shareholders and the finder an additional 4,070,766 rights to ordinary shares with related partiesa value of USD 4.4 million and cash consideration of USD 4.9 million upon the achievement of defined milestones. The acquisition agreement specified that each milestone must be reached within a six-month period, over a total period of two years, which can be extended by up to nine additional months under circumstances set forth in the acquisition agreement. Peace of Meat achieved the first three milestones, the first two during 2021 and the third during 2022.

  December 31,  December 31, 
  2020  2019 
  USD thousands  USD thousands 
       
 Related companies receivables  -   87 
 Trade and other payables  117   52 

B.
Expense amounts with respect
No liability is being provisioned prior to related partiesmilestones achievement.

  Year ended December 31,  
Year ended
December 31,
  
Eight months
ended
December 31,
 
  2020  2019  2018 
  USD thousands  USD thousands  USD thousands 
General and administrative expenses         
Salaries, wages and related expenses  316   89   31 
Legal and professional services  281   58   - 
Share-based payments  488   -   - 
Rent and maintenance  -   -   7 
             
Research & Development expenses            
Salaries, wages and related  121   15   - 
Share-based payments  64   -   - 

F - 30

28


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 16 – Related Party Transactions- Subsidiaries (cont.)



1.
Key Management Personnel

The Company recognizes three key management personnel as related parties, namely the Chief Executive Officer and Chief Technologies Officer (CEO and CTO), Deputy CEO and Chief Operations Officer (COO) and Chief Financial Officer (CFO).

The CEO, CTO and director, Mr. Sharon Fima, entered into an employment agreement with the Company on September 1, 2019. Under his agreement Mr. Fima is entitled to a gross monthly salary of USD 11.8 thousand (NIS 38 thousand) plus generally accepted social benefit contributions for senior executives and a company car with value in use of up to USD 1.6 thousand (NIS 5 thousand) per month (plus a related tax gross-up). Mr. Fima was also compensated with options amounting to USD 129 thousand (NIS 443 thousand) to be recognized over the course of 3 years.

The  Deputy CEO, COO and director, Mr. Omri Schanin, entered into an employment agreement with the Company on September 1, 2019. Under his agreement Mr. Schanin is entitled to a gross monthly salary of USD 10.7 thousand (NIS 34.5 thousand) plus generally accepted social benefit contributions for senior executives.

The CFO, Mr. Guy Hefer, entered into an employment agreement with the company on October 18, 2020. Under his agreement Mr. Hefer is entitled to a gross monthly salary of USD 10.9  thousand (NIS 35 thousand) plus generally accepted social benefit contributions for senior executives.

Before Mr. Hefer, Uri Ben-Or acted as CFO through his company CFO Direct. In return for his services, CFO Direct was entitled to a gross monthly payment of USD 3.8 thousand (NIS 12 thousand) with additional ad hoc services provided as needed.

2.
Directors
The Company recognizes its directors as related parties. Mr. Steve H. Lavin was appointed as active chairman of the Company's board of directorsIdentifiable assets acquired and he is entitled to monthly monetary compensation of USD 15 thousand as well as share-based compensation.
Mr. Danny Ayalon is entitled to monthly compensation of USD 2.5 thousand for his term of office as a director of the Company.
In addition, the Company has four external or otherwise independent directors who are compensated in accordance with the terms of the Israeli Companies Regulations (Rules Regarding Payment and Expenses for External Directors), 2000, as amended.

3.
Between September and December 2019, MeaTech received management and investor relations services from two related parties in exchange for a monthly salary of USD 2.8 thousand each, plus generally accepted social benefits, the expense for which amounted to USD 33 thousand in the year ended December 31, 2019.

4.
Between September and December 2019, MeaTech received legal advice and business development services from two other related parties in exchange for a monthly fee of USD 4 thousand plus VAT (each). In addition, MeaTech received legal services from one of these related parties with respect to the merger transaction described in Note 1(A), in exchange for an amount of USD 22 thousand.
In 2020 MeaTech 3D Ltd. received legal advice and business development services from Arik Kaufman who also acted as a director until July 2020. For his services he received a monthly fee of USD 11 thousand (NIS 35 thousand) with additional ad hoc services provided as needed.
In 2019, MeaTech also recognized legal expenses in respect of services provided, free of charge, by a related party, at a value of USD 14 thousand, as described in Note 9(C).liabilities assumed:
 
Peace Of Meat condensed Balance Sheet (at acquisition date)
USD thousands
Current assets
425
Non-current assets
588
Current liabilities
(578
)
Non-current liabilities
(16
)
Tangible assets net
419
IPR&D – Intangible asset
Intangible asset that was recognized as a result of the acquisition and additions made by December 31, 2022 as follows:
Peace Of Meat initial consolidation effect
USD thousands
Closing cash consideration and related acquisition costs
5,053
Shares consideration
4,359
Initial cash investment in acquiree
1,223
Tangible assets, net
(419
)
10,216

F - 31

29


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020
2022

Note 16 - Subsidiaries (cont.)


Additional contributions post-acquisition date according to milestone achievement:
 
2022
  
2021
 
Opening balance
  
13,453
   
10,216
 
Cash consideration
  
838
   
1,960
 
Payment liabilities
  
-
   
194
 
Shares consideration (2022: 846,190, 2021:1,852,730 ordinary shares)
  
724
   
1,973
 
         

Foreign exchange rate effect

  
(648
)
  
(890
)
Total
  
14,367
   
13,453
 
Impairment valuation result
  
(14,367
)
  
-
 
Period-end intangible asset balance
  
-
   
13,453
 
Note 17 – Leases
The aggregate cash flows for the Group as a result of the acquisition in the year ended December 31,
 
 
2022
  
 
2021
 
Cash and cash equivalents paid
  -   
(5,053
)
Cash and cash equivalents of the subsidiary
  -   
205
 
Cash consideration for milestone achievement during the period
  
(838
)
  
(1,960
)
         

Net reduction of cash flow relative to acquisition

  
(838
)
  
(6,808
)


1.
Under an office leasing agreement dated November 1, 2019, MeaTech leases office space and parking spaces, for a monthly fee of USD 10 thousand (NIS 32 thousand), including management fees, for a period of two years, with a an option to extend the term of the lease by one more year. The Company initially recognized a long-term lease liability and a right-of-use asset in the amount of USD 214 thousand (NIS 743 thousand). The incremental interest rate used for estimating the liability is 2.25%.
 

2.
Under an office leasing agreement dated August 9, 2020, MeaTech 3D Ltd. leases office space and parking spaces, for a monthly fee of USD 8 thousand (NIS 27 thousand), including management fees, for a period of one year, with a an option to extend the term of the lease by one more year. The Company initially recognized a long-term lease liability and a right-of-use asset in the amount of USD 102 thousand (NIS 348 thousand). The incremental interest rate used for estimating the liability is 4.3%
As part of the annual impairment test, we have tested the Peace of Meat Cash-Generating Unit (“CGU”) for impairment as of December 31, 2022. We have determined that the value in use of the operation is negative, and therefore continued to assess the fair value less costs of disposal of the CGU. As of the date of publication of these financial statements, we have not identified a potential market participant that may purchase the CGU in an arm’s-length transaction. (Regarding the Company’s decisions to cease the funding of the CGU after the reporting period, see Note 24). Thus, we have concluded that the fair value less costs of disposal of the CGU is immaterial. The fair value less costs of disposal of the CGU’s IPR&D asset was determined to be zero, as the Company did not identify any potential buyer for this asset. We have allocated the impairment loss to the CGU’s fixed assets based on their fair value. The fair value of fixed assets that are available for sale to a market participant is based on their estimated selling value as of the valuation date, less selling costs. We estimated the selling value less selling costs of the fixed assets based on actual offers received, previous purchases, and our knowledge of the second-hand industry market. In allocating the impairment loss, we have not reduced the carrying amount of each asset below its fair value less costs of disposal on an individual basis, if determinable.  As a result, we recognized an impairment loss of USD 14,367 thousand for our IPR&D asset and USD 1,210 thousand for our fixed assets. The total impairment loss recorded was USD 15,577 thousand.

3.
Right-of-Use Asset
Offices
USD thousands
Balance as at January 1, 2019-
 Additions during the year214
Amortization during the year(17)
Balance as at December 31, 2019197
Additions during the year102
Amortization during the year(146)
Effect of changes in exchange rates15
Balance as at December 31, 2020168


4.
Maturity analysis of for the Company’s lease liability
  December 31,  December 31, 
  2020  2019 
  USD thousands  USD thousands 
       
Up to one year  180   109 
2 years  -   92 
Total  180   201 

F - 32

30


MeaTech 3D Ltd.

Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

2022

Note 17 – Leases (cont.)


5.
Amounts recognized in the statement of income
  Year ended December 31,  Year ended December 31, 
  2020  2019 
  USD thousands  USD thousands 
       
Amortization of ROU asset  146   17 
Interest expenses on lease liability  5   1 

Total amounts paid for leasing of the offices in the year ended December 31, 2020 and  December 31, 2019, was USD 140 thousand and USD 14 thousand, respectively.

Note 18 – Contingent Liabilities


From time to time, the Company may be party to litigation or other legal proceedings that it considers to be a part of the ordinary course of its business. The Company is not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on its business, prospects, financial condition or results of operations.
A.
In November 2020, the Israeli Securities Authority, or ISA, initiated an administrative proceeding claiming negligent misstatement regarding certain immediate and periodic reports published by the Company’s predecessor (Ophectra) during the years 2017 and 2018, prior to the merger with MeaTech and prior to establishment of the settlement fund in connection with the Merger.  In February 2021, the trustee of the settlement fund informed the Company that the ISA views the Company as a party to this proceeding, notwithstanding the settlement and establishment of the settlement fund. This proceeding is of an administrative nature and carries a potential penalty in the form of a monetary fine which, under applicable Israeli law, could be as high as NIS 5 million. In April 2021, following negotiations with the ISA, we agreed to settle the matter for $0.21 million (NIS 0.7 million), for which the Company recorded a provision. The settlement is subject to approval of the ISA’s Enforcement Committee.
B.
In February 2021, a civil claim was lodged for which the settlement fund is a respondent, relating to Ophectra's activities prior to establishment of the settlement fund, in an amount of USD 0.8 million (NIS 2.5 million). The Company believes that there is a low probability of a final judgment against the settlement fund.

In November 2020, the Israeli Securities Authority, or ISA, initiated an administrative proceeding claiming negligent misstatement regarding certain immediate and periodic reports published by the Company’s predecessor (Ophectra) during the years 2017 and 2018, prior to the merger with MeaTech and prior to establishment of the settlement fund in connection with the Merger. In February 2021, the trustee of the settlement fund informed the Company that the ISA views the Company as a party to this proceeding, notwithstanding the settlement and establishment of the settlement fund. This proceeding is of an administrative nature and carries a potential penalty in the form of a monetary fine which, under applicable Israeli law, could be as high as NIS 5 million. In April 2021, following negotiations with the ISA, the Company agreed to settle the matter for USD 0.2 million (NIS 0.7 million), for which the Company recorded a provision. The settlement is subject to approval of the ISA’s Enforcement Committee. As similar proceedings with several other companies found the companies not liable, the Company has initiated procedures to obtain a similar finding with respect to the Company, notwithstanding the settlement, however due to lack of certainty with the regard to the outcome of these procedures, the Company has retained the aforementioned provision.

In February 2021, a civil claim was lodged against the settlement fund, relating to Ophectra's activities prior to establishment of the settlement fund, in an amount of USD 0.7 million (NIS 2.5 million). The Company believes that it is more likely than not that no final ruling will be decided against the settlement fund.

F - 33

31



Steakholder Foods Ltd


MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020
2022


Note 18 – Related and Interested Parties
 
Balances with related parties
  
Year ended
December 31,
  
Year ended
December 31,
  
Year ended
December 31,
 
  
2022
  
2021
  
2021
 
  
USD thousands
  
USD thousands
  
USD thousands
 
          
 Trade and other payables
  
227
   
261
   
117
 

Expense amounts with respect to related parties
  
Period ended
December 31,
  
Period ended
December 31,
  
Year ended
December 31,
 
  
2022
  
2021
  
2021
 
  
USD thousands
  
USD thousands
  
USD thousands
 
General and administrative expenses
         
Salaries, wages and related expenses
  
486
   
588
   
316
 
Legal and professional services
  
369
   
301
   
281
 
Share-based payments
  
482
   
777
   
488
 
             
Sales and Marketing expenses
            
Salaries, wages and related expenses
  
126
   
-
   
-
 
Professional services
  
16
   
-
   
-
 
Share-based payments
  
44
   
-
   
-
 
             
Research & Development expenses
            
Salaries, wages and related
  
259
   
338
   
121
 
Share-based payments
  
51
   
66
   
64
 
The senior executives of the Company are entitled to a salary, including standard social benefits and domestic travel expenses, an annual performance-based bonus and share-based compensation incentives. The directors of the Company are entitled to a service fee and share-based compensation (and in the case of the Chairman of the Board, domestic travel expenses and an annual performance-based bonus).
Mr. Kaufman, CEO of the company, and Yaron Kaiser, Chairman, are also founding partners of BlueOcean Sustainability Fund, LLC, doing business as BlueSoundWaves which provide to the Company marketing, promotional, consulting, and investor engagement services in the U.S., in exchange for warrants to purchase ordinary shares and restricted share units, which are recognized as share-based payments expenses. BlueSoundWaves is led by prominent investors Ashton Kutcher, Guy Oseary, and Effie Epstein.

F - 32


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 19 – Leases
Leases in which the Group is the lessee
1.
Under an office leasing agreement dated May 18, 2021, the Company leased office space and parking spaces, for a monthly fee of USD 51 thousand (NIS 178 thousand) linked to the CPI, including management fees and insurance, for a period of 4 years, with an option to extend the term of the lease by an additional term of 4 years. On February 2022, after receiving the facilities, the Company initially recognized a long-term lease liability and a right-of-use asset in the amount of USD 3,625 thousand (NIS 12,687 thousand). The incremental interest rate used for estimating the liability is 8.77%.
In conjunction with the aforementioned lease, the Company terminated its previous leasing agreements in Israel.
2.
Right-of-Use Asset
USD thousands
Balance as at January 1, 2021
168
Additions following the acquisition of POM
16
Additions during the year
512
Amortization during the year
(286
)
Effect of changes in exchange rates
(3
)
Balance as at December 31, 2021
407
Additions during the year
4,099
Terminations during the year
(239
)
Amortization during the year
(619
)
Effect of CPI
145
Effect of changes in exchange rates
(393
)
Balance as at December 31, 2022
3,400
3.
Maturity analysis of for the Company’s lease liabilities
  
December 31,
  
December 31,
 
  
2022
  
2021
 
  
USD thousands
  
USD thousands
 
       
Up to one year
  
394
   
165
 
1-8 years
  
3,109
   
246
 
Total
  
3,503
   
411
 

F - 33


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 19 – Leases (cont.)
4.
Amounts recognized in profit or loss 
  
Year ended December 31,
  
Year ended December 31,
  
Year ended December 31,
 
  
2022
  
2021
  
2020
 
  
USD thousands
  
USD thousands
  
USD thousands
 
          
Amortization of ROU asset
  
619
   
286
   
146
 
Expenses related to short-term leases
  
149
   
-
   
-
 
Interest and CPI expenses on lease liability
  
266
   
9
   
5
 
Total amounts paid for leasing of the offices in the period ended December 31, 2022 and  December 31, 2021, was USD 870 thousand and USD 346 thousand, respectively.
Note 20 - Employee Benefits

Employee benefits include post-employment benefits and short-term benefits.
 
Regarding benefits to key management employees, see Note 17(B).
The Company has a defined contribution plan in respect of its liability to pay the savings component of provident funds and in relation to employee severance pay, which is subject to Section 14 of the Israeli Severance Pay Law – 1963, according to which the Company pays fixed contributions to pension funds and/or insurance companies that release the Company from any additional severance-related liability. Expenses recognized in respect of such defined contribution plans in the yearyears ended December 31, 20202022 and December 31, 2019,2021, amounted to USD 121305 thousand and USD 10225 thousand, respectively.

F - 34


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 2021 – Loss per Share

Basic and diluted loss per share
 
The calculation of basic loss per share wereas at December 31, 2022 was based on the loss attributable to the Company’s ordinary shareholders divided by a weighted average number of ordinary shares outstanding, calculated by dividingas follows:
Weighted average number of ordinary shares
  
Year ended
December 31,
2022
  
Year ended
December 31,
2021
  
Year ended
December 31,
2020
 
          
Issued and paid-in share capital as at January 1
  
125,770,107
   
79,866,264
   
19,870,337
 
Weighted average of the number of ordinary shares of
Steakholder Foods Ltd. issued during the year
  
10,130,762
   
36,088,237
   
40,241,860
 
Weighted average of the number of ordinary shares used
to calculate basic earnings per share
  
135,900,869
   
115,954,501
   
60,112,197
 
In prior periods, the weighted average number of the ordinary shares of MeaTech (now known as MeaTech MTSteakholder Innovation Ltd.) that were outstanding during the corresponding periods, into the loss or earnings in the corresponding periods, was multiplied by the exchange ratio according to which ordinary shares of MeaTech 3DSteakholder Foods Ltd. were issued in return for ordinary shares of MeaTech, calculated as follows:
Weighted average number of ordinary shares

  
Year ended
December 31,
2020
  
Year ended
December 31,
2019
  
Eight months
ended
December 31,
2018
 
          
Weighted average of the number of ordinary shares of MeaTech  38,497   24,573   18,816 
Exchange ratio established in the acquisition agreement  
792.9
   
792.9
   
792.9
 
Weighted average of the number of ordinary shares of MeaTech 3D Ltd. outstanding pre acquisition  30,525,506   19,484,478   14,919,810 
Weighted average of the number of ordinary shares of MeaTech 3D Ltd. issued post acquisition  29,586,691   -   - 
Weighted average of the number of ordinary shares used to calculate basic earnings per share  60,112,197   19,484,478   14,919,810 

Steakholder Innovation Ltd. in the 2020 reverse acquisition.
 
At December 31, 2020, 45,768,4242022, 55,632,713 options, warrants, rights and RSUs (in 2019: 9,839 options)2021 and 2020, 41,902,044 and 45,768,424 options respectively) were excluded from the diluted weighted average number of ordinary shares calculation, as their effect would have been anti-dilutive.
F - 34

MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 2122 – Agreements, Guarantees and Liens

A.
To secure its undertakings in connection with its lease agreements as described in Note 13, MeaTech provided a bank guarantee in the amount of USD 26 thousand (NIS 85 thousand) For which there's a restricted deposit. MeaTech alsoSteakholder Foods Ltd. restricted a deposit of USD 2529 thousand (NIS 80100 thousand) in favor of a bank to secure its liabilities with respect to credit cards. The guarantee and deposit were assigned to MeaTech 3D Ltd. upon the Merger.

B.
In October and November 2019, MeaTech engaged
To secure its undertakings in consulting agreementsconnection with two development consultants, which were assigned to MeaTech 3Dits future lease agreement, Steakholder Foods Ltd. uponprovided a bank guarantee in the Merger. In return for the consultation services, the Company pays each consultant a monthly retaineramount of USD 3 thousand. Subsequent to the closing of the merger transaction detailed in Note 1B, the Company allotted the consultants warrants to purchase an aggregate amount of 200,000 shares.296 thousand (NIS 1,040 thousand), for which a restricted deposit has been recorded.

C.
To secure its undertakings in connection with its lease agreements as described in Note 19, POM provided a bank guarantee in the amount of USD 24 thousand (EUR 23 thousand), for which a restricted deposit has been recorded.

F - 35


Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 2223 – Financial Instruments

The Company has exposure to the following risks from its use of financial instruments: credit, liquidity and market risks.risks, this note presents qqualitative information about the Company’s exposure to each of the above risks, and the Company’s objectives, policies and processes for measuring and managing risk.
 
A.
Framework for risk management
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.
 
The Company’s risk management policy was formulated to identify and analyze the risks that the Company faces, to set appropriate limits for the risks and controls, and to monitor the risks and their compliance with the limits. The risk policy and risk management methods are reviewed regularly to reflect changes in market conditions and in the Company’s operations. The Company acts to develop an effective control environment in which all employees understand their roles and commitment.
 
B.
Credit risk
Credit risk is the risk of financial loss to the Company if a debtor or counterparty to a financial instrument fails to meet its contractual obligations, and arises mainly from the Company’s receivables.
 
The Company restricts exposure to credit risk by investing only in bank deposits.
 
C.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
 
This does not take into account the potential effect of extreme circumstances that cannot reasonably be predicted.
 
The cash surpluses held by the Company that are not required for financing their current activity, are invested in interest-bearing investment channels, such as short-term deposits. These investment channels are chosen by the Company’s management based on future forecasts of the cash the Company will require in order to meet its liabilities.
 
D.
Market risk

Market risk is the risk that changes in market prices, such as foreign currency exchange rates, the CPI, interest rates and the prices of equity instruments, will influence the Company’s results or the value of its holdings in financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
 
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MeaTech 3D Ltd.

NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020

Note 22 – Financial Instruments (cont.)

E.
Fair value

The carrying amounts of financial assets and liabilities, including cash and cash equivalents, other receivables, trade payables and other payables are the same or proximate to their fair value. Changes in CPI are effecting operational contracts, mainly lease agreement
 

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Steakholder Foods Ltd


NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2022

Note 2324 – Subsequent Events

A.1.
On February 10, 2021,January 9, 2023, the Company consummated an underwritten public offering of 1,550,000 American Depositary Shares (“ADSs”) at a price of USD 1.00 per ADS and pre-funded warrants to purchase 4,950,000 ADSs at a purchase price of USD 0.9999 per warrant and an exercise price of USD 0.0001 per warrant, for total immediate gross proceeds of approximately USD 6.5 million. As part of the offering, the Company issued warrants to purchase 6,500,000 ADSs, exercisable immediately for a period of five years, with an exercise price of USD 1.00 per ADS. Underwriting discounts and other offering expenses totaled approximately USD 0.7 million. In connection with the offering, the Company entered into an agreement with allan existing investor to reduce the exercise price of outstanding warrants to purchase up to 1,857,143 ADS which were issued in the Company’s July 2022 registered direct offering (the “Prior Warrants”) from USD 3.50 per ADS to USD 1.00 per ADS, and to extend the term of the shareholdersPrior Warrants until January 10, 2028.
2.
On March 2, 2023, the Company announces that Mr. Eitan Noah, previously VP Finance of the Company, will be promoted to the position of Company’s Chief Financial Officer on April 5, 2023, replacing the current CFO, Mr. Guy Hefer, who is stepping down for personal reasons.
3.
On April 3, 2023, the Company announced that Peace of Meat BV,would close, in the context of optimizing its funds and investment strategy, alongside enabling a private limited liability company incorporated, organizedgreater focus on recently-announced core goals such as accelerating the commercialization of its 3D printing technology. See also Note 16.
4.
On March 27, 2023, the Company received a letter from the Nasdaq, indicating that it is not in compliance with the minimum bid price requirement of $1.00 per shares for continued listing. The letter, which has no immediate effect on the Company’s Nasdaq listing or the trading of its American Depositary Shares (ADSs), states that the Company has a compliance period of 180 days (until September 18, 2023) to regain compliance with the minimum bid price requirement. The Company can regain compliance if, at any time during this 180-day period, the closing bid price of its ordinary shares is at least $1.00 for a minimum of ten consecutive business days. 
5.
On April 3, 2023, the Company announced its participation in a strategic investment round in Wilk Technologies Ltd. (TASE: WILK), alongside leading players in the food industry, such as Danone and existing under the LawsCentral Bottling Co. Ltd. (owner of Belgium, or PeaceTara, Coca Cola Israel and more). The transaction was approved by the Company's audit committee (due to related party considerations) and board of Meat, to acquire alldirectors. As part of the outstanding share capital of Peace of Meat not yet owned byinvestment, the Company (detailed in Note 5B) for total consideration of up to €15.4 million ($17.2 million). The total consideration payable by the Company in the acquisition consists of €7.7 million ($8.6 million), comprised of €4.1 million ($4.6 million) in cash paid to Peace of Meat shareholders and in legal and finder’s fees, and 4,070,766 of the Company’spurchased ordinary shares with a fair value of €3.6 million ($4.0 million), paid on the closing date, or the Closing Consideration, and up to an additional €7.5 million ($8.3 million) payable in a combination of €3.9 million ($4.4 million) in cash and 4,070,766 of the Company’s ordinary sharesWilk in the amount of €3.6 million ($3.9 million) with$450,000 at a fair value of €2.4 million ($2.7 million), upon15% discount below their 45-day average closing price, giving the achievement of four defined milestones related to Peace of Meat’s biomass and bioreactor size, density, capacity and production. The acquisition agreement specified that each milestone must be reached withinCompany a six-month period, over a total of two years, which can be extended by up to nine additional months under circumstances set forth2.5% stake in the acquisition agreement. The agreement also includes acceleration events, such as breach of the acquisition agreement by the Company; certain merger, consolidation or acquisition transactions involving the Company; the delisting of the Company’s securities from all public trading forums; and the termination of employment of two or more of the founders of Peace of Meat during the milestone period under circumstances set forth in the acquisition agreement.Wilk. 

B.
In March 2021, the Company completed an initial public offering of American Depositary Shares representing ordinary shares on the Nasdaq Capital Market, with aggregate gross proceeds of $28 million. For further details see Note 1(A).

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F - 37


ITEM 19. EXHIBITS
 
Exhibit No.
 
Description

   

   

   

   

   

 


   

 

   

   

 
 

   

   

 
 
*
*
Previously filed as an exhibit to our registration statement on Form F-1 (File No. 333-253257) as filed with the SEC on March 11, 2021 and incorporated by reference herein
#
English translation of original Hebrew document.
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SIGNATURES
 
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for this filing and that it has duly caused and authorized the undersigned to sign this Annual Report on Form 20-F on its behalf.
 
 MEATECH 3D
STEAKHOLDER FOODS LTD.
   
 
By:
/s/ Sharon FimaArik Kaufman
  Sharon Fima
Arik Kaufman
  
Chief Executive Officer
 
Date: April 21, 2021 4, 2023
84
 
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